ME records fall in passenger traffic

The Middle East airlines recorded a 9.6 per cent drop in passenger traffic in June 2008 compared to a 12.8 per cent drop regional airlines witnessed in their traffic in May this year, according to International Air Transport Association, or IATA.

However, Middle Eastern carriers delivered the strongest performance in freight growth in June with 12.1 per cent growth (up slightly from the 10.7 per cent growth recorded in May).

Latin American carriers, on the other hand, turned in the strongest performance with 12.5 per cent growth.

According to IATA, strong commodity-driven economic growth in Latin America is the driving force behind this performance.

The Geneva-based airline trade body also released the data for June that revealed international air freight traffic volume fell for the first time, to 0.8 per cent, in more than three years in June, hit by the global economic downturn. "This is the first decline seen since May 2005 and follows several months of falling manufacturing sector confidence indicators," IATA said.

"The global economic turbulence clearly shows in the 0.8 per cent drop in freight volumes compared to last year. Although the passenger demand grew by 3.8 per cent, this is the slowest growth that we have seen since the industry was hit by the Sars crisis in 2003," said Giovanni Bisignani, Director General and Chief Executive Officer of IATA. "With consumer and business confidence falling and sky-high oil prices, the situation will get a lot worse," he added.

Passenger demand growth, meanwhile, fell to its lowest level since 2003, to 3.8 per cent. Passenger load factors, too, dropped to 77.6 per cent, 1.2 percentage points below the 77.8 per cent recorded for June 2007.

"The airline sector is in trouble. Losses this year could reach $6.1 billion, (Dh22.3bn) more than wiping out the $5.6bn that airlines made in 2007.

"Falling demand and rising costs are re-shaping the industry," said Bisignani.

"To survive the crisis, urgent action is needed. Airports and air navigation service providers must come to the table with efficiencies that deliver cost savings.

"Labour must understand that efficiency is the only path to job security. And governments must stop crazy taxation and give airlines the freedom to merge and consolidate where it makes business sense," he added. In the year-to-date, while global passenger traffic has recorded a 5.4 per cent growth, freight traffic is up 2.4 per cent, according to IATA, compared to the first six months of 2007.

The numbers

12.1%: Freight growth recorded by Middle Eastern carriers in June, which was up from 10.7% witnessed in May

$6.1bn: Loss expected by the airline sector this year, says IATA