Air Transport Market Analysis - April 2011
Released 02 June 2011
Key points from our full report on
air transport markets in April:
- From this month we cover domestic markets as well as international, including all airlines;
- Markets improved in April but not by enough to offset the squeeze on profits from high jet fuel prices;
- International air travel rebounded sharply in April to reach a new high, 7% above the pre-recession peak in early 2008;
- Compared to April last year, international air travel was up 16.5% after demand shock in Japan and MENA left travel growth down at 3.7% in March;
- However, much of this dramatic improvement is due to the comparison with April last year, when travel collapsed due to airspace closure related to the ash cloud;
- On domestic markets the Japanese market is down over 30% due to the impact of the earthquake and tsunami;
- The weakness of the large US domestic market, with a 1.2% decline during the month, follows the sharp rise in jet fuel costs;
- India and Brazil stand out with very strong growth in domestic markets, in contrast to the Chinese market which has slowed, partly due to tighter economic policies;
- Air freight also improved in April but growth has been disappointing in recent months, with FTKs just 5.4% higher in international markets in April;
- However, there were promising signs of renewed growth in air freight in a number of regions, boosted by the solid expansion in world trade;
- Passenger load factors rebounded in April, having fallen sharply in February and March but are still 2% point below the level reached earlier last year;
- The rebound in seat utilization will have improved unit revenues at the start of the second quarter, but jet kerosene prices rose $6 a barrel during April;
- A further rebound in demand and revenues is critical for airlines to avoid a substantial further squeeze on profits in this high fuel cost environment;
- The impact of recent demand shocks is easing and, with world trade and business confidence still high, a second half upturn in air travel and freight is expected;
- However, the other key to maintaining profitability will be asset utilization and that may be more difficult to sustain.
- IATA Economics -
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