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Aviation Sector Recovery Loses Momentum

by Ulrika Lomas,, Brussels

14 August 2012

The International Air Transport Association has published new traffic figures providing evidence that the strong recovery experienced in late 2011 and early 2012 has dwindled.

While the statistics show that demand for air travel has expanded by 6.2% year-on-year, and capacity and load factors have increased by 4.5% and to 81%, respectively, recently the rate of growth has declined. Isolating the February through June trend shows that growth has slowed to 2%, markedly lower than the 8% annualized growth rate recorded from mid-2011 through to January 2012.

Meanwhile, June air freight volumes recorded a 0.8% increase compared to the previous year. This brings seasonally-adjusted June demand about 2.5% above the low reached in the fourth quarter of 2011. The global picture masks strong growth for Middle East airlines (17.9%) 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.

June demand in international passenger markets was up 7.4% on the previous year. The growth trend, however, shows little promise, IATA says. While passenger markets experienced strong growth through to the end of 2011, this has slowed continuously in 2012. For example, from May to June 2012 demand was up just 0.2%. When looked at over the second quarter of 2012, the trend in international air travel has been an annualized growth rate of just over 2%.

European airlines experienced strong growth in June (7.3%), well ahead of the May result (4.3%). The previous few months had seen the growth trend flatten out, after a solid 6% annualized growth rate from mid-2011 through the first quarter of 2012. Capacity was up 4.9% and load factors stood at 82.5%.

North American airlines saw 1.6% growth in demand while capacity was cut by 0.3% compared to the previous June. This pushed the load factor to 86.9% which was the highest among the regions. Compared to May there was basically no growth with the region’s airlines reporting a 0.1% decline in demand.

Asia-Pacific carriers reported a 6% growth in demand which was more than double the 2.9% expansion in capacity for June, when compared to the same month in 2011. The load factor for the region’s carriers stood at 79.5%. Month-to-month, the demand in the region was basically flat at -0.1%. The growth trend for the region is similar to that of the overall market. From mid-2011 to the start of 2012, Asia-Pacific carriers experienced a 9.5% annualized growth in demand. That has slowed to 2% for the February to June period.

Middle East carriers were the strongest performers with demand growth of 18.2% outstripping a capacity expansion of 13.4%. Load factors stood at 78.6%. In contrast to the overall market, the growth trend in this region has been robust throughout 2012, gaining a further 1.9% in June compared to May.

Latin American airlines also performed well in June, recording an 11.2% gain in demand compared to the previous year. Demand growth slightly outpaced a capacity expansion of 10.7%, but load factors were among the weakest at 77.4%.

African carriers showed growth of 10.1%, slightly behind a capacity expansion of 10.6%. At 65.0%, the region’s load factor was the weakest.

TAGS: aviation

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