While we have always agreed that the economy drives the demand for air traffic, both passenger and cargo, we are wondering if it might be the other way around. Because while the global crisis is still an issue - especially in Europe and the United States - the second quarter 2010 results in the results, both in terms of demand growth and net income as reported by major carriers, would indicate the economy is catching up with the airline world. Net income in the second quarter among airlines was way up, including record results for Delta with $467m net income, best performance in a decade. Others reporting include United, Continental, US Airways, Alaska Airlines, Jetblue, Air Tran, Allegiant, Ryanair, Kingfisher, Air France-KLM. LAN Chile reported a record $60.6m net in the second quarter, with passenger revenue increasing 24.5 percent and cargo increasing 60.35 percent year on year.  At the same time European airline Ryanair is opening new a new hub in Seville, to serve 29 routes,  Air Berlin is joining Oneworld, and Cargoitalia is launching freighter service between Milan and Shanghai. Airlines are acquiring new aircraft, by leasing or buying, as reported last month at the Farnborough Air Show, which listed new aircraft acquisitions by: LAN Chile; FlyBe; Air France/KLM; Virgin America; Emirates; Hong Kong Airlines; China Southern Airways; Aeroflot; Thai Airways; Garuda; Qatar; Azerbaijan Airlines; Air Austral; Royal Jordanian; Azul; Republic; Kartika; Orient Thai; and Gazpromavia.

IATA reports international passenger demand (particularly China and Latin America), and freight showed strong improvements during June compared to a year ago. According to the latest statistics, released in July, international passenger demand was up 11.9 percent while international scheduled freight traffic showed a 26.5-percent improvement, which means the industry is recovering from the impact of the global financial crisis.

"The industry continues to recover faster than expected, but with sharp regional differences. Europe is recovering at half the speed of Asia with passenger growth of 7.8 percent compared to 15.5-percent growth in Asia-Pacific," said Giovanni Bisignani, IATA's director general and CEO. Middle Eastern carriers continue to post the fastest growth - up 18 percent compared to June 2009.Asia-Pacific carriers recorded the most significant demand improvement of 15.5 percent, with China continuing to be the region's growth engine. North American airlines posted 10.8-percent growth; European carriers reported 7.8-percent growth; Latin American carriers posted a 14.7-percent growth while African airlines posted a 23.6-percent growth, positively impacted by the FIFA World Cup.

IATA's Economic Briefing, based on the July 2010 Survey is a must read. In June it revised up its own forecast for 2010 industry performance from a loss of $2.8bn to profit of $2.5bn.

Regardless, whether I'm right in thinking that airlines are driving the economy or not - the facts are that there is no global crisis in the airline industry. And I expect to see the economies following suit during the balance of this year.

Source: AirWaves