International Air Demand Slowdown Continues

Global traffic results for August showing demand for air transport continuing to flatten-out, but with significant regional variations, the International Air Transport Association (IATA) reports. Freight volumes shrank as business and consumer confidence continued to slip, IATA said.

Demand for air travel expanded by 5.1 percent in August compared to the same month in 2011, IATA says. This partly reflects a positive distortion owing to the timing of Ramadan. Adjustment for such seasonal fluctuations reveals that passenger demand has been basically flat since June and with only a 1.2 percent expansion since January. Carriers continued to moderate capacity expansion, limiting it to 4.1 percent growth, taking load factors to 82.1 percent.

International Passenger Markets: The growth trend for international traffic remains weak, with overall expansion of 5.3 percent heavily dependent on seasonal factors. Compared to July, August growth was flat, and load factors were down. Asia-Pacific carriers appear particularly affected, as airlines face strong competition and shifting trade flows.

North American airlines saw just 0.5 percent growth in demand while capacity was reduced by 0.5 percent compared to the previous August. This increased load factors by 0.8 percentage points to 86.9 percent, comfortably the highest among the regions. Compared to July there was a 0.5 percent increase in demand.

Domestic Passenger Markets: Overall, domestic traffic grew by 4.8 percent, slightly ahead of a 4.2 percent rise in capacity. The domestic load factor stood at 82.3 percent. All markets, except India and Japan, showed growth compared to the previous August. Chinese domestic travel was the best performer.

U.S. domestic demand grew 2.4 percent compared to the year-ago period. With capacity growth held to 1.4 percent, carriers reported a load factor of 86.7 percent, consistently the highest among the major domestic markets.

IATA currently forecasts a collective $3.0 billion profit for airlines in 2012 for a 0.5 percent net margin. On 1 October IATA will release a revised industry outlook.