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IATA Reports February Gains in DemandApril 3, 2012 By: George Dooley Travel Agent
Global traffic results for February 2012 from the International Air Transport Association (IATA) show an 8.6 percent improvement in passenger demand compared to the same month in the previous year. However, IATA warns that several factors inflated February 2012 results and distorted comparisons with the year-ago period. When comparing to January 2012 levels, the gains are more moderate, with passenger demand growing by 0.4 percent.
Global passenger capacity expanded by 7.4 percent compared to previous-year levels, lagging behind the 8.6 percent increase in demand. This has had a positive impact on load factors, IATA says, which airlines have maintained at 75.3 percent—better than the 74.4 percent recorded in February 2011.
“The outlook is fragile. Improvements in business confidence slowed in February. This will limit the potential for business class travel growth and it implies that an uptick for cargo is not imminent. At the same time, airlines trying to recoup rising fuel costs could risk reduced volumes on price sensitive market segments. Weak economic conditions and rising fuel costs are a double-whammy that an industry anticipating a 0.5 percent margin can ill-afford,” said Tony Tyler, IATA’s director general and CEO.
International air travel stood 9.3 percent above February 2011 levels. Capacity expanded by 7.3 percent and load factors stood at 74.4 percent. IATA notes that except for Asia-Pacific, all regions saw demand expand ahead of capacity when compared to February 2011.
North American carriers showed the weakest growth in demand at 4.9 percent, which was still ahead of 4.3 percent growth in capacity over the previous year. The average load factor was the lowest among the major regions at 72.1 percent. While this performance was weak in comparison to other regions, IATA said it was significantly better than January, when international demand contracted by 0.3 percent. This improvement follows strengthened consumer confidence and economic conditions, IATA said.
The US domestic market saw considerably improved performance in February with 5.2 percent demand growth. After keeping capacity flat for several months, demand improvements were met with a 4.4 percent increase in capacity. Load factors strengthened to 78.8 percent.
“We are ending the first quarter with a considerable amount of uncertainty. While the threat of a European financial meltdown seems more remote than it did only a few months ago, the political risks that aviation faces are growing. The rapid increase in the price of oil is already biting hard. The UK is increasing the onerous Air Passenger Duty. Europe is adding to the burden with the inclusion of international aviation in its emissions trading scheme—the extra-territorial aspects of which are creating the possibility of a trade war that nobody can afford. The exact conditions vary from country to country, but around the world we see ill-conceived policy initiatives that over-regulate, excessively tax or otherwise restrain the aviation industry. This prevents it from being the catalyst for economic growth that it can be,” said Tyler.