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Mideast air traffic soars despite fall in other regions
By Saudi Gazette Staff
Published in The Saudi Gazette on 28 - 08 - 2009

The International Air Transport Association (IATA) announced international scheduled traffic results for July showing passenger demand declining 2.9 percent compared to the same month in the previous year while freight demand was down 11.3 percent. The international passenger load factors stood at 80.3 percent.
However, Middle Eastern carriers were the only region to grow in July. The 13.2 percent growth in July was slightly better than the 12.9 percent recorded in June. The growth is fueled by increased capacity and greater market share in traffic between Europe and Asia.
The July passenger demand fall of 2.9 percent was a relative improvement over the 7.2 percent drop in June and the 6.8 percent decline recorded over the first seven months of the year. July capacity was more in line with reduced demand than in previous months and load factors are similar to those recorded in July 2008. These positive developments, however, have come at the expense of yields which continue to fall sharply.
The 11.3 percent decline in cargo demand for July was also a relative improvement over the -16.5 percent recorded in June and the -19.3 percent average for the first seven months of the year. Despite this improvement, the July freight load factor of 47.6 percent was lower than the 49 percent recorded in July 2008.
However, the Middle East was the only region to grow.
Middle Eastern carriers were the only region to grow, posting a 1 percent growth in demand compared to July 2008.
The stabilization of air freight demand in the first quarter and its improvement in the second quarter has helped reduce the rate at which excess capacity has been growing. But load factors are still lower than levels seen at the same time last year. Downward pressure on freight rates and revenues continued to intensify in July.
“The freight numbers tell an interesting story. The sector is being boosted as companies re-stock depleted inventories. Once inventories are at desired levels in relation to sales, improvements in demand will level off until business and consumer confidence returns. Given the large amount of debt in all sectors of the economy, instant relief is not in the forecast,” said Bisignani.
“Demand may look better, but the bottom line has not improved. We have seen little change to the unprecedented fall in yields and revenues. The months ahead are marked by many uncertainties, including the price of oil. The road to recovery will be both slow and volatile. In the meantime, the industry remains in intensive care,” said Giovanni Bisignani, IATA's director general and CEO.
Asia-Pacific carriers are experiencing the extremes of this recession. The 7.6 percent fall in passenger demand compared to July 2008, was the largest decline of any region. At the same time, compared to the -14.5 percent recorded in June, the relative improvement to -7.6 percent was also the biggest among all regions.
Economic growth returned during the second quarter in a number of Asian economies, to a much larger extent than elsewhere. This was likely the driver behind July's better performance.
The impact on passenger confidence from Influenza A(H1N1) was also somewhat diminished as media coverage of the disease decreased.
European and North American carriers saw declines of 3.1 percent and 3.2 percent respectively. Passengers have been trading down to cheaper seats in the face of recession pressures. Airlines have also been leaving less expensive fares open for sale much longer (closer to departures dates) in the face of excess capacity and intensifying competition.
The July improvement in travel demand was more the result of deep discounting than stronger incomes or greater economic confidence.
Latin American carriers saw demand decline by 3.5 percent. This was the only region to see a greater decline in July than the seven month average which is -3.0 percent.
African carriers saw a fall of 5.5 percent compared to the seven month average of -8.6 percent.
Falls by Asia-Pacific carriers, European carriers and North American carriers were 9.5 percent, 16.2 percent and 14.6 percent respectively.
African carriers posted the worst performance at -25.9 percent. This was the only region to see a deterioration in freight demand compared to June when the region's carriers posted a 20.2 percent decline compared to the same month in the previous year.
Latin American carriers posted a 1.2 percent fall in demand compared to July 2008. __


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