THE latest global air traffic numbers released by the International Air Transport Association (IATA) for August shows a sequential drop in passenger demand through August.
Although passenger demand was up 4.5 percent over the previous August, this represents a significant slowing from the 6 percent recorded in July.
Meanwhile, the decline in freight markets accelerated.
The 3.8 percent contraction in freight markets recorded in August was more than double the pace of July's 1.8 percent decline.
'The industry has shifted gears downward,' noted Tony Tyler, IATA's Director General and CEO.
'The pace of growth in passenger markets has dipped and the freight business is now shrinking at a faster pace. With business and consumer confidence continuing to slump globally there is not a lot of optimism for improved conditions any time soon.'
Comparisons of July to August more clearly indicate the slowdown.
The total passenger market fell by 1.6 percent in August compared to July. International markets declined by 1.8 percent, while already weak domestic markets shrank by 1 percent.
The total cargo market fell by 1.3 percent.
'Overall, utilisation on freight markets has declined 4 percentage points since the second quarter of 2010. Coupled with falling volumes this makes the freight business a very difficult market in which to sustain profitability,' IATA reported.
Passenger load factors were at 81.4 percent, almost as high as in July. While this is close to historically high levels reflecting the industry's ability to efficiently allocate capacity, it too showed weakness - falling by 1.3 percent compared to July.
IATA said that the August traffic results were in line with expectations for a decline in profitability heading into 2012.
It recently projected total industry profits to fall from $6.9 billion in 2011 to $4.9 billion.
Historically, the airline industry has delivered collective losses when GDP growth (measured using current exchange rates) falls below 2 percent. GDP growth has fallen from 3.9 percent in 2010, to an expected 2.5 percent this year and 2.4 percent is projected for 2012.
'Airlines are bracing for tough times ahead,' Mr Tyler added.
'Economic uncertainty owing to the European sovereign debt crisis and the growing likelihood of a protracted period of slow growth in developed economies mean the industry will be even more focused on reducing costs and improving efficiency. To ensure that airlines can continue to catalyse economic activity, we need governments to review the often onerous tax burden that they place on aviation.'
