IATA Reports Strong Gains in February 2010

Raising industry hopes of a strong recovery, international scheduled air traffic showed continued strengthening of demand, the International Air Transport Association (IATA) reports. Compared to February 2009, passenger demand was up 9.5 percent for February 2010.

These are strong gains, IATA said, but it must be noted that February 2009 marked the bottom of the cycle for passenger traffic during the global economic recession. Passenger demand must recover by a further 1.4 percent to return to pre-crisis levels. 

“We are moving in the right direction,” said Giovanni Bisignani, IATA’s director general and CEO. “In two to three months, the industry should be back to pre-recession traffic levels. This is still not a full recovery. The task ahead is to adjust to two years of lost growth.”

North American airlines posted weak growth of 4.4 percent.. Having cut capacity deeply during the recession (February 2010 capacity was 3 percent below 2009 levels), this is to be expected. Consumers continue to pay down debt rather than increase spending, keeping demand for air travel comparatively weak, IATA said.

The highlight for February was improved load factors which stood at 75.5 percent. Considering that February is traditionally the weakest month for travel, and if seasonally adjusted, this translates to an all-time record February load factor of 79.3 percent. While demand increased by 9.5 percent, supply was held back to just 1.9 percent.

Airlines are maintaining normal aircraft utilization on short-haul fleets but long-haul utilization is down over 8 percent compared to 2008 levels. The resulting increase in unit costs for long-haul operations may delay the positive impact of stronger demand to the bottom line, IATA says.

“While the numbers are improving, the year has started with two disappointments,” said Bisignani. “The first is in Europe. We anticipate Europe to post $2.2 billion in losses this year— the highest among the regions. Weak European passenger and freight demand is in line with our forecast. It is disappointing to see labor at European airlines engaging in strikes when the fragile industry needs to focus on improving efficiency and reducing costs.

“The second is the failure to address ownership issues in second stage talks on open skies between the EU and the U.S.,” Bisignani continued. “Last week’s agreement was not a step backwards. The gains from the stage one talks have not been lost. But the two sides missed an opportunity at this critical time to give airlines the much needed normal commercial freedom to access global capital markets without the limitations of outdated foreign ownership restrictions embedded in the current bilateral system.”

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