May Air Freight Slumps while Passenger Demand remains Robust

The International Air Transport Association (IATA) has reported traffic results for the January to May 2005 period. For the Month of May, freight traffic was 1.6% below the 2004 level while growth for the first five months of 2005 was 3.1%. Passenger traffic showed 8.8% growth comparing May 2004 to May 2005 and January-May passenger growth was 8.7%.

"May cargo growth slipped into negative territory in Asia, North America, Latin America and Europe, following sluggish performance since the beginning of 2005. As a leading economic indicator, the slowdown in cargo traffic demonstrates that the high price of oil is slowing the global economy faster than expected. Passenger traffic for May at 8.8% was much stronger. But we can expect a downward trend as the decline in economic activity works its way through the economy," said Bisignani, IATA's Director General and CEO.

Average load factors for the first five months of 2005 remained high at 73.3%. In all regions, growth in demand outstripped supply. A 10% drop in the value of the Euro against the US dollar is changing the competitive environment on the North Atlantic even as North America carriers continue to shift domestic capacity to international markets.

"While we had much optimistic news at [the] Paris Air Show, this month's traffic results continue to show that operating environment is volatile. Our projection of a US$6 billion industry loss is looking optimistic and the need for continued cost reduction is critical," said Bisignani.

Referring to the approaching G8 Summit, Bisignani criticized proposals of tax aviation to generate funds for aid to developing nations. "Now is not the time to add new taxes to an industry that is already over-charged. Governments must stop thinking of air transport as a cash cow and understand the real value that we bring to the global economy. Connecting global markets and facilitating tourism is vital to development. Dampening demand for travel by further taxing air transport makes no sense. Instead, let's tear down the barriers to trade and give developing nation products access to developed markets," said Bisignani.

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