Despite a marked drop in global demand for both passenger and cargo in the month of April this year, traffic in the Middle Eastern region posted gains, the latest report from the Geneva-based International Air Transport Association (IATA) said on Wednesday. In a report sent to the Saudi Gazette, IATA's international traffic data for April showed a 3.1 percent decline in passenger demand and a 21.7 percent fall in cargo demand compared to April 2008. The average passenger load factor stood at 74.4 percent. However, Middle Eastern carriers saw passenger demand growth in April of 11.2 percent, against a capacity expansion of 12.3 percent. In cargo traffic, Middle Eastern carriers were the strongest performers at -11.1 percent, the report said. While April's 3.1 percent passenger demand drop was a clear improvement compared to the -11.1 percent fall in March, this improvement should be viewed with caution. Easter holidays, which fell in April, positively skews the data by at least 2 percent. Traffic gains were at the expense of yields in most regions. And preliminary data for May suggests a renewed double-digit decline, at least for European airlines. Freight demand appears to have found a solid floor with a fifth consecutive month at more than 20 percent below previous year levels. “We are not out of the woods yet,” said Giovanni Bisignani, IATA's director general and CEO. “The demand improvements that we saw in April are welcome. But the 3.1 percent decline in passenger demand still outstripped the 2.5 percent cutback in capacity. There is no improvement in revenues as yields continue to fall. And freight remains at shockingly low levels. The worst may be over. However, we have not yet seen any signs that recovery is imminent,” Bisignani said. Load factors improved to 74.4 percent in April (compared to 72.1 percent in March). However this is slightly distorted by high volume holiday travel. Forward schedules show a return to previous-year capacity levels by the end of the third quarter. Without a corresponding sharp improvement in demand, load factors are likely to decline rather than improve. Asia Pacific carriers continued to see the most significant demand deterioration. Their 8.6 percent fall outstripped capacity adjustments of -7.4 percent. An acceleration of fare discounting saw demand increase on North Atlantic routes. North American carriers, who experienced a 13.4 percent drop in demand in March, saw this reduced to -4.2 percent in April. The capacity adjustment of -4.0 percent much more closely matched the fall in demand than in March when there was a 7.7 percentage point gap. For European carriers, the 11.6 percent decline in passenger demand reported for March improved to -2.7 percent in April, closely matching the capacity adjustment of -2.6 percent. Latin American carriers saw demand expand by 7.5 percent, outstripping a capacity increase of 6.0 percent. Nonetheless, Latin American carriers recorded the weakest load factor, 71.2 percent. Africa's carriers experienced a 7.1 percent fall in demand, outpacing the capacity cut of 5.0 percent. Moreover, airfreight continues at very weak levels. International cargo was down 21.7 percent in April compared to previous year levels. This is the fifth consecutive month in the -20 percent range. This sideways progression may indicate that we have seen the worst of the economic downturn. Business confidence is improving, but inventories remain high. Until inventories adjust to more normal levels, airfreight volumes will likely continue to bounce along the bottom. In cargo, carriers in all regions showed double digit declines. European, North American, Asia-Pacific and African carriers had similar performance of -23.3 percent, -22.4 percent, -22.3 percent and -18.8 percent respectively. Latin American carriers were the worst performers at -24.2 percent. “With each day of the recession, the challenges for the air transport industry are mounting. Flexibility has never been more important. But there is not enough of it. Airlines remain constrained by old rules that restrict basic commercial freedoms such as access to markets and capital. Much of the cost base remains out of our control - from volatile fuel prices to monopoly infrastructure charges. And many governments simply don't understand the need for urgent change. We need a change in mindset. To manage through this ongoing crisis, every player in the air transport value chain must be prepared to drive change,” Bisignani further said. The 65th IATA Annual General Meeting and World Air Transport Summit will take place in Kuala Lumpur, Malaysia on June 7-9. On the agenda of the 600 industry leaders expected to attend will be the industry's top priorities, including safety, environment, infrastructure charges, taxation and liberalization. __
