The following was released by the International Air Transport Association:
WASHINGTON, June 25, 2009 – The International Air Transport Association (IATA) announced international scheduled traffic results for May showing passenger demand declining 9.3 percent compared to the same month in previous year while freight demand was down by 17.4 percent. International passenger load factors stood at 71.2 percent, down from 74.5 percent recorded in May 2008.
The 17.4 percent decline in international cargo demand is a relative improvement compared to the 21.7 percent drop in April. Since December 2008, cargo demand has been moving sideways in the -20 percent range. This is one of the first physical signs of the economic recovery being anticipated in equity markets.
International passenger demand weakened from the -3.1 percent recorded in April to -9.3 percent in May. But both of the past two months have been slightly stronger than the 11.1 percent decline reached in March, even after adjusting for the distortions caused by the timing of Easter. This indicates that a floor may now have been reached. However, the capacity adjustment of -5.0 percent in May did not keep pace with the fall in demand during the same month. Moreover, although the impact of the recession appears to be stabilizing, strong headwinds from debt and low asset prices are expected to weaken and delay any significant recovery.
“We may have hit bottom, but we are a long way from recovery,” said Giovanni Bisignani, IATA’s Director General and CEO. “Capacity is not aligned with demand. Passenger load factors dropped 3.3 percentage points over the last 12 months. The impact on revenue is dramatic. After a 20 percent fall in international passenger revenue in the first quarter, we estimate that the drop accelerated to as much as -30 percent in May. This crisis is the worst we have ever seen,” said Bisignani.
International Passenger Demand
· May was the first full month to feel the impact of the Influenza A(H1N1) on travel. Mexican carriers saw their traffic fall almost 40 percent in May. Latin American carriers saw their traffic decline by 9.2 percent in May compared to the previous year. Against a capacity increase of 0.2 percent, the load factor plummeted to 64.7 percent. That is a 6.7 percentage point drop compared to May 2008 and the lowest load factor among all the regions. We estimate that the global impact of Influenza A(H1N1) on global travel patterns in May was a 1 percent drop in passenger traffic.
· Asia Pacific carriers recorded a 14.3 percent fall in demand. While capacity adjustments by the region’s carriers were the most severe (-9.3 percent), they did not keep pace with the fall in demand driven by weak economies and the impact of Influenza A(H1N1) on the region with the most vivid memories of the SARS crisis.
· North American carriers posted a 10.9 percent fall in passenger demand, considerably worse than the 4.2 percent fall in April. This was the result of weak demand to Latin American destinations affected by Influenza A(H1N1) along with significant recession-driven drops in both trans-Atlantic and trans-Pacific markets.
· European carriers, in additional to weak long-haul markets, saw some loss of market share to European low cost carriers whose traffic grew by 2.1 percent, while the network carriers reported a 9.4 percent decline.
· African carriers saw a slight improvement of a 6 percent fall in demand in May, compared to a 7.1 percent decline in April.
· Middle Eastern carriers bucked the declining trend with 9.5 percent growth in demand and a 14.5 percent expansion of capacity.
International Air Freight
· In May, freight volumes rose by around 3 percent above April levels as manufacturers began to add to their product inventories in anticipation of an economic recovery. However, inventories remain 10-15 percent higher than normal in relation to sales levels, indicating that a significant recovery is not expected in the near term. Surveys of purchasing managers indicate we could experience a further improvement in air freight demand during June and July to levels that are 12-15 percent below last year’s levels.
Scheduled traffic results for June showed passenger demand declining 7.2 percent compared to the same month in the previous year, while freight demand was down 16.5 percent.
Volcano Dents Recovery
Passenger demand fell as a result of massive flight cancellations centered in Europe during the six days in April following the eruptions of an Icelandic volcano.
IATA: Good news on volumes, but risks remain