IATA Warns of Slowing Demand

The International Air Transport Association (IATA) has announced worldwide traffic results for the month of November 2011 and warned that passenger demand is slowing while cargo markets are still weak compared to the previous year. Although passenger traffic was up 4.3% to last November, the figure is somewhat distorted due to November 2010 being particularly weak itself. The slowing passenger market is seen when comparing figures from October 2011, showing a 0.5% fall on a seasonally-adjusted basis. Meanwhile, cargo markets were down 3.1% to November 2010, despite an October 2011 rise of 1.1%.

Passenger load factors have sharply declined from 78.5% in October to 76.3%, showing that the weakness in demand is outpacing the ability of carriers to adjust capacity in accordance. Regional differences are steep, with North American airlines seeing a 0.8% fall in travel, Middle Eastern carriers recording a 10.1% rise and Latin American airlines experiencing a 9% increase.

International passenger markets continue to be weaker than domestic, with demand contracting 1.5% compared to a 1.3% growth in the domestic sector. Demand fell 1.2% in North America compared to November 2010, which is in line with a 1% capacity cut. Middle Eastern carriers recorded a 9.8% growth and Latin American airlines recorded an 8.8% growth, which is the strongest year-on-year growth for both regions. This followed capacity rises surpassing demand growth, with Middle Eastern airlines increasing capacity by 10.4% and Latin American carriers jumping 11.4%.

European carriers continue facing the weakest market outlook because of uncertainty surrounding the eurozone. Demand rose 4.9% compared to November 2010 and capacity grew 5.3%. This is a big change from the 6.4% growth in demand for October 2011 on an 8.1% rise in capacity. Airlines in the Asia-Pacific reported a 2.4% rise in year-on-year demand with a 5.4% increase to capacity and a load factor of 73.3%. African airlines reported demand growing 2.6% with a 1.3% increase to capacity and a 66.2% load factor.

IATA director general and chief executive Tony Tyler says that weak worldwide economic performance is being reflected in aviation markets. Although passenger markets have grown some 2% compared to the beginning of the year, the trend has been volatile and soft. Cargo markets have contracted some 4% compared to the beginning of 2011. Continuing uncertainty about the economy will likely mean shortcomings worsen in the market as the world moves into 2012.

Tyler continued that the holiday season at the end of the year reminds everyone of the importance of connectivity and how aviation is a good force in the world. Millions more travellers journey to rest and discover, and they will be joined in the New Year by businesspeople seeking to grow their companies by investigating new markets of opportunity. Additionally, governments everywhere will seek solutions to the uncertainty of the economy, as growth is the only sustainable solution. Aviation can be an economic growth catalyst, but this will depend on governments permitting airlines to provide global connectivity. Every government should resolve this year to stop the mis-regulation or over-taxation of such an essential economic driver.