Slowing world trade and weak business confidence are affecting demand for air travel, while Hurricane Sandy delivered a concentrated punch to U.S. domestic and North Atlantic travel with a global impact, said Tony Tyler, IATA’s director general and CEO. “Airlines are managing the softer passenger demand environment by limiting capacity growth to keep load factors high. But the rapid decline in freight traffic is outrunning the industry’s ability to respond.” The hurricane cost airlines at least $0.5 billion with 17,000 flights canceled.
In its report for October, the International Air Transport Association (IATA) announced a persistent softening of passenger traffic growth and a significant deterioration in freight demand. Passenger demand rose 2.8 percent compared to October 2011, but declined 0.5 percent compared to September, IATA said. Capacity increased by 2.3 percent over the year-ago period, and load factor rose 0.4 percentage points to 78.8 percent.
International Passenger Markets: October international passenger demand was up 3.2 percent compared to the year-ago period, but contracted 0.2 percent compared to September. Several regions saw demand weaken compared to the prior month but in some cases results were affected by Hurricane Sandy, which struck the US East Coast in late October, IATA noted. International capacity rose 2.2 percent year-over-year and the load factor rose 0.8 percentage points to 78.3 percent.
Among North American airlines’ international traffic rose 0.2 percent compared to October 2011 after rising 2.1 percent in September. However, seat capacity declined 2.2 percent--reflecting the impact of Sandy--and load factor rose 2 percentage points to 82.2 percent, the highest among the regions. Demand declined 0.9 percent compared to September.
Domestic markets rose 2.1 percent in October compared to a year ago, down from a 2.5 percent year-on-year rise recorded in September. The domestic market growth trend has been soft throughout most of 2012, and the market shrank 0.9 percent between September and October, partly owing to the impact of Hurricane Sandy on the US domestic market. Weakness in India, Japan and the US, stands in stark contrast to the strong growth experienced in China and Brazil.
US traffic slipped 0.7 percent in October while capacity fell by 1.1 percent, pushing load factor up to 84 percent, the highest among all the domestic markets. IATA estimated that two-thirds of all passengers impacted by Hurricane Sandy were US domestic passengers. Demand declined 1.1 percent compared to September.
Hurricane Sandy was the big news story of October for the aviation industry, IATA notes. In total, nearly 17,000 flights were cancelled to the five most affected airports (the three New York area airports of John F. Kennedy, Newark and LaGuardia as well as Washington-Dulles and Philadelphia). At the peak of the storm on Monday 29 October 8-9 percent of global capacity was grounded which is equal to 1.6 billion available seat kilometers.
A conservative estimate of lost revenues as a result of the hurricane is $0.5 billion, IATA says. While there would be some savings from unused fuel, additional costs including those for passenger care and out-of-position crew would have been incurred.
“The human toll and physical destruction of Hurricane Sandy remain foremost in our minds. It also dealt the airline industry a $0.5 billion blow at a time when it can least afford it,” said Tyler. “At the same time, the disruption of thousands of flights demonstrated just how connected the aviation industry has made the world. Direct flight cancellations reached airports as far apart as Singapore, Johannesburg and Santiago. Meetings were cancelled, shipments delayed, conferences postponed and supply chains disrupted. A smooth functioning aviation industry is a critical component of modern life that is often taken for granted.”
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