Sharply Lower January Air Passenger Traffic Could Signal Start Of Slowdown

[Naim 6]

Sounds really ominous.

 

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February 27, 2008 09:59 AM

 

IATA: Sharply Lower January Air Passenger Traffic Could Signal Start Of Slowdown

 

KUALA LUMPUR, Feb 27 (Bernama) -- A sharply lower growth of 4.3 percent in year-on-year international passenger demand in January could signal the start of a slowdown due to the fallout from the U.S. credit crunch crisis plus fears of a recession.

 

Releasing international traffic data for January, the Geneva-based International Air Transport Association (IATA), said this was sharply down from the 6.7 percent growth recorded in December and 7.4 percent chalked up for the full-year of 2007.

 

"January's traffic results show that we could be at a turning point," said Giovanni Bisignani, IATAs Director General and chief executive officer.

 

He said in a statement released from Hong Kong that although months data is not enough to define a trend, the sharp shift in demand growth patterns makes it clear that the U.S. credit crunch is negatively impacting air travel.

 

"Fasten your seatbelts. There is likely to be turbulence ahead," said Bisignani.

 

"This is an unusual situation for the industry. Asia outside of Japan is looking strong, even as the U.S. economy weakens. This highlights the need for the air transport industry to globalise,” he said.

 

He said the outdated bilateral system and national ownership rules will prevent the industry from responding as a normal business to economic shifts.

 

"Airlines cannot diversify risk, so the parts of the industry will see the impact of the U.S. credit crunch with very little buffer. This must change," said Bisignani.

 

IATA also said that capacity growth of 4.2 percent saw load factors inch up to 75.1 percent.

 

International cargo demand growth remained sluggish. At 4.5 percent for January, it was largely unchanged from the 4.7 percent year-on-year growth in December, it said.

 

European carriers saw the largest fall in growth, at 0.3 percent from 5.5 percent in December), IATA said, adding it was the weakest growth of all regions.

 

While intra-Europe traffic remained relatively strong, the largest drop came in long-haul markets, largely due the strong euro weakening the competitiveness of Europe airlines.

 

North American carriers recorded five percent growth in international passenger traffic, down slightly from the 6.0 percent in December.

 

U.S. domestic traffic contracted by 3-4 percent as carriers re-deployed capacity to more lucrative international routes.

 

Increased competitiveness from a weak U.S. dollar helped drive load factors to an industry leading 77.2 percent.

 

Asia Pacific carriers saw a marginal drop in demand growth to 5.7 percent in January against 6.2 percent in December.

 

Despite the weak Japanese economy, carriers in the region benefited from increased competitiveness due to the strong Euro and the booming economies of both India and China.

 

Latin American airlines continue to see a sharp recovery of 16.9 percent growth in January on the back of strong economies, driven partly by Asian commodity demand, and continued restructuring.

 

Middle Eastern growth slowed sharply to 7.4 percent but this seems due to slower growth in capacity rather than any change in the strong oil-driven upward trend in growth.

 

African airlines saw a second disappointingly slow month of growth (2.8%), despite good regional economic growth.

 

As for cargo, IATA said steady year-on-year air freight growth of 4.5 percent was recorded in January.

 

This runs contrary to downward trends in many leading indicators including semi-conductor shipments and manufacturing business confidence levels.

 

Air cargo has been growing at half the rate of global trade expansion, indicating a loss of market share to shipping which has benefited from faster ships and cheaper fuel costs.

 

While aviation fuel rose 300 percent between 2002 and the first half of 2007, residual fuel for ships increased by 200 percent.

 

During the last half of 2007 the gap narrowed with the sharp increase in prices.

 

The result is that air cargo has clawed back some lost market share, masking any early impacts from the downturn in the U.S. economy.

 

In the larger freight markets there is continued strength.

 

Asia Pacific airlines saw demand increase 6.5 percent, up from 6 percent in December, boosted by the booming economies in China and India.

 

European airlines saw freight slump to 0.4 percent in a pattern very similar to passenger traffic.

 

Most of the air freight is carried on long-haul markets where business for the European airlines has suffered from the strong euro.

 

-- BERNAMA

 

http://www.bernama.com.my/bernama/v3/news_lite.php?id=316745