INTERNATIONAL. International scheduled airline traffic climbed by +8.2% year-on-year in January, the International Air Transport Association (IATA) has reported. But the organisation said it remained deeply concerned about spiralling oil prices amid political uncertainty in the Middle East, and their impact on air traffic and the profitability of airlines in the year ahead.
IATA Director General and CEO Giovanni Bisignani said: “We begin the year with some good news. January traffic volumes are up +8.2% on January 2010 and +2.6% on December. With most major indices pointing to strengthening world trade and economic growth, this is positive for the industry’s prospects.
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Giovanni Bisignani: “Even with good news on traffic, 2011 is starting out as a very challenging year for airlines” |
“But we are all watching closely as events unfold in the Middle East. The region’s instability has sent oil prices skyrocketing. Our current forecast is based on an average annual oil price of US$84 per barrel (Brent). Today the price is over US$100.
“For each Dollar it increases, the industry is challenged to recover US$1.6 billion in additional costs. With US$598 billion in revenues, US$9.1 billion in profits and a profit margin of just 1.5%, even with good news on traffic 2011 is starting out as a very challenging year for airlines.”
By January 2011 air travel volumes were +18% higher compared to the low point reached in early 2009, and some +6% above the pre-recession peak of early 2008.
International passenger demand
The +8.2% growth in passenger traffic shows a recovery from December’s slowdown (with +5.4% growth) that was related to severe weather in Europe and North America, which reduced total traffic by 1-2%.
Passenger load factors are high, but there is evidence that supply growth is beginning to run ahead of demand, noted IATA. Compared to the previous January, the +8.2% demand increase was outstripped by a +9.1% increase in capacity, resulting in an average load factor of 75.7%. Adjusting for seasonality this is equates to a 77.7% load factor. This is a 1.1 percentage point drop from the October 2010 peak.
Europe’s carriers recorded a +7.9% year-on-year growth in passenger traffic and an +8.8% increase in capacity. The strong January performance reflects a rebound from December which was depressed by cancellations due to severe weather. Despite this, with capacity growth outstripping demand, the load factor slipped by 0.6 percentage points to 73.9%.
North American carriers recorded an +8.7% year-on-year growth in demand and a +10.0% increase in capacity in January. This imbalance saw load factors slip by nearly a full percentage point to 77.2%. International passenger traffic carried by North American airlines has now recovered to 2% above its pre-recession peak of early 2008.
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Asia Pacific carriers recorded a +5.8% year-on-year demand increase in January, more than double the +2.8% increase recorded in December. Increasingly strong economic growth is driving the acceleration in travel market growth, said IATA. Capacity increased by +7.0%, pushing the load factor down 0.9 percentage points to 77.7%.
Latin American carriers recorded an +11.0% growth in demand and a +12.4% growth in capacity. The region’s load factor fell by 1 percentage point to 79.7% but it is still the highest in the world. Traffic volumes in January were +16% higher than the pre-recession peak in early 2008. Latin American traffic comparisons have now been adjusted to eliminate the impact of the Mexicana bankruptcy and more accurately reflect the growth taking place with carriers actually operating in the region, said IATA.
Middle East carriers saw demand grow +11.7% in January compared to January 2010. The post-recession recovery has been the strongest – +45% higher compared to the low point in September 2008. The region’s economy looks positive with a predicted +4.2% GDP growth which is likely to sustain growth in the air traffic market. Political instability in parts of the region is expected to dampen demand in the affected areas. Egypt, Libya and Tunisia combined comprise around a fifth of the region’s international passenger traffic, said IATA.
African carriers grew by +14.3% year-on-year and passenger traffic levels are now around +28% higher compared to the previous peak reached in early 2008. However, this market has a relatively small impact as it represents about 3% of the total traffic. African load factor grew slightly to 68.7%, the lowest of any region.
