Executive Briefings

Airfreight and Passenger Traffic Dipped in May, Continuing Downward Spiral

The International Air Transport Association (IATA) announced global traffic results for May showing a general downward trend in line with deteriorating global economic conditions.

While passenger demand was 4.5% ahead of levels in May 2011, growth was virtually flat compared to April. Capacity increased by 4.0% and load factors stood at 77.6%, below the historically high levels recorded in April.

May freight demand was 1.9% below previous year levels. Compared to April, the freight market contracted by 0.4%. Freight markets hit a low during the fourth quarter of 2011. Since then, they have basically moved sideways with just a 1.5% improvement on that level by May. The freight load factor stood at 45.3%, unchanged from the previous month but 1.2 percentage points below May 2011 levels.

"The airline industry is fragile," said Tony Tyler, IATA's director general and CEO. "Relief in oil prices provides some good news. Unfortunately, the softness in oil markets comes on the back of fears of deterioration in the European economy. Business and consumer confidence are falling. And we are seeing the first signs of that in slowing demand and softer load factors. This does not bode well for industry profitability. Airlines are expected to return a $3bn profit in 2012 on $631bn in revenues. That's a razor-thin 0.5% margin."

Airfreight markets stood at 1.9% below previous year levels in May. Compared to April, there was a 0.4% contraction. Taking a broader perspective, airfreight has improved by a small 1.5% since hitting bottom in 2011. But this growth has been narrowly focused on the Middle East carriers.

• European airlines experienced the steepest decline in freight traffic, posting a 5.7% decline compared to a year ago on a 1% rise in capacity. North American airlines had a 1.9% drop in demand while capacity was trimmed by1.6%. Asia-Pacific carriers saw a 4.1% decline in demand in May compared to the previous year, while capacity dipped just 1.7%.

Latin American airlines' demand rose 0.2%, while capacity climbed 0.5%.

• Middle Eastern carriers posted a 12.4% increase in demand, which exceeded an 11.7% rise in capacity. Half of this year's growth in cargo markets has been captured by the Middle East carriers.

• African carriers' results were not available but will return next month.

"We need governments to move from recognition [of the vital nature of aviation] to action with tax policies that don't kill growth, regulation that enables growth and infrastructure to accommodate growth," said Tyler.

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While passenger demand was 4.5% ahead of levels in May 2011, growth was virtually flat compared to April. Capacity increased by 4.0% and load factors stood at 77.6%, below the historically high levels recorded in April.

May freight demand was 1.9% below previous year levels. Compared to April, the freight market contracted by 0.4%. Freight markets hit a low during the fourth quarter of 2011. Since then, they have basically moved sideways with just a 1.5% improvement on that level by May. The freight load factor stood at 45.3%, unchanged from the previous month but 1.2 percentage points below May 2011 levels.

"The airline industry is fragile," said Tony Tyler, IATA's director general and CEO. "Relief in oil prices provides some good news. Unfortunately, the softness in oil markets comes on the back of fears of deterioration in the European economy. Business and consumer confidence are falling. And we are seeing the first signs of that in slowing demand and softer load factors. This does not bode well for industry profitability. Airlines are expected to return a $3bn profit in 2012 on $631bn in revenues. That's a razor-thin 0.5% margin."

Airfreight markets stood at 1.9% below previous year levels in May. Compared to April, there was a 0.4% contraction. Taking a broader perspective, airfreight has improved by a small 1.5% since hitting bottom in 2011. But this growth has been narrowly focused on the Middle East carriers.

• European airlines experienced the steepest decline in freight traffic, posting a 5.7% decline compared to a year ago on a 1% rise in capacity. North American airlines had a 1.9% drop in demand while capacity was trimmed by1.6%. Asia-Pacific carriers saw a 4.1% decline in demand in May compared to the previous year, while capacity dipped just 1.7%.

Latin American airlines' demand rose 0.2%, while capacity climbed 0.5%.

• Middle Eastern carriers posted a 12.4% increase in demand, which exceeded an 11.7% rise in capacity. Half of this year's growth in cargo markets has been captured by the Middle East carriers.

• African carriers' results were not available but will return next month.

"We need governments to move from recognition [of the vital nature of aviation] to action with tax policies that don't kill growth, regulation that enables growth and infrastructure to accommodate growth," said Tyler.

Read Full Article