Travel Retail and Duty Free Business Intelligence    Friday 24 October 2014

AFRICA

International airline passenger demand rises marginally in October; ‘crisis has cost the industry two years of growth’ says IATA – 30/11/09

Published: 30/11/09

Source: ©The Moodie Report

By Dermot Davitt

Giovanni Bisignani: "The crisis has cost the industry two years of growth.”
INTERNATIONAL. Passenger demand on the world’s airlines rose by +0.5% year-on-year in October as market conditions continued to improve, according to the International Air Transport Association (IATA).

The airline body noted: “The improvement that started since passenger traffic hit bottom in March is similar to the pace of growth in 2006 and 2007. Without an exaggerated rebound from pent-up demand, there will be no rapid catch-up to the growth trend established in the 2005 to early-2008 period.”

IATA Director General and CEO Giovanni Bisignani said: “The crisis has cost the industry two years of growth. Adjusting costs and capacity to meet that reality will be challenging.”

The improvement in load factors to pre-recession levels (78% on scheduled airlines) is largely the result of careful capacity management, noted IATA. Compared to October 2008, overall passenger capacity on offer was down by -3.3%. Stripping out seasonal fluctuations, passenger capacity has been essentially flat throughout 2009.

“Yields remain under severe pressure,” said IATA. “Although there has been a modest rise in air fares since mid-year, it remains around -20% less expensive to fly in real terms today than it was a year ago.”

Passenger demand is now +6% better than the low point reached in March 2009, but -5% below the peak recorded in early 2008.

Compared to September, seasonally adjusted passenger volumes rose by +0.8%. Carriers in all regions except Asia Pacific, Middle East and North America saw improved demand in October compared to September.

Asia Pacific carriers saw demand grow by +0.9%, lower than the 2.1% recorded in September. The carriers in this region, together with the European carriers, have seen demand rise the most from their low points.

While European carriers saw a demand decline of -3% in October, it is an improvement from the -4.2% in September. European demand is still below the levels from last year due to weakness across the Atlantic and within Europe.

North American carriers saw significant growth in international traffic through the middle of 2009. Very significant capacity cuts across both the Atlantic and Pacific have reduced traffic carried in October to -2.6% below 2008 levels.

Middle Eastern carriers saw demand grow +14.3% (compared to +18.2% in September), the highest among the regions. The region’s carriers continue to add capacity, increasing +15.3% in October and outpacing the growth in demand.

Latin American carriers saw significant increases in the demand for air travel, growing +9% compared to +3.4% in September. The region’s carriers continue to add capacity, growing +3.7% compared to 2008.

African carriers saw the demand decline -2.6% in October, an improvement from September’s -4.2%.

Bisignani added: “This recession is re-emphasising a structural weakness in the industry. The inability to merge across political borders has created a hyper-fragmented industry. The industry is financially sick, and the medicine of cross-border consolidation is off limits due to an archaic regulatory structure.

“Market forces should guide our commercial operations. Instead the bilateral system, established in the 1940s, puts governments in control of which markets can be served and limits access to global capital with ownership restrictions. No other industry faces such regulatory manacles.”

He added: “A financially sustainable aviation industry is a necessary catalyst for the global economy.”


MORE STORIES ON IATA

International airline passenger demand levels out in September; but 'too early to call this a recovery' says IATA - 02/11/09

International passenger traffic improves in August, reports IATA, but concerns remain – 29/09/09

IATA forecasts US$11 billion in airline losses – 16/09/09

International passenger traffic stabilises in July, reports IATA, but industry struggles with profitability – 28/08/09