IATA says global air traffic slowdown moderating

MANILA, Philippines – With the global air transport industry still reeling from the effects of the financial crisis, international passenger demand declined 9.3 percent in May this year while freight demand dropped 17.4 percent, the International Air Transport Association (IATA) said.

However, the air carriers’ group pointed out the 17.4-percent decline in international cargo demand was a relative improvement from the 21.7-percent drop in April. Since December 2008, cargo demand has been moving sideways in the negative 20-percent range. This, IATA said, is one of the first physical signs of the economic recovery being anticipated in transport markets.

International passenger demand weakened from the 3.1-percent contraction recorded in April to a 9.3 percent fall 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, IATA said.

However, the capacity adjustment of negative five 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, IATA added.

“We may have hit bottom, but we are a long way from recovery. 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,” IATA director general and CEO Giovanni Bisignani stressed.

May was the first full month to feel the impact of the influenza A(H1N1) virus on travel, as 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 A(H1N1) on the region with the most vivid memories of the SARS crisis. – Mary Ann Reyes, Philippine Star