August 2006 Airline Passenger Growth Slows while Freight Rebounds

The International Air Transport Association (IATA) reported 4.8% year-on-year growth in international passenger traffic for August 2006. This is the smallest monthly passenger traffic increase since the end of 2003 and marks the fourth consecutive month of declining growth in passenger demand. International freight traffic rose 4.7%, rebounding from 3.7% growth recorded in July, but below the historic long-term average growth of 6%.

The average load factor for August remained near record levels at 79.4%, with North American carriers leading all regions with a load factor of 82.7%.

For the first eight months of the year, passenger demand grew by 6.1% and freight by 5.2% over the same period in 2005. Average load factors for the period stood at 76.4%.

“A strong revenue environment and careful capacity management are keeping load factors at record levels. Combine that with a declining oil price and enormous efficiency gains and the industry may end the year better off than our current US$1.7 billion loss projection. More importantly, we are on track for a profit of US$1.9 billion in 2007 - the first black number in 6 years. We are moving in the right direction, but nobody should be rushing to open Champagne for a US$450 billion industry returning 0.4% of revenues. More change and efficiency gains remain absolutely critical,” said Giovanni Bisignani, Director General and CEO of IATA.

The Middle East led all regions with August demand growth for passenger traffic at 11.9% and for cargo at 13.1%. Strong growth in Africa continued with the region registering 8.9% and 10.6% traffic increases for passenger and freight respectively. Restructuring in Latin America led to a demand decline of 8.5% for passenger and a 1.1% gain for freight. European growth remained stable at 3.5% for passenger and 2.6% for freight.

“While the UK terror alert had no clear impact on traffic growth last month, it did send some strong wake-up calls to the industry. We need better contingency planning at airports, greater harmonisation of security measures across borders and governments must take up the security cost burden. Airlines and their passengers are now paying US$5.6 billion a year for additional security measures since 2001. These concern national security. There is no justification to bill travellers for security when governments assume the burden everywhere but in airports or on airplanes. Undoubtedly security is much improved. And measures to harmonise security requirements across Europe are a step in the right direction. But there is a lot of work still to do on the efficiency of the system, including harmonising across the Atlantic,” said Bisignani.

See other recent news regarding: Travel News Asia, IATA