Passenger Air Traffic Demand Softens in June

Passenger Air Traffic Demand Softens in June

The International Air Transport Association (IATA) said that demand for air travel softened in June; traffic trends continue upward but at a slower pace. Compared to June 2010, passenger demand was up 4.4 percent.

The trend for passenger travel remains upwards, but at a slower pace than the post recession rebound which was at an annual rate close to 10 percent. The slowdown reflects slower economic growth and increased costs resulting from higher jet fuel prices, and increased taxation (in some countries).

“Compared to May both passenger and cargo markets contracted by about 1 percent,” said Tony Tyler, IATA’s director general and CEO. “For passenger traffic, this is a speed-bump in a gradual post recession improvement. But air cargo continues in the doldrums at 6 percent below the post-recession peak.”

Overall demand for international passenger services grew by 5.9 percent and capacity expanded by 7.2 percent. While load factors were maintained at an impressive 79.0 percent, this is 0.9 percentage points below the June 2010 performance.

North American carriers saw May’s 4.5 percent growth in demand fall to 2.4 percent. With tight capacity discipline, airlines in the region delivered a load factor of 85.3 percent, the highest among the regions.

Latin American carriers experienced the highest growth levels with a 14.3 percent increase over June 2010. European carriers are showing the second most robust expansion of demand with 8.9 percent growth compared to June 2010. The weak euro is supporting a strong inbound travel trend and business travel associated with growing exports. Load factors for the region stood at 80.6 percent, the second highest among regions.

Middle East carriers recorded a 6.4 percent increase in demand against a capacity increase of 8.4 percent for a load factor of 74.8 percent. For the second consecutive month both demand and capacity increases by Middle East carriers have fallen behind those of Europe and Latin America.

Asia Pacific carriers saw demand grow by 3.3 percent. Demand growth was held at about half the global average due to tightening economic policies and the effects of the earthquake and tsunami in Japan. African carriers continue to experience the weakest demand with a 2.9 percent fall compared to June 2010 levels.

“The industry is living in several different realities,” said Tyler. “With high load factors and an upward growth trend, the passenger business is doing better than cargo. But regional growth patterns are shifting. The Middle East carriers have moderated to a single digit expansion and tighter economic conditions have slowed China’s growth. Meanwhile, Latin America is leading the industry expansion followed by Europe which is growing strongly despite its currency crisis. And North America is underperforming the industry on growth but leading on load factors.”