IATA Says Increase in Air Passenger Traffic Growth May Be Fragile

The International Air Transport Association (IATA), a Canada-based international trade group of airlines, has released its global traffic results for February 2012.

While worldwide air traffic results for February 2012 show an 8.6 percent increase in passenger demand, and a 5.2 percent increase in cargo demand, compared to those in February 2011, IATA has warned the industry of an impending downswing in air traffic due to an increase in airline fuel expenditure, and the slowdown of economies.

The chief executive of IATA, Tony Tyler, said, ‘The outlook is fragile. Improvements in business confidence slowed in February. This will limit the potential for business class travel growth and it implies that an uptick for cargo is not imminent. At the same time, airlines trying to recoup rising fuel costs could risk reduced volumes on price sensitive market segments. Weak economic conditions and rising fuel costs are a double-whammy that an industry anticipating a 0.5 percent margin can ill-afford.’

The global traffic results also show that Brazil has led the air traffic growth in February 2012, with a 17.9 percent increase in demand, compared to that in February 2011, while capacity increased by 20.9 percent. India has reported the second quickest growth, with 12.3 percent, with a 16.3 percent increase in capacity year-on-year. China has registered the third highest growth in domestic air traffic at 10.1 percent, year-on-year.

Tyler added, ‘We are ending the first quarter with a considerable amount of uncertainty. While the threat of a European financial meltdown seems more remote than it did only a few months ago, the political risks that aviation faces are growing. The rapid increase in the price of oil is already biting hard. The UK is increasing the onerous Air Passenger Duty. Europe is adding to the burden with the inclusion of international aviation in its emissions trading scheme-the extra-territorial aspects of which are creating the possibility of a trade war that nobody can afford. The exact conditions vary from country to country, but around the world we see ill-conceived policy initiatives that over-regulate, excessively tax or otherwise restrain the aviation industry. This prevents it from being the catalyst for economic growth that it can be.’

Global passenger capacity increased by 7.4 percent in February 2012 compared to that in February 2011, while passenger demand has increased by 8.6 percent in the comparable period. The load factor for February 2012 is 75.3 percent, an increase from 74.4 percent reported in February 2011.