Airlines in ‘intensive care’ IATA warns
Wednesday, 27 Aug, 2009
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The airline industry remains in “intensive care” despite a slight improvement in monthly results, IATA has warned.
International scheduled traffic in July saw passenger demand down by 2.9% compared to the same month last year – an improvement over the 7.2% drop in June and the 6.8% decline recorded over the first seven months of the year.
July capacity was more in line with reduced demand than in previous months and load factors are similar to those recorded in July 2008.
But this came at the expense of yields which continue to fall sharply, IATA said.
European and North American carriers saw declines of 3.1% and 3.2% respectively last month.
Passengers have been trading down to cheaper seats in the face of recession pressures.
Airlines have also been leaving less expensive fares open for sale closer to departures dates in the face of excess capacity and intensifying competition.
The July improvement in travel demand was more the result of deep discounting than stronger incomes or greater economic confidence, according to the airline industry body.
Middle East carriers were the only ones to grow in July. The 13.2% growth in July was slightly better than the 12.9% recorded in June. The growth is fuelled by increased capacity and greater market share in traffic between Europe and Asia.
IATA director general and CEO Giovanni Bisignani said: “Demand may look better, but the bottom line has not improved.
“We have seen little change to the unprecedented fall in yields and revenues.
“The months ahead are marked by many uncertainties, including the price of oil.
“The road to recovery will be both slow and volatile. In the meantime, the industry remains in intensive care.”
He added: “Airlines need to make their money in the June-August peak travel season. Planes are full. Load factors are high. But revenues are way down.
“Conserving cash, effectively managing capacity and cutting costs will be the long-term theme for every business in the air transport value chain.”
by Phil Davies
Phil Davies
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