Airline industry looks to emerging markets for global rebound

With UK airports reporting their worst annual performance decline since the 1940’s, global airlines are eagerly looking at the Latin American and Asian air markets to lead the global recovery predicted for 2010.

The International Air Transport Association (IATA) last week lowered its forecasts for airline losses this year to $2.8 billion, a significantly lower figure than the previous estimate of $5.6 billion. The late surge in travel at the end of 2009 also led IATA to revise its loss estimate for last year from $11 billion to $9.4 billion.

The CEO and Director General for IATA, Giovanni Bisignani, confirmed that two distinctly separate trends have developed, with North America and Europe still struggling but Latin America and Asian markets growing strongly. This momentum was confirmed by the January data from IATA, which represents some 240 global carriers, which showed the Latin American and Asia-Pacific markets grew by 11 percent and 6.5 percent respectively. Europe posted a mild gain of 3.1 percent, as did North America at 2.1 percent.

IATA has also suggested that passenger demand in 2010 will increase by 5.6 percent, as opposed to the 2.9 percent decline seen last year. Cargo traffic is also expected to grow by up to 12 percent this year after an 11.1 percent drop in 2009.

The biggest variance to forecasts remains the cost of jet fuel, which centre mainly around the price of oil. IATA has forecasted that oil prices will reach $79 per barrel in 2010, up by $4 from the previous estimate and well above the $62 average price in 2009.