Demand for air travel rises 6.4% in January - IATA

MANILA, Philippines - Global air traffic has shown continuing improvement this year as passenger demand in January rose 6.4 percent compared to the previous year, the International Air Transport Association (IATA) said.

Against this improving demand, a 1.2 percent increase in passenger capacity in January pushed load factors to 75.9 percent, up from 72.2 percent recorded in January 2009, the industry group noted.

IATA represents some 230 airlines, including those from the Philippines, comprising 93 percent of scheduled international air traffic.

Asia-Pacific carriers registered a 6.5 percent increase in passenger demand compared to the previous year. Of the improvement in demand seen since the low point in early 2009, 31 percent has been realized by carriers in the region which is leading the global economic recovery.

International cargo demand showed a 28.3 percent improvement with only a 3.7 percent increase in capacity. This pushed the cargo load factor to 49.6 percent which is a significant change from the 40.1 percent recorded in January 2009.

IATA said the large increases reflect a steady improvement from the precipitous fall in demand that characterized the early part of 2009, rather than a dramatic improvement in January. Compared to December 2009 and adjusting for seasonal variations, passenger demand grew 0.5 percent while air freight volumes increased three percent.

“Airlines have lost two to three years of growth. Demand is moving in the right direction. The three percent increase in freight volumes from December to January is particularly encouraging. We can start to see the future with some cautious optimism, but better volumes do not necessarily mean better profits. Passenger yields are still 15 percent below peak. And we expect 2010 losses to be $5.6 billion,” IATA director general and CEO Giovanni Bisignani said.

There are large geographical differences in the improvements. The strongest upturns have been seen in markets where economic recovery from the recession has been strongest – Asia, Latin America and the Middle East.

Compared to the low point in the cycle (February 2009), international passenger traffic is up 8.6 percent. The market has not yet recovered from the losses of 2008 and early 2009. Demand must improve by a further two percent to return to the peak levels of early 2008, IATA said.

Meanwhile, IATA noted that compared to the low point in the cycle (December 2008 to January 2009), international freight traffic has regained about 28 percent. But this is still three to four percent below the early 2008 peak level.

It said the sharp improvement in air freight, which accelerated to three percent in January compared to December, is being driven by businesses restocking depleted inventories.

IATA, however, pointed out that this part of the inventory cycle will not last much longer. “Durable air freight growth will require consumers to start buying again and businesses to return to making investments. While these improvements are beginning to be seen in Asia, Europe and North America lag behind,” it said.

“We are starting to see some encouraging signs in demand, albeit with large differences among the regions. Unfortunately, the constraints of the archaic bilateral system limit airlines from being able to respond as normal businesses to market opportunities. Political borders limit opportunities for consolidation. And we still require governments to negotiate open markets,” Bisignani said.