MICEBTN - Passenger demand up in October -IATA

Passenger demand up in October -IATA

Tuesday, 01 December 2009

The International Air Transport Association (IATA) has reported international scheduled traffic results for October 2009 showing improving conditions.
Passenger demand was up 0.5 per cent compared to October 2008 and load factors for passengers continue at pre-recession levels of 78.0 per cent.

IATA says the improvement trend that has emerged since passenger traffic hit the bottom in March is similar to the pace of growth in 2006 and 2007. Without an exaggerated rebound from pent-up demand, there will be no rapid catch-up to the growth trend established in the 2005 to early-2008 period.

“The crisis has cost the industry two years of growth. Adjusting costs and capacity to meet that reality will be challenging,” said Giovanni Bisignani, IATA’s director general and chief executive.

The improvement in load factors to pre-recession levels is largely the result of capacity management. Compared to October 2008, October 2009’s overall passenger capacity was down 3.3 per cent. Stripping out seasonal fluctuations, passenger capacity has been flat throughout 2009.

Aircraft utilisation for both wide and narrow-body aircraft is now 6 per cent below early 2008 levels. This low asset utilisation is increasing operating costs.

Yields remain under severe pressure. Although there has been a modest rise in air fares since mid-year, it remains around 20 per cent less expensive to fly in real terms today than it was a year ago.

International Scheduled Passenger Demand

Passenger demand is now six per cent better than the low point reached in March 2009, but five per cent below the peak recorded in early 2008.

Compared to September, seasonally adjusted passenger volumes rose by 0.8 per cent. Carriers in all regions except the Asia-Pacific, Middle East and North America saw improved demand in October compared to September.

Asia-Pacific carriers saw demand grow 0.9 per cent, lower than the 2.1 per cent recorded in September. The carriers in this region, together with the European carriers, have seen demand rise most from their low points.

While European carriers saw a demand decline of 3 per cent in October, it is an improvement from the -4.2 per cent in September. European carriers demand is still below the levels from last year due to weakness across the Atlantic and within Europe.

North American carriers saw significant growth in international traffic through the middle of 2009. Very significant capacity cuts across both the Atlantic and Pacific have reduced traffic carried in October to -2.6 per cent below 2008 levels.

Middle Eastern carriers saw demand grow 14.3 per cent (compared to 18.2 per cent in September), the highest among the regions. The region’s carriers continue to add capacity, increasing 15.3 per cent in October and outpacing the growth in demand.

Latin American carriers saw significant increases in the demand for air travel, growing nine per cent compared to 3.4 per cent in September. The region’s carriers continue to add capacity, growing 3.7 per cent compared to 2008.

African carriers saw the demand decline 2.6 per cent in October, an improvement from September’s -4.2 per cent.

“This recession is re-emphasising a structural weakness in the industry. The inability to merge across political borders has created a hyper-fragmented industry. The industry is financially sick, and the medicine of cross-border consolidation is off limits due to an archaic regulatory structure. Market forces should guide our commercial operations. Instead the bilateral system, established in the 1940s, puts governments in control of which markets can be served and limits access to global capital with ownership restrictions. No other industry faces such regulatory manacles,” said Bisignani.

Earlier this month, Chile, Malaysia, Panama, Singapore, Switzerland, the US, the UAE, with the endorsement of the European Commission, signed a multilateral statement of policy principles focused on aviation liberalisation. These principles aim to promote normal commercial freedoms for market access, access to capital (ownership) and pricing on a level playing field. The economic impact of such liberalisation could add 0.86 per cent to national GDPs, according to studies by InterVISTAS.

“Managing through this crisis will require all commercial tools that every other industry takes for granted. The principles have been developed by governments covering 60 per cent of global aviation. Now the challenge is two-fold. States that signed need to apply the principles themselves while bringing more states on board. The statement of policy principles is not a panacea, but it is a historic step in the right direction at a critical time. A financially sustainable aviation industry is a necessary catalyst for the global economy,” said Bisignani.

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