Passenger Traffic Hits Speed Bump in June

Air Cargo Basically Flat

• Brazil led domestic growth with a 15.1% demand expansion over the previous year, propelled by strong growth in household incomes. Brazil was followed by India at 14.0%. While China’s 5.0% growth is also impressive, it is a step change from the 14.6% recorded in 2010 and the 10.4% recorded in May. China, the world’s second largest domestic market, still has enormous potential. As with China’s international markets, the slowdown reflects a squeeze on consumer spending power by tighter economic policies.

• The US, which represents more than 50% of domestic travel, posted 1.3% growth in June. Freight (Domestic + International)

• Asia Pacific carriers, the biggest players in the air freight market with a 40.5% market share, also recorded the largest year-on-year decline (-5.8%). This is mainly attributable to (1) disrupted supply chains for the electronics and auto industries in the wake of the Japanese tsunami and earthquake and (2) slower economic growth in China. The strength of the region however is shown in the maintenance of the highest load factors (58.6%) well ahead of the 45.7% industry average for the month.

• European carriers posted a 1.3% decline and North American

carriers recorded a decline of 3.0% compared to June 2010 levels. • Carriers in the Middle East, Latin America and Africa showed year-on-year growth for June, recording demand increases of 3.7%, 2.8% and 0.3% respectively. The Bottom Line

“The industry is living in several different realities. With high load factors and an upward growth trend, the passenger business is doing better than cargo. But regional growth patterns are shifting. The Middle East carriers have moderated to a single digit expansion and tighter economic conditions have slowed China’s growth. Meanwhile, Latin America is leading the industry expansion followed by Europe which is growing strongly despite its currency crisis. And North America is underperforming the industry on growth but leading on load factors,” said Tyler.

“What is clear is that the rising jet fuel price is putting pressure on the bottom line. The average price for the second quarter was $133/barrel which is an increase of $10 over the first quarter. With an expected profit margin of only 0.7%, the ability of airlines to recoup this cost is critical to staying in the black for the year. Slower economic growth makes these challenges all the more difficult. It is certainly not the time to burden the industry with increases in other costs, including taxation,” said Tyler.

IATA is forecasting an industry profit of $4 billion for 2011 which is a 78% fall from the $18 billion that the airlines made in 2010. On anticipated revenues of $598 billion, this translates to a net industry margin of 0.7%. Based on a forecast average oil price of $110/barrel for 2011 and a jet fuel price of $126.5/barrel, the industry fuel bill is expected to be $176 billion which accounts for 30% of costs.

View June traffic results - IATA - For more information, please contact: Corporate Communications Tel: +41 22 770 2967 Email: Notes for Editors:

• IATA (International Air Transport Association) represents some 230 airlines comprising 93% of scheduled international air traffic.

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• Domestic Markets: Domestic RPKs account for about 40% of the total market. It is most important for North American Airlines as it is about 67% of their operations. In Latin America, domestic travel accounts for 47% of operations, primarily due to the large Brazilian market. For Asia-Pacific carriers, the large markets in India, China and Japan mean that domestic travel accounts for 41% of the region’s operations. It is less important for Europe and most of Africa where domestic travel represents just over 10% of operations. And it is negligible Middle Eastern carriers for whom domestic travel represents just 5% of operations.

• Explanation of measurement terms: o RPK: Revenue Passenger Kilometers measures actual passenger traffic o ASK: Available Seat Kilometers measures available passenger capacity o PLF: Passenger Load Factor is % of ASKs used. In comparison of 2011 to 2010, PLF indicates point differential between the periods compared o FTK: Freight Tonne Kilometers measures actual freight traffic o AFTK: Available Freight Tonne Kilometers measures available total freight capacity o FLF: Freight Load Factor is % of AFTKs used

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