Passenger Traffic Hits Speed Bump in June

Air Cargo Basically Flat

The International Air Transport Association (IATA) announced traffic results for June which showed a slight softening in demand for both air travel and freight markets. Compared to June 2010, passenger demand was up 4.4% while freight demand was 3% lower. The trend for passenger travel remains upwards, but at a slower pace than the post recession rebound which was at an annual rate close to 10%. The slowdown reflects slower economic growth and increased costs resulting from higher jet fuel prices, and increased taxation (in some countries).

Freight volumes have not grown since July-August 2010. May 2010 was the post-recession re-stocking peak, compared to which the June 2011 international freight market was 6% smaller. While world trade is expanding at 7% a year, the benefit is being realized more by modes of transport other than air.

“Compared to May both passenger and cargo markets contracted by about 1%. For passenger traffic, this is a speed-bump in a gradual post recession improvement. But air cargo continues in the doldrums at 6% below the post-recession peak,” said Tony Tyler, IATA’s Director

General and CEO. June 2011 vs. June 2010 RPK Growth ASK Growth PLF FTK Growth AFT Growth International 5.9% 7.2% 79.0 -3.0% 3.0% Domestic 1.9% 1.5% 80.5 -3.0% -1.9% Total Market 4.4% 5.1% 79.5 -3.0% 1.9% YTD 2011 vs. YTD 2010 RPK Growth ASK Growth PLF FTK Growth AFTK Growth International 8.0% 9.7% 75.9 1.7% 7.6% Domestic 4.0% 2.7% 78.1 -2.2% 0.3% Total Market 6.5% 7.1% 76.7 1.2% 5.9%

International Passenger Markets by Region

• Overall demand for international passenger services grew by 5.9% and capacity expanded by 7.2%. While load factors were maintained at an impressive 79.0%, this is 0.9 percentage points below the June 2010 performance.

• Latin American carriers experienced the highest growth levels with a 14.3% increase over June 2010. Disruptions following Chile’s Puyehue Volcano eruption contributed to a drop from the 21.3% increase recorded in May. Load factors for the region rose to 77.3% (from 73.8% in June 2010) which will help the region’s carriers deal with higher fuel costs.

• European carriers are showing the second most robust expansion of demand with 8.9% growth compared to June 2010. The weak euro is supporting a strong inbound travel trend and business travel associated with growing exports. Load factors for the region stood at 80.6%, the second highest among regions.

• Middle East carriers recorded a 6.4% increase in demand against a capacity increase of 8.4% for a load factor of 74.8%. For the second consecutive month both demand and capacity increases by Middle East carriers have fallen behind those of Europe and Latin America.

• North American carriers saw May’s 4.5% demand growth fall to 2.4%. With tight capacity discipline, airlines there delivered a load factor of 85.3%--the highest among the regions.

• Asia Pacific carriers saw demand grow by 3.3%. Demand growth was held at about half the global average due to tightening economic policies and the effects of the earthquake and tsunami in Japan. The weakness in Japan’s international market has knocked 0.5% percentage points off the region’s growth. Asia Pacific carriers recorded a load factor of 76.9% which is 2.1 percentage points below the global average.

• African carriers continue to experience the weakest demand with a 2.9% fall compared to June 2010 levels. The continued political unrest in North Africa is the primary driver of the poor performance which is also reflected in load factors which stood at 64.7%, which is 3.9 percentage points below the previous year’s levels. Domestic Markets • Demand in the Japanese domestic market continues to suffer from the effects of March’s tsunami and earthquake, recording a 24.6% fall compared to the previous year’s performance. This is a slow improvement on the -27.8% recorded for May.

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