Grim outlook for airlines: IATA chief

Capacity growth of 5 per cent saw load factors fall to 75.4 per cent. This is a 1.5-per-cent drop from the 76.9 per cent recorded during the same period last year and the third consecutive monthly year-on-year decline. International cargo demand growth remained sluggish at 3.7 per cent.

April figures contain several distortions. The impact of an early Easter holiday in 2008 reduced comparative year-on-year traffic growth by about 2 per cent in April. At the same time, the 10-per-cent transatlantic capacity increase with the commencement of the US-EU Open Skies is estimated to have boosted global traffic by about 1 per cent. Adjusting for these distortions and for leap year, underlying passenger traffic demand increased 4 per cent in April and the three previous months.

"The impact of skyrocketing oil prices and weaker economies has made its way to traffic growth. At this time last year we were talking about 6.7-per-cent growth for the first four months of the year. This year it's 4 per cent. There has been a step change downwards," said IATA director general Giovanni Bisignani. Unadjusted traffic figures for April indicate significant differences by region:

Europe recorded 1.6-per-cent year-on-year growth, down from the 3.7 per cent recorded in March.

North American carriers recorded 3.8-per-cent demand growth in international passenger traffic as capacity continued to shift to international markets. This was outstripped by capacity expansion of 6.2 per cent. Moreover it is down from the 6.3-per-cent year-on-year growth recorded in March.

Asia Pacific carriers saw 2.6-per-cent growth in demand, down from 4.3 per cent in March as a result of the slowing Japanese economy. Particularly impacted were long-haul routes to North America and Europe.

Middle Eastern airlines saw an 11-per-cent increase in traffic due to soaring oil revenues, developing tourism and additional airport and airline capacity.

Latin American airlines saw a 4-per-cent increase. This is down from the 19.7 per cent recorded in March as the impact of the significant industry restructuring in 2007 wears off.

Africa continued its free-fall with a 5.6-per-cent contraction in traffic and an 8.7-per-cent reduction in capacity.

The sluggish air freight volume growth of 3.7 per cent in April was weaker than the 4.4-per-cent average increase recorded during the first quarter reflecting the impact of the economic slowdown.

The EU-US Open Skies agreement provided a modest boost to US airlines, which recorded 6-per-cent growth in April due to extra transatlantic capacity.

Middle Eastern airlines recorded a 15.8-per-cent increase in April due to additional capacity and strong trade in the markets they serve.

"Combine slowing growth with skyrocketing oil prices and the industry outlook is grim at best," said Bisignani, as the world's aviation leaders begin to gather in Istanbul for the IATA Annual General Meeting and World Air Transport Summit.

"In 2007 airlines posted a profit of US$5.6 billion (Bt182 billion). This was the first profit after six years in which losses totalled more than $40 billion. To achieve this, we re-engineered the industry," said Bisignani. "On June 1, the industry will mark a 'Simplifying the Business' milestone, having achieved 100-per-cent e-ticketing. It means $3 billion in cost savings and greater convenience everywhere. But there will barely be time to celebrate. Much more change is needed," said Bisignani.

The IATA Annual General Meeting and World Air Transport Summit is the biggest airline event of the year.