Downturn continues for pax and freight
- Monday, 30 November -0001
THE INTERNATIONAL Air Transport Association (IATA) has released international traffic data for August that confirm a continuing downturn.
International passenger demand growth slowed to 1.3 per cent in August, following disappointing growth of 1.9 per cent in July. Passenger load factors fell to 79.2 per cent a sharp drop-off from the 81 per cent recorded during the same period last year as capacity growth outpaced demand.
International freight traffic saw its third consecutive month of contraction with a 2.7 per cent decline following drops of 1.9 per cent in July and 0.8 per cent in June.
“The contrast between the first half of the year and the last two months is stark,” said Giovanni Bisignani, IATA’s director general and chief executive.
“The slowdown has been so sudden that airlines can’t adjust capacity quickly enough. While the drop in the oil price is welcome relief on the cost side, fuel remains 30 per cent higher than a year ago. And with traffic growth continuing to decline, the industry is still heading for a US$5.2 billion loss this year.”
Air freight has declined for the past three months, led by Asia Pacific carriers that posted a 6.5 per cent decline in July and a 6.8 per cent decline in August. “Airlines carry 35 per cent by value of the goods traded internationally. The three-month decline—led by weakness in Asia-Pacific markets—is a clear indication that global trade is slowing down. This shows that the impact of the financial crisis is broad geographically and will worsen before it gets better,” said Bisignani.
Cargo
• The 6.8 per cent decline in international freight shipped by carriers in the Asia Pacific region had the greatest impact as they comprise 45 per cent of the global air cargo markets.
• The other big market players also showed weakness. European carriers experienced a 0.9 per cent decline, while US carriers reported weak growth of 0.8 per cent.
• Sharp declines in freight traffic in Latin America (-13.2 per cent) reflect restructuring in Brazil with cuts in capacity.
“The industry crisis is deepening and no region is immune. Urgent measures are needed. From taxation to charges and operational efficiencies, all areas impacting the business must be examined for ways to reduce costs and drive efficiencies. It’s a matter of survival,” said Bisignani.
Bisignani noted significant progress in Brazil where presidential approval for the removal of a fuel tax for international flights was published on 26 September. “After a two-year campaign, this is great news and the US$411 million savings over the next four years could not be better timed. The challenge is for other governments to follow Brazil’s example, conform with global standards and free the industry of crazy taxation. This is particularly true of India. Its carriers will post the largest losses outside of the US—US$1.5 billion this year—and they are being crippled by enormous taxation on fuel, particularly in domestic markets,” said Bisignani.
