IATA announces passenger traffic decline, improvement in freight demand
By Chika Ezeokoli
THE International Air Transport Association (IATA) has disclosed that the international scheduled traffic results for May passenger demand h declined by 9.3 per cent compared to the corresponding period of last year, while freight demand dropped by 17.4 per cent just as international passenger load factors stood at 71.2 per cent down from 74.5 per cent recorded in May 2008.
The body stated that 17.4 per cent decline in international cargo demand was a relative improvement compared to the 21.7 per cent drop in April. Since December 2008, cargo demand has been moving sideways in the 20 per cent range. This is one of the first physical signs of the economic recovery being anticipated in equity markets, it said.
According to IATA, international passenger demand weakened from the 3.1 per cent recorded in April to 9.3 per cent in May. But both of the past two months have been slightly stronger than the 11.1 per cent decline reached in March, even after adjusting for the distortions caused by the timing of Easter. This indicates that a floor may now have been reached. However, the capacity adjustment of 5.0 per cent in May did not keep pace with the fall in demand during the same month.
Moreover, although the impact of the recession appears to be stabilising, strong headwinds from debt and low asset prices are expected to weaken and delay any significant recovery.
The Director General, Giovanni Bisignani said: "We may have hit bottom, but we are a long way from recovery. "Capacity is not aligned with demand. Passenger load factors dropped 3.3 percentage points over the last 12 months. The impact on revenue is dramatic. After a 20 per cent fall in international passenger revenue in the first quarter, we estimate that the drop accelerated to as much as 30 per cent in May. This crisis is the worst we have ever seen."
In the result of its international passenger traffic demand monthly release, European carriers, in additional to weak long-haul markets, saw some loss of market share to European low cost carriers whose traffic grew by 2.1 per cent, while the network carriers reported a 9.4 per cent decline.
It revealed that African carriers saw a slight improvement of a 6.0 per cent fall in demand in May, compared to a 7.1 per cent decline in April. Middle Eastern carriers bucked the declining trend with 9.5 per cent growth in demand and a 14.5 per cent expansion of capacity.
In May, freight volumes rose by around three per cent above April levels as manufacturers began to add to their product inventories in anticipation of an economic recovery.
However, inventories remain 10-15 per cent higher than normal in relation to sales levels, indicating that a significant recovery is not expected in the near term. Surveys of purchasing managers indicated.
"We could experience a further improvement in air freight demand during June and July to levels that are 12-15 per cent below last year's levels.
"We have lost several years of growth and yields are under severe pressure. Airlines are in survival mode. Cutting costs and conserving cash are the priorities," said Bisignani.
He added: "Even if we look beyond the crisis, it is difficult to see a return to business as usual. This crisis is re-shaping the industry. The burden cannot be placed on airlines alone. All partners in the value chain must be prepared to change-reducing costs and improving efficiencies. Too often we get the opposite. Already this year we have seen $1.5 billion in cost increases from airports and air navigation service providers. It's irresponsible in the best of times and a completely unacceptable abuse of monopoly position in a crisis."
