Air Travel Rebounded in May Above Pre-Recession Levels

Posted: 29 June 2010 | IATA (International Air Transport Association) | No comments yet

IATA announced international scheduled traffic statistics for May which showed an 11.7% increase in passenger traffic and a 34.3% jump in freight demand compared to May 2009…

The International Air Transport Association (IATA) announced international scheduled traffic statistics for May which showed an 11.7% increase in passenger traffic and a 34.3% jump in freight demand compared to May 2009.

“Demand rebounded strongly in May following the impact of the European volcanic ash fiasco in April. Passenger traffic is now 1% above pre-recession levels, while the freight market is 6% bigger,” said Giovanni Bisignani, IATA’s Director General and CEO.

A capacity increase of 4.8% in May lagged behind the strong upturn in passenger demand. This pushed May’s international passenger load factor to 76% (78.7% when adjusted for seasonality). This is the sixth consecutive month with seasonally adjusted load factors near 79%. Matching capacity to demand will become increasingly challenging in the coming months. Aircraft utilization remains 5% below pre-recession levels for single-aisle aircraft and 8% for longer-range twin-aisle aircraft. The 100 aircraft taken out of storage during May and 93 the new aircraft delivered globally add further capacity pressure.

Similarly, the strong surge in cargo traffic outstripped a capacity increase of 12.3%, pushing load factors to a record high of 55.7% (56.3% when adjusted for seasonality).

International Scheduled Passenger Demand

  • European airlines recorded an 8.3% growth compared to May 2009 however this still puts Europe as the region with the weakest growth. Weak economic growth, questions over financial stability and sharply tightening fiscal policies will likely result in continued slower demand growth than is experienced in other parts of the world.
  • Asia-Pacific carriers recorded a 13.2% increase in demand in May 2010 over the same month in 2009. Asia-Pacific carriers continue to drive the recovery based on robust economic growth, primarily in China.
  • North American carriers saw a 10.9% increase in May over the same month last year. Careful matching of capacity to demand has driven the load factor to 82.4%, the highest among all regions.
  • Latin American carriers recorded the fastest growth in demand at 23.6% in May, supported by the region’s strong economic upturn.
  • Middle Eastern carriers recorded a 17.5% growth in May. The region’s carriers continue to post strong growth with connecting traffic through their hubs, although the pace of growth has dropped from the over 20% increases recorded earlier in the year.
  • African carriers reported a demand increase of 16.9% in May as the region’s carriers benefit from growing economies and more success in maintaining market share. At the same time, the region’s load factor was the weakest at 66.5%.

International Scheduled Freight Demand

  • Air freight growth surged in May to 34.3% (significantly up from the 26.0% recorded in April).
  • Latin American and African carriers recorded the fastest increases at 60.2% and 58.2% respectively.
  • Asia-Pacific airlines, which represent the largest market share (45%) grew by 38.7% compared to the previous May on the strength of resurgent regional manufacturing. North American and Middle East airlines posted a similar growth of 35.3% and 38.6% respectively.
  • European carriers showed the weakest growth at 21.9%. It is anticipated that the 15% fall in the value of the Euro will stimulate outbound traffic with cheaper European exports.

Strong traffic growth is contributing to a strengthening industry bottom line. Airlines are expected to post a $2.5 billion profit in 2010 in a dramatic turnaround from the $9.9 billion lost in 2009. “This is good news, but it is only a 0.5% margin. We are still a long way from sustainable profitability,” said Bisignani.

“In the short-term, airlines need to focus our efforts on nurturing the recovery by continuing to match capacity carefully to improving demand conditions. And everybody must control costs. This includes airports, air navigation service providers, global distribution systems and labor. There are no exceptions,” said Bisignani.

“Two months ago, the Icelandic volcano made it clear that aviation is vital to the global economy. When the volcano went to sleep, politicians developed amnesia to the lessons-learned. Germany proposed a EUR 1 billion departure tax that will dampen demand instead of stimulating growth. The new UK government is talking about a future without domestic aviation and no capacity growth, without any analysis of the devastation that this would bring to the UK’s economy. And the much anticipated accelerated progress on the EUR 5 billion savings of the Single European Sky has been truncated at incremental change. The traveling public and Europe’s struggling economy deserves much better than this short-sighted policy myopia,” said Bisignani.

At its recent Annual General Meeting, IATA announced Vision 2050. This is an initiative to build a common vision among industry stakeholders for a sustainable future for air transport. Announcing the vision, Bisignani pointed to four cornerstones of change: a new and sustainable energy source, a regulatory regime that allows airlines to operate as normal businesses, cost-efficient infrastructure that meets the needs of users, and services that exceed customer expectations.

View full May traffic results

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