A rebound in international markets with 16.5 percent growth compared to April 2010, has been reported by the International Air Transport Association (IATA). While this is exaggerated by the comparison to April 2010 during which European airspace was closed due to the volcanic ash crisis, international travel markets in April had grown to reach a level 7 percent higher than the pre-recession peak of early 2008, IATA says.
“Demand improved significantly in April. Eliminating all distortions, we are growing at 3-4 percent. International traffic is now 7 percent above the early 2008 pre-recession levels, load factors are hovering around 77 percent and business confidence is high. Unfortunately two things are spoiling the party—demand shocks and high jet fuel prices,” said Giovanni Bisignani, IATA’s Director General and CEO.
“Despite the enormous restructuring over the last decade, the industry is not shock-proof. Profits are being squeezed by the succession of crises and shocks that have marked the first four months of this year. Their impact on demand will continue to ease as we move into the second half. But maintaining the high load factors needed to support profitable growth will be difficult given the ongoing challenge of matching capacity to volatile demand,” said Bisignani.
Top line highlights include:
• International: A 16.5 percent increase in passenger demand was met by a 16.8 percent increase in capacity. Passenger load factors fell slightly from 76.8 percent in April 2010 to 76.7 percent in April this year.
• Domestic: Domestic markets showed 4.7 percent growth over the previous year, outpacing a capacity increase of 3.1 percent, pushing the passenger load factor to 78.8 percent.
• System-wide: System-wide, passenger traffic grew by 11.9 percent, slightly ahead of an 11.5 percent capacity expansion pushing the system-wide load factor to 77.4 percent.
North American carriers are seeing much stronger demand in international markets (+11.9%) than in domestic, for which the US carriers reported 1.2 percent growth.
Domestic markets have been the weakest segment of air travel over the past 9 months, IATA said.
Japanese domestic travel was 31 percent below previous year levels in the aftermath of March’s earthquake and tsunami. While capacity was adjusted downwards by 15.9 percent, the gap with the fall in demand pushed load factors down to 47.4 percent for the month.
The United States reported sluggish growth of 1.2 percent. The sluggishness in the mature US domestic market (which represents about half of global domestic travel) is responsible for the overall slow growth in domestic travel. It is also a very price sensitive market that has declined with rises in jet fuel costs this year, IATA said.