Air traffic points to slowing recovery

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International air traffic slowed in November, the airline industry body IATA says, a sign that Reuters says shows the global economic recovery is losing speed. The International Air Transport Association added harsh weather conditions in many countries in December were weighing on business.

INet Bridge reports African carriers were the only region to show an increase in air travel growth rates from October (12.6%) to November (16.4%), the International Air Transport Association (IATA) announced on Thursday. The region’s carriers moved 11% more travellers in November than they did at the pre-recession peak in early 2008. At the international level, air travel is now 4% above the pre-recession peak of early 2008. All regions, except Africa, reported a slowing in year-on-year growth rates from October to November.
“The year-end holiday season has been tough for travellers and for airlines,” IATA director-general, Giovanni Bisignani, said in a statement. “Airlines saw lost revenues and saw costs rise.” Bisignani repeated IATA’s recent profit forecast for the industry, saying a strong end to 2010 overall should lift profits to $15.1 billion. Slowing traffic growth was in line with projections for a reduced profit of $9.1 billion in 2011. “The industry is shifting gears in the recovery cycle,” Bisignani said.
“Growth is slowing towards normal historical levels in the 5-6 percent range. Relative weakness in developed markets is being offset by the momentum of economic expansion in developing markets,” he added.

Reuters notes the air traffic numbers are in line with other signs that the global recovery from economic crisis is losing speed. The International Monetary Fund expects 4.2 percent global growth next year, which would be a step down from 2010 but well above the recession-hit rates of the previous two years. Air freight — an important indicator of trade and economic recovery — grew by 5.4 percent in November from a year ago, well below the 14.5 percent rise recorded in October.

Freight traffic, which accounts for 35 percent of the value of goods traded internationally, is now at the pre-crisis levels of early 2008, said IATA, which represents 230 airlines. Passenger demand — a reflection of business and consumer confidence — was 8.2 percent higher in November than a year earlier, below October’s 10 percent rise, and is now 4 percent above pre-crisis levels. Air traffic growth slowed significantly in all regions with the exception of Africa, IATA said. Freight levels remained well below their pre-crisis levels in North America and Europe.
“We see a strong end to 2010 that boosted the year’s profit forecast to $15.1 billion. Slowing traffic growth is in line with our projections for a reduced profit of $9.1 billion in 2011. That’s a 1.5% margin. More hard work will be needed in the New Year to achieve sustainable levels of profitability,” Bisignani added. IATA also said the air freight recovery hit a peak in May 2010. Compared to that peak, volumes have fallen 7%. The volume of air freight in November was equal to pre-recession levels of early 2008.

November’s year-on-year growth of 5.4% is a significant shift from the 14.5% recorded in October.



This was exaggerated by the exceptionally strong performance in November 2009, INet Bridge noted. In absolute terms, there was a 1.1% fall in freight volumes from October to November.
“The year-end holiday season has been tough for travellers and for airlines. Exceptionally adverse weather conditions in Europe and the US resulted in travel chaos,” the association said, adding that passengers were inconvenienced. Airlines saw lost revenues and saw costs rise. As the backlogs of stranded passengers clear and the situation normalizes, there are two opportunities that must not be lost. The first is to learn and apply lessons from this difficult season so that all stakeholders in the industry’s infrastructure are better prepared for future exceptional situations,” Bisignani said.
“The second opportunity is to evaluate the regulatory world in which aviation operates,” he said.
“In 2010, the Icelandic volcano and the year-end adverse weather made the value of air transport crystal clear.”