Airline growth slows but Middle East still shining in IATA figures

The International Air Transport Association (IATA) announced traffic results for September showing diverging trends for cargo and passenger traffic. Passenger traffic was 5.6% higher than the same month last year and stronger than the 4.6% year-on-year growth recorded in August.

Air freight on the other hand posted a 2.7% contraction for September compared to September 2010. This is a further deterioration from the 2.4% decline recorded in August.

Traffic carried by Middle East carriers rose by 9.1%, ahead of a capacity increase of 8.5%--a step change from the 15% capacity increases seen in recent years.

African carriers experienced a 5.0% increase in demand, closely matching the 5.2% increase in capacity.

“September’s strength in passenger demand was a pleasant surprise. Freight demand contracted for a fifth consecutive month and this trend is in line with falling business and consumer confidence. We are still expecting a general weakening in passenger traffic as we head towards the year-end,” said Tony Tyler, IATA’s Director General and CEO.

Despite stronger than expected growth in passenger markets during September, the industry is bracing for more difficult times ahead. IATA’s recent Airline Business Confidence survey reported a significant decline in profitability expectations over the next 12 months. More worrying is the expectation that unit costs will increase with little optimism for yields. The majority expected no change in passenger yields while 90% of respondents were split equally among those expecting cargo yields to remain the same or decline. IATA is expecting profitability to decline from $6.9 billion in 2011 to $4.9 billion in 2012 for a margin of just 0.8%.

“Airlines play a key role in connecting global business. At this time of economic uncertainty in many parts of the world, US plans to raise an additional $36 billion in aviation taxes over the next decade could not be more misguided.

“Last month the UK recognized the harm that its GBP2.5 billion Air Passenger Duty was doing in Northern Ireland and announced a major cut. It’s time to apply that lesson at a more global level. Increasing the cost of doing business by making air transport more expensive destroys competitiveness. “Governments should protect the 33 million jobs and $3.5 trillion in economic activity supported by aviation with a sound policy framework—not by suffocating the industry with taxes,” said Tyler

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