THE International Air Transport Association (IATA) has announced scheduled international traffic for February 2011 showing increases of six per cent and 2.3 per cent respectively for passenger and cargo demand compared to February 2010.
But demand growth was down significantly from the revised 8.4 per cent and 8.7 per cent expansion recorded in January for passenger and cargo traffic respectively. The political unrest in the Middle East and North Africa during February is estimated to have cut international traffic by about one per cent and, as such, it is responsible almost entirely for the slippage in passenger demand growth.
In addition to the unrest in the region, the more dramatic fall in cargo growth was impacted in part by factory shutdowns due to the Chinese New Year period which fell in the first part of February in 2011.
“Another series of shocks is denting the industry’s recovery from the recession. As the unrest in Egypt and Tunisia spreads across the Mena region, demand growth is taking a step back. The tragic earthquake and its aftermath in Japan will most certainly see a further dampening of demand from March. The industry fundamentals are good. But extraordinary circumstances have made the first quarter of 2011 very difficult,” said Giovanni Bisignani, IATA’s director general and CEO.
February marked a decline in load factors in both cargo and passenger business. February passenger load factors stood at 73 per cent. On a seasonally adjusted basis they have lost 2.2 percentage points on peak levels as capacity additions have consistently exceeded demand growth. Freight load factors have deteriorated even faster to 51.6 per cent. This is four percentage points below their peak in May 2010, on a seasonally adjusted basis.
By February 2011, air travel volumes were 16 per cent higher compared to the low point reached in early 2009.
Middle East airlines saw demand growth fall from 12 per cent in January to 8.4 per cent in February. A capacity increase of 11 per cent resulted in a load factor of 72.2 per cent. Political unrest in Bahrain, Yemen and Syria is expected to have an impact on the region’s markets when the March figures are known. These three countries represent about six per cent of Middle Eastern traffic and 0.3 per cent of global capacity.
Africa saw traffic fall by 1.3 per cent compared to February 2010. Against a capacity expansion of 6.9 per cent, load factors fell to 60.4 per cent. Egypt and Tunisia account for 18 per cent of the African market and 0.6 per cent of worldwide capacity. Libya is a further three per cent of the African market and 0.1 per cent of global capacity. The impact of political unrest has been severe with absolute traffic (measured by RPKs) falling by 13.1 per cent compared to January levels.
Europe’s carriers recorded 7.4 per cent growth compared to February 2010 against a 9.8 per cent increase in capacity.
North American airlines reported 6.7 per cent year-on-year growth for February and a capacity expansion of 11.9 per cent. There is a widening gap between supply and demand pushing the load factor down to 71.7 per cent, significantly below the 82.2 per cent recorded for the full year in 2010.
Asia-Pacific airlines reported a major slowdown to three per cent growth, half of the 6.3 per cent recorded for January. A capacity increase of 6.6 per cent pushed the load factor down to 75.4 per cent.
“The industry situation is volatile and we are watching higher fuel prices carefully. Capacity increases ahead of demand are bringing down load factors for both passenger and cargo operations. Demand is still supported by strong economic fundamentals. But with looser supply and demand conditions, it will be a challenge for airlines to recover the added costs of fuel. Our pathetic 1.4 per cent expected margin for 2011 is under considerable pressure,” said Bisignani.
Based on an average oil price of $96 per barrel, IATA is forecasting fuel to account for 29 per cent of average operating costs with a total fuel bill of $166 billion. For every dollar increase in the price of a barrel of oil, the industry must recover an additional $1.6 billion in added costs.