The International Air Transport Association last week announced international traffic results for October showing a 10.1% year-on-year increase in passenger demand and a 14.4% year-on-year increase for international freight.
“As we approach the end of 2010, growth is returning to a more normal pattern. Passenger demand is 5% above pre-crisis levels of early 2008, while freight is 1% above. Where we go from here is dependant on developments in the global economy. The US is spending more to boost its economy. Asia outside of Japan is barrelling forward with high-speed growth. And Europe is tightening its belt as its currency crisis continues. The picture going forward is anything but clear, but for the time being, the recovery seems to be strengthening,” said Giovanni Bisignani, IATA’s Director General and CEO.
Freight appears to be at a turning point. Since May, freight volumes have declined by 5%. October saw an end to the decline in freight with a slight uptick. “But a single month does not make a trend. And it remains to be seen if this is the stabilization in freight volumes or the start of an upward trend,” said Bisignani.
Improvements in demand are being met by a cautious approach to capacity expansion. Over the first 10 months of the year, passenger demand grew by 8.5%, with a capacity expansion of 4.0%. A cargo capacity expansion of 9.2% was well below the demand increase of 24%. Forward schedules indicate a continuation of this trend, with a 7.5% passenger capacity increase planned for the half-year scheduling period beginning at the end of October.
International Passenger Demand
- The 10.1% growth in passenger demand in October is slightly below the 10.7% recorded in September, but both months are an improvement over August.
- North American airlines posted a 12.4% demand increase over October 2009. October represented the fastest growth rate for the year. With a capacity increase of 11.9%, the load factor for North American airlines was pushed to 82.5%, the highest among all regions. Compared to pre-recession levels of early 2008, the region’s airlines are carrying 2% more traffic.
- European carriers showed a 9.6% increase over October 2009. This is significantly better than the 8.6% growth reported for September. European airline traffic grew by 1.5% from September to October and is now 4% higher than the pre-recession levels of early 2008.
- Asia-Pacific carriers posted a 7.3% demand increase, ahead of a 5.3% increase in capacity. Volumes remain 1% below pre-crisis levels of early 2008.
- African airlines recorded strong growth (13.3%) compared to October 2009. With a capacity increase of 8.9%, load factors improved to 71.8%.
- Latin American airlines posted a comparatively weaker performance with a 4.9% increase in demand and a 0.7% drop in capacity. The region’s results remain skewed because of the bankruptcy of Mexicana.
- Middle East carriers recorded the strongest growth for the month with an 18.0% increase in demand. This is despite the earlier Ramadan dates, which negatively skewed the numbers with a 1% fall in October traffic as compared to September. The region also had the largest capacity expansion at 13.7% compared to October 2009.
International Cargo Demand
- The 14.4% year-on-year increase in freight traffic for October was marginally weaker than the 15.5% recorded in September. Nonetheless, international freight volumes actually improved slightly from its September level on a seasonally adjusted basis.
- Asia-Pacific airlines reported a 14.9% year-on-year increase in international freight demand, down from the 16.2% recorded in September. October’s growth translates to an impressive 22% annualized growth rate for the region’s carriers, reflecting the strong economic recovery particularly in China and India. With a 44% share of total freight traffic, the growth experienced by Asia-Pacific airlines played a large role in the uptick seen in overall industry freight volumes during October.
- European airlines recorded a 12.1% year-on-year demand increase in October. North American carriers saw a slightly larger improvement of 12.2%. For both regions, October freight volumes represented a 6% improvement on freight volumes carried in December 2009. Relative weakness in the Euro and dollar is helping export activity and boosting freight traffic. Even so, traffic remains 12% below pre-recession levels of early 2008 for European airlines and just 2% higher in North America.
“We are ending 2010 in much better shape than we were just 12 months ago. Airlines have turned losses into profit—albeit tiny. Despite the economic uncertainties people continue to fly. Airlines appear to be managing capacity in the upturn with a good deal of prudence. And cost control continues to be a main theme for airlines everywhere,” said Bisignani.
“A good example of airlines delivering change is the conversion to bar coded boarding passes (BCBP). In 37 days we will achieve 100% capability for BCBP. The courage to change brings great benefits: $1.5 billion in cost savings for the industry and greater convenience for our passengers,” said Bisignani.
“Not all in the supply chain have the same courage to change. We have been waiting decades for the efficiency of a Single European Sky. Average air traffic management costs per flight in Europe are EUR 771, compared to EUR 440 in the US. This is a EUR 5.0 billion competitive disadvantage for Europe that affects everybody that flies or ships goods by air. Reluctance to change continues to put the program at risk. It is extremely disappointing to see some European state governments refusing to implement the 4.5% cost reduction target for 2012-14 agreed by the independent Performance Review Board,” said Bisignani.
“This is no hardship. With inflation expected to be 1.6-2.0% and with traffic growth of 3.2%, this is achievable simply by containing costs. If Europe’s air traffic management community cannot see the need for change, I hope that Europe’s Transport Ministers will. I urge them to support the European Commission in building a more competitive Europe, driven by serious performance targets and with a modern cost-efficient approach to air traffic management that is the Single European Sky,” said Bisignani.
Asia Pacific air traffic up 12% in October –AAPA
According to preliminary traffic figures from the Association of Asia Pacific Airlines (AAPA) for the month of October 2010, airlines based in the Asia Pacific region carried 15.9 million international passengers in October, a growth of 11.8% compared to the same month last year, with robust demand for both business and leisure travel, particularly on Asian regional routes.
International passenger traffic measured in revenue passenger kilometre (RPK) terms saw 8.2% growth. Available seat capacity was 5.4% higher than a year ago, resulting in a 2.1 percentage point improvement in the average international passenger load factor, to 79.5%.
Air cargo demand remained robust, with a 16.6% increase in cargo traffic, measured in freight tonne kilometre (FTK) terms, in October compared to the same month last year. The average international air cargo load factor for Asia Pacific carriers was 1.1 percentage points higher at 71.1% for the month, based on 14.8% growth in offered freight capacity.
“The dynamic economies of Asia are powering ahead and so are its airlines. Passengers are back in numbers, and the return of premium class passengers and airfreight is particularly welcome. The improving mix of business, coupled with disciplined capacity management, has seen Asian airlines leading the industry in returning to profitability,” said Mr. Andrew Herdman, AAPA Director General. “For the first ten months of the year, we have seen 14.2% growth in the number of international passengers carried by Asian airlines, whilst the sharp rebound in global trade led to a 28.5% jump in our international air cargo traffic.”
“The double digit traffic growth rates seen throughout 2010 are expected to gently ease back towards long term trends, but with the region still delivering dynamic growth, the overall outlook for Asian carriers for the coming year remains very positive,” he added.