Executive Briefings

Air Cargo Output Drop Worst Since DotCom Bubble Burst

The International Air Transport Association (IATA) has announced global international air transport figures for September, which show that cargo traffic dropped by 7.7% compared to the same month in 2007. It described that decline as the worst since the 'dotcom' technology bubble burst in 2001.

According to IATA, recent declines in airfreight have slowed 2008 year-to-date growth to 0.1%, with all regions except the Middle East and Africa reporting negative results. The most alarming drop was with Asia Pacific carriers--the largest players in the market. That region's carriers reported a 10.6% decline in September. Europe and North America carriers, which had seen flat growth through August, saw their cargo traffic fall 6.8% and 6%, respectively.

Giovanni Bisignani, IATA's Director General and CEO, commented: "Even the good news that the oil price has fallen to half its July peak is not enough to offset the impact of the drop in demand. At this rate, losses may be even deeper than our forecast $5.2bn for this year."

The problems, which the airline industry as a whole periodically faces, have been exacerbated by high levels of regulation, which prevent consolidation and innovation in the sector. The web of 3,500 bilateral air service agreements that govern international air transport denies market access until specifically agreed. The ownership clauses that are contained in those agreements preclude mergers across borders.

"Look at what the banking industry is doing...We have seen mergers without anybody asking to see the investors' passports. Airlines are not asking for handouts. But today's crisis highlights the need for airlines to be able to run their businesses like normal global businesses," said Bisignani.
Transport Intelligence

The International Air Transport Association (IATA) has announced global international air transport figures for September, which show that cargo traffic dropped by 7.7% compared to the same month in 2007. It described that decline as the worst since the 'dotcom' technology bubble burst in 2001.

According to IATA, recent declines in airfreight have slowed 2008 year-to-date growth to 0.1%, with all regions except the Middle East and Africa reporting negative results. The most alarming drop was with Asia Pacific carriers--the largest players in the market. That region's carriers reported a 10.6% decline in September. Europe and North America carriers, which had seen flat growth through August, saw their cargo traffic fall 6.8% and 6%, respectively.

Giovanni Bisignani, IATA's Director General and CEO, commented: "Even the good news that the oil price has fallen to half its July peak is not enough to offset the impact of the drop in demand. At this rate, losses may be even deeper than our forecast $5.2bn for this year."

The problems, which the airline industry as a whole periodically faces, have been exacerbated by high levels of regulation, which prevent consolidation and innovation in the sector. The web of 3,500 bilateral air service agreements that govern international air transport denies market access until specifically agreed. The ownership clauses that are contained in those agreements preclude mergers across borders.

"Look at what the banking industry is doing...We have seen mergers without anybody asking to see the investors' passports. Airlines are not asking for handouts. But today's crisis highlights the need for airlines to be able to run their businesses like normal global businesses," said Bisignani.
Transport Intelligence