IATA: Passenger Traffic Gets a Boost

Passenger travel was up 5.9 percent in July over July 2010 the International Air Transport Association (IATA) reports. Compared to pre-recession levels of early 2008, international passenger traffic has expanded by 12 percent, despite weakness in demand for cargo services.

“Passenger travel bucked the gloomy economic outlook with a 5.9 percent increase in July. This increase was likely based on the much more optimistic economic outlook that marked the beginning of the year. With business and consumer confidence now tanking, sluggishness in international trade, and high fuel prices, the expectation is for a weaker end to the year. We are already seeing this in the shrinking air freight markets, which were 0.4 percent down on the previous year,” said Tony Tyler, IATA’s director general and CEO.

International passenger markets, which grew by 7.3 percent compared with July 2010, remain stronger on average than domestic markets, which showed weaker growth of 3.5 percent year over year. Compared to pre-recession levels of early 2008, international passenger traffic has expanded by 12 percent. Had the industry continued to grow at the pre-recession pace of 8 percent, international markets would have been about 14 percent higher than today’s levels and a quarter higher than pre-recession level. This confirms that the global financial crisis has cost airlines about two full years of growth, IATA said.

Load factors for the total market (domestic + international) have improved by half a percentage point over July 2010 to 83.1 percent. This is equal to the highs recorded in Q3 2010. North American carriers (86.9 percent) and European carriers (84.1 percent) were in the lead. Latin American carriers saw the biggest improvement (from 76.5 percent last July to 79.6 percent this year).

Demand for international air travel in July was 7.3 percent above the previous year’s level and considerably stronger than the 6.0 percent growth recorded in June. This boosted the international load factor to an impressive 83.1 percent. The increase goes beyond the seasonal fluctuation which normally produces a July spike owing to the Northern hemisphere vacation season, IATA reports.

North American carriers saw a 3.9 percent increase in demand exceeded by a 4.4 percent increase in capacity. Nonetheless, the region’s carriers produced the highest load factor at 86.8 percent. The disappointing economic outlook continues to dampen demand, IATA said.
With very little growth since the end of Q3 2010, domestic demand has been much more sluggish than that for international travel, IATA says. US domestic markets, which represent 50 percent of the world’s market, grew 2.1 percent compared to July 2010.

China, with the second biggest domestic market (18% of the world), slowed abruptly to just a 5.1 percent increase in July. This accelerated the trend of slowing domestic traffic growth that began in the second half of 2010. After growing at around 20 percent in the first half of 2010, China finished the year with a 14.6 percent annual increase that has now slipped to single digits. 

"July is the peak in the annual cycle for passenger traffic. This year was no exception. But even if the industry’s performance could be classified as stronger than expected, we do face headwinds as we look towards the end of the year. Some of our challenges have a high percentage of government-made content. The recent downsizing of Air Berlin is a clear reminder of the high cost of the German departure tax on the economy, jobs and communities. Governments should not compromise aviation’s role as an economic catalyst for the short-term revenue gain of gratuitous taxation—particularly when economies remain weak,” said Tyler.

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