Slowing Passenger Growth Trend, Cargo Markets Remain Weak
By Pritha Dey
The International Air Transport Association (IATA) announced global traffic results for June showing a continued slowing of growth in the demand for air transport. This is in line with weakness in business and consumer confidence.
Year-on-year, demand for air travel in June expanded by 6.2 percent. Capacity grew by a much more cautious 4.5 percent leaving load factors at 81 percent. While this appears to be a healthy growth rate, the growth trend since early 2012 has seen a slowdown. This is illustrated by isolating the February through June trend which shows 2 percent annualized growth. That is a major slowdown from the 8 percent annualized growth rate experienced from mid-2011 through to January 2012.
June air freight volumes recorded a 0.8 percent increase compared to the previous year. This brings seasonally adjusted June demand about 2.5 percent above the low reached in the fourth quarter of 2011. The global picture masks strong growth for Middle East airlines (17.9 percent) and the improvement in North American air freight demand.
“The uncertainty that we see in the global economic situation is being reflected in air transport’s performance. Although there are some pockets of solid performance, it is difficult to detect a strong trend—positive or negative—at the global level. Passenger markets have been growing more slowly since the beginning of the year and freight markets gains have been mostly very weak. The net effect is a demand limbo as consumers and businesses hedge their spending while awaiting clarity on the European economic front,” said Tony Tyler, IATA’s Director General and CEO.
Freight (International and Domestic)
While air freight performance remains soft it is nonetheless an improvement on the weak market conditions of a year ago. Compared to June 2011, freight demand has grown by 0.8 percent, behind a capacity expansion of 1.7 percent. The current level of demand shows an improvement of about 2.5 percent on the market lows reached in the fourth quarter of 2011.
- North American carriers saw demand grow 1.8 percent compared to the previous June, while capacity shrank by 1 percent. An improvement in economic conditions and particularly consumer demand in the US has helped support the increase in air freight demand in that region throughout 2012. Middle East carriers recorded a 17.9 percent increase in demand against a 14.2 percent increase in capacity. Middle Eastern airlines have been adding capacity to meet the need for moving goods between the Middle East and Africa and also toward Europe and Asia. African airlines were also in positive territory with a 15.9 percent increase in demand against a 12.1 percent increase in capacity.
- Asia-Pacific airlines reported a 3 percent decline in demand ahead of a 1.3 percent trimming of capacity. The slowdown in major Asian economies – China and India – has put a dampener on air freight demand for the airlines in Asia-Pacific. Continued economic woes and waning consumer confidence in Europe has seen air freight in the region decline by 1.1 percent compared to June 2011, even as capacity grew by 1.8 percent. Latin American airlines recorded a 1.4 percent decline in demand while capacity grew by 12.5 percent.