Air traffic growth at five-year low

Financial Times (30/09/2008)

Growth in international air traffic slowed in August to the lowest level in five years, while air cargo volumes shrank for the third month in succession.
Iata, the global airline trade association, said on Tuesday the three-month decline in air freight was a clear indication that global trade was slowing down. Airlines carry 35 per cent by value of goods traded internationally.

Passenger traffic grew by 5.4 per cent year-on-year in the first six months but slowed to growth of 1.9 per cent in July and 1.3 per cent in August. Capacity growth is outpacing demand leaving airlines with more unfilled seats.

“The slowdown has been so sudden that airlines can’t adjust capacity quickly enough,” said Giovanni Bisignani, Iata director general. “The industry crisis is broadening and no region is immune.”

Around 30 airlines have collapsed during the last 12 months and more are expected to fail during the coming winter season, as losses mount and carriers struggle to find new sources of finance.

Mr Bisignani said the fall in the oil price had brought “welcome relief”, but the cost of fuel was still 30 per cent higher than a year ago.

With traffic growth continuing to decline, Iata is forecasting the airline industry will make a net loss of $5.2bn this year.

International air freight declined by 2.7 per cent year-on-year in August following falls of 1.9 per cent in July and 0.8 per cent in June.
The decline has been led by Asia-Pacific carriers, which comprise 45 per cent of global air cargo markets and whose international freight shipments suffered a decline of 6.8 per cent year-on-year in August following a drop of 6.5 per cent in July.

Asia-Pacific carriers also reported a 3.1 per cent decline in passenger traffic in August and 0.5 per cent in July partly as a result of the distortion of the Olympics in China and the weakening economic outlook in Japan. Iata said the region’s economies were feeling the impact of the turmoil in financial markets.
Mr Bisignani warned Indian airlines would make a loss of around $1.5bn this year, the largest losses outside the US, partly because they were “being crippled by enormous taxation on fuel, particularly in domestic markets.”