IATA: Passenger Growth Slows in August - Fuel Prices Begin to Dampen Demand

(Geneva) - The International Air Transport Association (IATA) announced that international passenger grew 8.3% and international freight traffic 3.6% in the first eight months of the year. However, year-on-year comparisons for August showed slower growth than for the previous seven months for international passenger and cargo traffic at 6.1% and 2.8% respectively.

“The story for August was weaker growth for passenger and a continuation of subdued growth for cargo traffic. While July recorded 8.5% growth in passenger traffic, August saw that drop to 6.1%. While we have tracked a softening cargo market since the beginning of the year, this is the first indication of a slower demand for passenger services. It appears that consumer confidence is being damaged by the rise in oil and gasoline prices,” said Giovanni Bisignani, IATA Director General and CEO.

Load factors remained high for August at 78.9% (0.6 percentage points higher than August 2004) with an eight-month average of 75.4%. The slowing in passenger demand in August impacted carriers in all regions except Africa. North American and European carriers saw negative growth for freight volumes, while Middle Eastern carriers continued with robust 15.6% month-on-month growth compared with August 2004. The strong performance of Middle Eastern carriers is largely due to regional trade induced by the strength of oil revenues.

Airlines are struggling to deal with a ballooning fuel bill that is expected to reach US$97 billion—more than double the US$44 billion in 2003. Efficiency gains, high load factors and fuel surcharges are helping mitigate a portion of the impact of the extraordinary price of fuel. “While many carriers have been more successful at imposing fuel surcharges, we may be nearing the limit and seeing a trade-off with demand,” said Bisignani.

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