Thursday, July 09, 2009

Air Passenger Demand Down 9.3 Percent In April

The International Air Transport Association (IATA) announced that international scheduled traffic results for May showed passenger demand down 9.3 percent compared with May last year.

Freight demand meanwhile was down by 17.4 percent in May.

International passenger load factors stood at 71.2 percent, down from 74.5 percent recorded in May 2008, it said in a statement.

The 17.4 percent decline in international cargo demand meanwhile was a relative improvement compared to the 21.7 percent drop in April this year, IATA said.

Since December 2008, cargo demand has been moving sideways in the -20 percent range.

This is one of the first physical signs of the economic recovery being anticipated in equity markets, it said.

International passenger demand weakened from the -3.1 percent recorded in April to -9.3 percent in May. But both of the past two months have been slightly stronger than the 11.1 percent decline reached in March, even after adjusting for the distortions caused by the timing of Easter, it said.

This indicates that a floor may now have been reached, it added.

However, the capacity adjustment of -5.0 percent in May did not keep pace with the fall in demand during the same month, it said.

Moreover, although the impact of the recession appears to be stabilising, strong headwinds from debt and low asset prices are expected to weaken and delay any significant recovery.

"We may have hit bottom, but we are a long way from recovery," said Giovanni Bisignani, IATA's Director General and chief executive officer.

"Capacity is not aligned with demand. Passenger load factors dropped 3.3 percentage points over the last 12 months. The impact on revenue is dramatic. After a 20 percent fall in international passenger revenue in the first quarter, we estimate that the drop accelerated to as much as -30 percent in May. This crisis is the worst we have ever seen," said Bisignani.

IATA said May was the first full month to feel the impact of the Influenza A(H1N1) on travel.

Mexican carriers saw their traffic fall almost 40 percent in May, while Latin American carriers saw their traffic decline by 9.2 percent.

It said against a capacity increase of 0.2 percent, the load factor plummeted to 64.7 percent, a 6.7 percentage point drop compared to May 2008 and the lowest load factor among all the regions.

IATA estimated that the global impact of Influenza A(H1N1) on global travel patterns in May saw a one percent drop in passenger traffic.

Asia Pacific carriers recorded a 14.3 percent fall in demand.

"We have lost several years of growth and yields are under severe pressure. Airlines are in survival mode. Cutting costs and conserving cash are the priorities," said Bisignani.

"The burden cannot be placed on airlines alone. All partners in the value chain must be prepared to change - reducing costs and improving efficiencies," he said.

Source : Bernama
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