Demand decline slows but no recovery in sight: IATA

The International Air Transport Association (IATA) released international traffic data for April showing a 3.1% decline in passenger demand and a 21.7% fall in cargo demand compared to April 2008. The average passenger load factor was 74.4%.

Yet in the Middle East, capacity is still outgrowing demand, with a capacity expansion of 12.3% and a demand growth of 11.2% with passenger load factors of 73.8%. For cargo Middle Eastern carriers were the strongest performers with an 11.1% drop.

Year-on-year performance so far shows a 4.9% increase in passengers carried with an overall 11% capacity rise for the Middle East and a load factor of 70.9%. Middle Eastern cargo has dropped 7.5% compared to last year’s YTD and cargo capacity has grown 7.1%

While April’s worldwide 3.1% passenger demand drop was a clear improvement compared to the -11.1% fall in March, this improvement should be viewed with caution the association said. It cited Easter holidays, which fell in the month of April, as a factor that skews the data by at least 2%. Traffic gains were at the expense of yields in most regions. And preliminary data for May suggests a renewed double digit decline, at least for European airlines.

Freight demand appears to have found a solid floor with a fifth consecutive month at more than 20% below previous year levels.

“We are not out of the woods yet,” said Giovanni Bisignani, IATA’s Director General and CEO. “The demand improvements that we saw in April are welcome. But the 3.1% decline in passenger demand still outstripped the 2.5% cutback in capacity. There is no improvement in revenues as yields continue to fall. And freight remains at shockingly low levels. The worst may be over. However, we have not yet seen any signs that recovery is imminent.

“With each day of the recession, the challenges for the air transport industry are mounting. Flexibility has never been more important. But there is not enough of it. Airlines remain constrained by old rules that restrict basic commercial freedoms such as access to markets and capital. Much of the cost base remains out of our control - from volatile fuel prices to monopoly infrastructure charges. And many governments simply don’t understand the need for urgent change. We need a change in mindset. To manage through this ongoing crisis, every player in the air transport value chain must be prepared to drive change,” said Bisignani.