Middle East carriers recorded demand increase by 12.3 per cent in August 2010 over the corresponding period in 2009, according airline industry association International Air Transport Association (IATA).
However, this is down from the 16.5 per cent recorded for July. The shifting of Ramadan into August is partially responsible for the slowdown. It was the only region in which capacity expansion of 13 per cent outstripped demand.
Globally, international scheduled traffic results for August indicated year-on-year increases of a 6.4 per cent for passenger and 19.6 per cent for cargo. Global passenger traffic in August was 2 per cent above pre-recession levels of early 2008.
August demand is down from the 9.5 per cent (revised) increase recorded for passenger and 23 per cent growth in cargo recorded in July.
The August 2010 data is partially distorted by the comparison to 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 per cent and cargo by 0.8 per cent compared to July.
“The rapid improvements in demand that we saw earlier this year are behind us. The slowdown 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 per cent while capacity has risen by 6 per cent. Passenger load factors remain high (81.6 per cent ), but when adjusted for seasonal fluctuation this amounts to a drop of 1.5 percentage points compared to the February 2010 peak.
Freight capacity is matching demand trends which are stabilizing. Since December 2009, the freight volume expansion of 9.2 per cent has been matched by capacity expansion. After a rapid improvement throughout 2009, freight load factors have leveled off at 51 per cent.
Asia-Pacific carriers recorded a demand increase of 6.2 per cent. While this is still a comparatively strong performance, the region’s airlines carried a similar seasonally adjusted volume of traffic in August as they did in January indicating a leveling off of the strong gains recorded throughout 2009.
European carriers recorded a 5 per cent growth in demand for August when compared to the previous year. Most of the growth that is supporting August’s 5 per cent year-on-year expansion has come during 2010. Demand improvements are being supported by inbound traffic on the back of the weak Euro. Business travel has also been given a boost by a revival in exports.
Global international cargo traffic in August was 3 per cent above the pre-recession levels of early 2008.
During the first quarter, air freight grew at an annualized rate of 25 per cent. The first two months of the third quarter recorded annualized growth of 12 per cent. With the restocking phase of the inventory cycle now complete growth rates are shifting back towards trend growth in world trade of around 6 per cent. Freight markets are still growing but at a significantly slower pace, said the report.
The patterns of recovery are shifting. Freight volumes carried by Asian carriers have increased by 3.8 per cent since January while European and North American carriers have seen a 6-8 per cent expansion over the same period. Several drivers are contributing to this shift. Weaker currencies in the US and Europe are supporting export growth and improving the competitiveness of US and European carriers.
Another contributor may be the fall in import activity in Europe and the US dampening the demand for finished goods manufactured in Asia.
Asian carriers are the largest participants in global cargo markets with a market share of 44 per cent.
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.