30 January 2009

IATA figures paint bleak picture for airline industry

Airline passenger growth slowed to just 1.6% in 2008, according to the latest figures from International Air Transport Association (IATA).

The figure is dramatically down on the 7.4% growth in demand seen in 2007.

Capacity grew by 3.5% resulting in a full-year average load factor of 75.9%, down from the 77.3% recorded for 2007.

IATA chief executive Giovanni Bisignani said "Airlines are struggling to match capacity with fast-falling demand. Until this comes into balance, even the sharp fall in fuel prices cannot save the industry from drowning in red ink.

"Yields are also under attack with a sharp drop in November premium traffic."

According to IATA, there was an 11.5% drop in the number of premium tickets issued globally in November.

The decline will contribute to an estimated industry loss of $2.5bn this year, bringing the total loss over 2008 and 2009 to $7.5bn.

The 2009 forecasts are based on a 3% fall in passenger numbers.

Detailing December traffic for each region, IATA revealed:

- Asia Pacific carriers saw the sharpest decline in December international traffic at 9.7%. They also registered the sharpest reduction in capacity, but at 5.6%, this is lagging behind the drop in demand. Load factors sank to 72.6%.

- European carriers saw demand for international travel fall by 2.7% while capacity declined by 1.5%. Load factors stood at the global average of 73.8%.

- North American airlines saw December demand drop by 4.3%, far outstripping the 0.7% cut in international capacity. While North American carriers had made early cuts in domestic capacity of about 10%, this is the first month registering a cut in international operations. Nonetheless, the region recorded the highest load factor at 78.1%.

- African carriers continued to see their traffic fall, despite more robust economies and travel to the continent than other regions. International passenger traffic declined 4.6% in December. The 2.1% reduction in capacity left load factors at 68.5%, the lowest among the regions.

- Latin American airlines recorded a 1.1% increase in December demand and a 3.2% increase in capacity. With North American commodities demand and trade falling so sharply, the months ahead are likely to be more difficult for airlines in this region.

- Carriers in the Middle East showed a 3.9% increase in demand in December, far below the 10% capacity increase. The region’s carriers ended five years of double-digit growth with full-year demand growing by 7.0% (compared to 18.1% recorded for 2007). Growth will continue to slow in 2009 as oil revenues and long-haul hub connection traffic are now both in decline.

By Bev Fearis