The International Air Transport Association (IATA) reported global traffic results for August showing demand for air transport continuing to flatten-out, but with significant regional variations. Freight volumes shrank as business and consumer confidence continued to slip.
Demand for air travel expanded by 5.1% in August compared to the same month in 2011. This partly reflects a positive distortion owing to the timing of Ramadan. Adjustment for such seasonal fluctuations reveals that passenger demand has been basically flat since June and with only a 1.2% expansion since January. Carriers continued to moderate capacity expansion, limiting it to 4.1% growth, taking load factors to 82.1%.
August air freight volumes fell 0.8% compared to the previous year. The minor recovery seen at the start of the year has faded quickly and the stability seen in freight markets during 2012 could be under threat owing to continued economic weakness. Middle East, African and North American carriers bucked the trend and remained in positive growth territory (11.3%, 10.2% and 2.0%, respectively). All other regions saw freight volumes decline, the most significant being for Asia-Pacific carriers at 5.5%.
“Passenger markets have not grown since June and global air freight volumes are below previous year levels. In the face of these adverse conditions, disciplined capacity management has kept load factors high. There are always opportunities and some parts of the world are growing. But, overall, trading conditions are tough,” said Tony Tyler, IATA’s Director General and CEO.
|Aug 2012 vs. Aug 2011||RPK Growth||ASK Growth||PLF||FTK Growth||AFTK Growth|
|YTD 2012 vs. YTD 2011||RPK Growth||ASK Growth||PLF||FTK Growth||AFTK Growth|
International Passenger Markets
The growth trend for international traffic remains weak, with overall expansion of 5.3% heavily dependent on seasonal factors. Compared to July, August growth was flat, and load factors were down. Asia-Pacific carriers appear particularly affected, as airlines face strong competition and shifting trade flows.
Domestic Passenger Markets
Overall, domestic traffic grew by 4.8%, slightly ahead of a 4.2% rise in capacity. The domestic load factor stood at 82.3%. All markets, except India and Japan, showed growth compared to the previous August. Chinese domestic travel was the best performer.
Freight (International and Domestic)
Compared to August 2011, freight demand fell by 0.8%, behind a capacity expansion of 0.4%, and declines in business confidence signal potential further weakness in the months to come. The strongest performers for air freight were carriers from the Middle East, Africa and (to a lesser extent) North America. Freight demand for Asia-Pacific, European, and Latin American airlines contracted compared to last August.
The Bottom Line
At a global level, airline industry fortunes track developments in the global economy. “Sluggish growth in the US, the continuing sovereign debt crisis in Europe and concerns over the slowdown in the Chinese economy are taking their toll on both business and consumer confidence. Airlines have responded with, among other things, careful capacity management. While global passenger traffic was up 5.1% on the previous August, capacity increases trailed with a 4.1% expansion. Along with this, conserving cash and controlling costs are the focus of most airlines as they await more favorable economic conditions,” said Tyler.
IATA currently forecasts a collective $3.0 billion profit for airlines in 2012 for a 0.5% net margin. On 1 October IATA will release a revised industry outlook.
Date: Sep 28, 2012