Iata reports slower growth in August

IATA has announced that international scheduled traffic results for August indicated a year-on-year increase of 6,4% for passenger travel.

August demand is down from the 9,5% (revised) increase for passenger travel recorded in July. The August 2010 data is partially distorted by the comparison with August 2009, by which time markets were already expanding rapidly in a post-recession rebound. When adjusted for seasonality, traffic volumes for passenger traffic fell by 1,0% compared with July.

“The rapid improvements in demand that we saw earlier this year are behind us. The slow down of demand in August is consistent with our forecast for a tougher end to 2010 as government stimulus monies run out without having generated significant improvements in employment. The bounce from re-stocking is over. We do not yet see the strong consumer confidence needed to sustain the expansion with spending,” said Giovanni Bisignani, Iata’s director general and ceo.

Capacity increases in passenger markets are accelerating. Since December 2009, air travel volumes have expanded by 4,3% while capacity has risen by 6%. Passenger load factors remain high (81,6%) but when adjusted for seasonal fluctuation this amounts to a drop of 1,5 percentage points compared with the February 2010 peak.
Global passenger traffic in August was 2% above pre-recession levels of early 2008. Africa’s carriers recorded growth of 10,8% slightly ahead of a capacity expansion of 9,0%. Economies in this region are still delivering robust growth. This is helping to generate further growth in business travel in the region, which is supporting the growth of African airlines’ passenger business.

Slower growth is consistent with Iata’s recently revised global industry outlook. The industry is expected to post a profit of $8,9 billion (up from the June forecast of $2,5 billion) based on an exceptionally strong first half of the year. The slower demand growth in the second half is expected to continue into 2011. But with capacity increasing faster than demand, yields are not expected to grow. With a much tougher revenue environment, expectations are for a significantly reduced profit of $5,3 billion in 2011.

“On $560 billion in industry revenue, our margins are just 1,6%. Having a bigger black number on the bottom line is good. But we must also be realistic in understanding that the profitability is fragile. And the August results are a reminder that as we move into 2011 we are expecting a more challenging revenue environment,” said Bisignani.