Load Factors Drop as Passenger Demand
Geneva - The International Air
Transport Association (IATA) today released March data for scheduled
international traffic. Passenger demand fell to 11.1% below March 2008
levels. Airlines cut international passenger capacity by 4.4% resulting
in an average load factor of 72.1%. This is 5.4 percentage points below
the average load factor recorded in March 2008. Freight demand was
relatively stable at -21.4% compared to March 2008.
“The global economic crisis continues to reduce demand for
international air travel,” said Giovanni Bisignani, IATA’s Director
General and CEO. IATA estimates that international revenues in March will
be impacted with a decline of up to 20%. “Airlines cannot adjust capacity
to match demand. Load factors have dipped sharply from last year. All of
this is hitting revenues hard,” said Bisignani.
“The only glimmer of hope is that cargo demand has
stabilised this month although at the shockingly low level of -21.4%,”
said Bisignani. For the fourth consecutive month international cargo
demand is hovering in the -21% to -24% region as a result of the sharp
drop in world trade. “It’s not the end of the recession, but we may have
found the floor,” said Bisignani.
- The shift
in Easter from March in 2008 to April in 2009 negatively distorts March
2009 passenger demand by about 2%, leading to an underlying fall in
March demand of 9%. This shows a continued decline from February of
about 1% (after February figures are adjusted for the impact of the
- Among the
major regions, carriers in Asia
Pacific continued to lead the decline with a 14.5%
fall in passenger demand, outstripping a 9.3% downward adjustment in
capacity. The region is particularly impacted by the fall-off in
long-haul travel, which is contracting faster than short-haul.
American carriers saw a decline in international
passenger demand of 13.4% as travel was further discouraged by US
unemployment reaching 8.5% in March and consumer confidence
carriers saw their international demand fall by 11.6%
where confidence has been dented by unemployment in key markets such
as Germany and Spain increased to 8.6% and 17.4% respectively.
carriers showed the weakest performance in March with
a 15.6% fall in demand. But they did the best job at matching
capacity to demand with an aggressive cut of 15.1%. While cross
border travel within Africa grew during February, African carriers
continued to lose market share.
American carriers increased capacity by 2.2% as
demand fell by 5.9%. Travel to and from Central America and from
Latin America to North America was particularly weak.
Eastern carriers were the only ones to experience
growth in March (4.7%). This is an improvement from the 0.4% growth
in February, and represented an expansion of market share. But this
was out of balance with the 13.1% increase in capacity.
- Air cargo
demand has moved sideways in the -21% to -24% range since its plunge
from -7.9% to -23.2% between October last year and January 2009.
severity of air freight slump is at least partly driven by
manufacturers seeking to correct large inventory overhangs that
emerged in late 2008. The stabilisation of the inventory to sales
ratio has in turn stabilised air freight demand. Recovery, however,
depends on purchasing that can deplete the inventory overhang.
Inventory levels remain high and final demand is weak.
Rising concerns over Swine Influenza could have a
significant impact on traffic. “Safety, as always, is our number one
priority. IATA is working in close cooperation with the World Health
Organization to ensure an efficient response of the air transport
industry to the challenges that Swine Influenza will present,” said
Bisignani. “It is still too early to judge what the impact of Swine Flu
will have on the bottom line. But it is sure that anything that shakes
the confidence of passengers has a negative impact on the business. And
the timing could not be worse given all of the other economic problems
airlines are facing.”
Aside from Swine Influenza, Bisignani noted that airlines
face many challenges. “Like the rest of the economy, recovery in the air
transport sector rests on a rise in consumer confidence and consumer
spending. Shedding debt will be a major headwind. US households, for
example, are leveraged at 130% of annual income. Even bringing this down
by 5% erases US$500 billion in consumer spending. The challenge for
governments is to turn stimulus funds into spending that fuels trade,”
Noting the deteriorating financial situation of many airlines,
Bisignani urged governments to move forward with liberalisation -
particularly of the archaic ownership restrictions that prevent
cross-border access to capital and consolidation. “Air transport is an
economic catalyst and can play an important role in driving recovery, but
only if we are financially sound. Access to global capital and the
freedom to consolidate would go a long way to shoring up this industry -
without government bailouts,” said Bisignani.
“Unfortunately, instead of using airlines to drive growth,
many governments see us as a cash cow. It is shockingly disappointing
that the UK Chancellor is continuing with plans to raise the UK Air
Passenger Duty in the middle of this economic crisis. When the
government should be doing everything possible to stimulate the economy,
it makes no sense to dampen demand for air travel with increased
taxation. Look no further than the Netherlands where collecting an extra
EUR 312 million in extra revenues with a new departure tax cost the
economy up to EUR 1.2 billion in lost revenue. The Dutch had the good
sense to abolish the tax. Let’s hope that others will follow,” said
View full March traffic results
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Notes for editors:
(International Air Transport Association) represents some 230 airlines
comprising 93% of scheduled international air traffic.
of measurement terms:
Revenue Passenger Kilometres measures actual passenger traffic
Available Seat Kilometres measures available passenger
Passenger Load Factor is % of ASKs used. In comparison of 2009 to
2008, PLF indicates point differential between the periods
Freight Tonne Kilometres measures actual freight traffic
Available Tonne Kilometres measures available total capacity (combined
passenger and cargo)
statistics cover international scheduled air traffic; domestic
traffic is not included.
- All figures
are provisional and represent total reporting at time of publication
plus estimates for missing data.
passenger traffic market shares by region in terms of RPK are:
Europe 32.9%, Asia Pacific 31.8%, North America 17.5%, Middle East
11.0%, Latin America 5.0%, Africa 1.8%
freight traffic market shares by region in terms of FTK are: Asia
Pacific 43.6%, Europe 27.2%, North America 16.0%, Middle East 10.2%,
Latin America 2.2%, Africa 0.9%