Demand Grows in May

IATA: Good news on volumes, but risks remain

• In China, demand was 10.4% higher than the previous May. A capacity expansion of just 3.3% resulted in load factors of 81.5%. While this is still robust growth, it is a major ramping down from the 14.6% recorded in 2010— reflecting tighter economic policies.

• India domestic demand was 13.8% above previous-year levels against a capacity expansion 19.9%. The load factor of 78.3% is consistent with the global average of 79.4%.

• The mature United States domestic demand grew by 4.0% compared to the previous May. Against a 1.5% increase in capacity, load factors were pushed to 84.6%--the highest among domestic markets surveyed. Freight (Domestic + International)

Air freight markets showed a 4.0% decline in May. This is skewed as a result of the May 2010 peak for of the post-recession restocking cycle. Since the beginning of the year, freight volumes have increased by a modest 2.0%. This is lower than the 5.5% IATA forecast for 2011.

While the continued expansion of world trade at around 6% annually could lend support to accelerated freight growth in the second half of 2011, the performance so far this year has been lower than expected. Carriers in all regions except Latin America (up 1.5%) and the Middle East (+8.1%) saw air freight declines compared to May 2010. The largest fall was for Asia-Pacific carriers with a 9.2% drop showing the impact of disrupted supply chains in Japan and tighter economic policies in China. Declines by African carriers (down 7.8%) reflected the disruption in Egypt and Tunisia. European and North American carriers had modest falls of 2.2% and 1.4% respectively.

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