Air Travel Returned To Pre-Recession Levels In May
Open Jaw

The International Air Transport Association (IATA) has announced its international scheduled traffic statistics for May showing an 11.7% increase in passenger traffic and a 34.3% jump in freight demand compared to May 2009.

“Demand rebounded strongly in May following the impact of the European volcanic ash fiasco in April. Passenger traffic is now 1% above pre-recession levels, while the freight market is 6% bigger,” said Giovanni Bisignani, IATA’s Director General and CEO.

A capacity increase of 4.8% in May lagged behind the strong upturn in passenger demand. This pushed May’s international passenger load factor to 76% (78.7% when adjusted for seasonality).  This is the sixth consecutive month with seasonally adjusted load factors near 79%.

Matching capacity to demand will become increasingly challenging in the coming months. Aircraft utilization remains 5% below pre-recession levels for single-aisle aircraft and 8% for longer-range twin-aisle aircraft. The 100 aircraft taken out of storage during May and the 93 new aircraft delivered globally add further capacity pressure.

Europe remains the region with the weakest growth despite recording 8.3% growth compared to May 2009. Weak economic growth, questions over financial stability and sharply tightening fiscal policies will likely result in continued slower demand growth than is experienced in other parts of the world.

Airlines in the Asia-Pacific region recorded a 13.2% increase in demand in May 2010 over the same month in 2009. Asia-Pacific carriers continue to drive the recovery based on robust economic growth, primarily in China.

North American carriers saw a 10.9% increase in May over the same month last year. Careful matching of capacity to demand has driven the load factor to 82.4%, the highest among all regions.

Fastest growth in demand was recorded by Latin American airlines at 23.6%, supported by the region’s strong economic upturn.

In the Middle East, carriers saw 17.5% growth, a continuation of strong connecting traffic through their hubs, although the pace of growth has dropped from their 20% increases recorded earlier in the year.

African carriers also reported a demand increase, coming in at 16.9% in May as the region benefited from growing economies and more success in maintaining market share. At the same time, they also had the weakest load factors averaging 66.5%.

Strong traffic growth is contributing to a strengthening industry bottom line. Airlines are expected to post a $2.5 billion profit in 2010 in a dramatic turnaround from the $9.9 billion lost in 2009. “This is good news, but it is only a 0.5% margin. We are still a long way from sustainable profitability,” said Bisignani.

“Two months ago, the Icelandic volcano made it clear that aviation is vital to the global economy. When the volcano went to sleep, politicians developed amnesia to the lessons-learned. Germany proposed a EUR 1 billion departure tax that will dampen demand instead of stimulating growth. The new U.K. government is talking about a future without domestic aviation and no capacity growth, without any analysis of the devastation that this would bring to the U.K.’s economy. And the much anticipated accelerated progress on the EUR 5 billion savings of the Single European Sky has been truncated at incremental change. The traveling public and Europe’s struggling economy deserves much better than this short-sighted policy myopia,” stated Bisignani.

At its recent Annual General Meeting, IATA announced Vision 2050. This is an initiative to build a common vision among industry stakeholders for a sustainable future for air transport. Announcing the vision, Bisignani pointed to four cornerstones of change: a new and sustainable energy source, a regulatory regime that allows airlines to operate as normal businesses, cost-efficient infrastructure that meets the needs of users, and services that exceed customer expectations.

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