IATA: Cargo Plummets in December

In the month of December, global international cargo traffic plummeted by 22.6 percent compared to December 2007.

WASHINGTON — The International Air Transport Association (IATA) released international scheduled traffic results for both December 2008 and the full year.

In the month of December, global international cargo traffic plummeted by 22.6 percent compared to December 2007. The same comparison for international passenger traffic showed a 4.6 percent drop. The international load factor stood at 73.8 percent.

For the full year 2008, international cargo traffic was down 4.0 percent, passenger traffic showed a modest increase of 1.6 percent, and the international load factor stood at 75.9 percent.

“The 22.6 percent free fall in global cargo is unprecedented and shocking. There is no clearer description of the slowdown in world trade. Even in September 2001, when much of the global fleet was grounded, the decline was only 13.9 percent,” said Giovanni Bisignani, IATA’s director general and CEO. Air cargo carries 35 percent of the value of goods traded internationally.

Bolstered by year-end advance-booked leisure travel, the 4.6 percent decline in December passenger demand was less dramatic than the fall in cargo. A 1.5 percent cutback in supply could not keep pace with falling demand, resulting in a 2.4 percent decline in the December load factor to 73.8 percent. “Airlines are struggling to match capacity with fast-falling demand. Until this comes into balance, even the sharp fall in fuel prices cannot save the industry from drowning in red ink,” said Bisignani.

“Yields are also under attack with a sharp drop in November premium traffic,” said Bisignani. For November, IATA reported an 11.5 percent drop in the number of premium tickets issued globally.

Passenger Traffic

Full-year traffic results show a 1.6 percent increase in demand, which is dramatically down from the 7.4 percent recorded in 2007. Capacity grew by 3.5 percent resulting in a full-year average load factor of 75.9 percent (down from the 77.3 percent recorded for 2007). Following is a regional summary for December traffic:

North American airlines saw December demand drop by 4.3 percent, far outstripping the 0.7 percent cut in international capacity. While North American carriers had made early cuts in domestic capacity of about 10 percent, this is the first month registering a cut in international operations. Nonetheless, the region recorded the highest load factor at 78.1 percent.

Asia Pacific carriers saw the sharpest decline in December international traffic at 9.7 percent. They also registered the sharpest reduction in capacity, but at 5.6 percent, this is lagging behind the drop in demand. Load factors sank to 72.6 percent. The economic turmoil in the region is widespread. December export volumes fell 20 percent for Singapore and 35 percent for Japan. Korean GDP showed a 5.5 percent contraction. While China’s economy continues to grow, recently released GDP figures show that it is at a much lower pace. As a result, traffic in the region continues to be the hardest hit.

European carriers saw demand for international travel fall by 2.7 percent while capacity declined by 1.5 percent. Load factors stood at the global average of 73.8 percent. With business confidence indicators pointing to a 10 percent decline in industrial production and a 20 percent fall in trade, there is little reason for optimism.

African carriers continued to see their traffic fall, despite more robust economies and travel to the continent than other regions. International passenger traffic declined 4.6 percent in December. The 2.1 percent reduction in capacity left load factors at 68.5 percent, the lowest among the regions.

Latin American airlines recorded a 1.1 percent increase in December demand and a 3.2 percent increase in capacity. With North American commodities demand and trade falling so sharply, the months ahead are likely to be more difficult for airlines in this region. Carriers in the Middle East showed a 3.9 percent increase in demand in December, far below the 10 percent capacity increase. The region’s carriers ended five years of double-digit growth with full-year demand growing by 7.0 percent (compared to 18.1 percent recorded for 2007). Growth will continue to slow in 2009 as oil revenues and long-haul hub connection traffic are now both in decline.

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