IATA’s August Traffic Numbers Reflect a Downward Shift
A report released last week by the International Air Transport Association (IATA) pointed to decelerating airline passenger demand for the month of August. Although demand increased 4.5 percent over the previous August, the growth amounts to a “significant slowing” from the 6.0 percent recorded in July. Meanwhile, the decline in freight markets accelerated, from a 1.8-percent decline in July to a 3.8-percent contraction in August.
“The industry has shifted gears downward,” said IATA director general and CEO Tony Tyler. “With business and consumer confidence continuing to slump globally there is not a lot of optimism for improved conditions anytime soon.”
From July to August, international markets also declined by 1.8 percent, while already weak domestic markets shrank by 1 percent. The total cargo market fell by 1.3 percent, said IATA.
Although passenger load factors remained at close to a historically high 81.4 percent, even the industry’s ability to allocate capacity efficiently showed some weakness, falling by 1.3 points from July.
According to the IATA report, European airlines achieved the strongest growth in international passenger traffic in August, registering a 7.9-percent increase, just slightly below a capacity expansion of 8.2 percent. Although the report noted that domestic economies and leisure travel showed weakness, strong exports have led to increased business travel on international markets.
Conversely, North American carriers reported the weakest performance of all regions with growth of just 2.9 percent, which, according to IATA, came about partly as a result of equally slow growth in capacity. The numbers represent a sharp downturn from stronger growth earlier in the year, as reflected in the 5.6-percent year-to-date demand expansion. The region’s carriers posted the world’s highest composite load factor at 86.1 percent.
August traffic results coincided with IATA’s expectations for a decline in profitability heading into 2012. It expects to see total industry profits fall from $6.9 billion in 2011 to $4.9 billion next year. Historically, the airline industry has delivered collective losses when GDP growth falls below 2 percent. Economists expect GDP growth to fall from 3.9 percent in 2010 to a projected 2.5 percent this year, followed by another decline to 2.4 percent in 2012.
“Airlines are bracing for tough times ahead,” said Tyler. “To ensure that airlines can continue to catalyze economic activity, we need governments to review the often onerous tax burden that they place on aviation.”