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Air Travel Shrinks in March

The International Air Transport Association (IATA) has announced scheduled international traffic results for March 2011 showing that year-on-year growth in passenger demand had slowed to 3.8% from the 5.8% recorded in February. Conversely, year-on-year growth in freight markets rebounded to 3.7% in March from the 1.8% recorded in February.

Compared to February, global passenger demand fell by 0.3% in March, while cargo demand expanded by 4.5%.

“The profile of the recovery in air transport sharply decelerated in March. The global industry lost 2 percentage points of demand as a result of the earthquake and tsunami in Japan and the political unrest in the Middle East and North Africa (MENA),” said Giovanni Bisignani, IATA’s Director General and CEO.

The impact of the events in Japan on global international traffic was a 1% loss of traffic in March. Looked at regionally, Asia-Pacific carriers saw a traffic loss of over 2%, North American carriers had a 1% drop and Europe’s carriers a 0.5% fall. Japan’s domestic market was the most severely impacted with a 22% fall in demand.

The disruptions in MENA cut international travel by 0.9 percentage points. Egypt and Tunisia experienced traffic levels 10-25% below normal for March. Military action in Libya virtually stopped civil aviation to, from and within that country.

Capacity adjustments lagged behind the sudden drop in demand. Against global demand growth of 3.8%, capacity expanded by 8.6%. The average load factor fell by 3.5 percentage points to 74.6%.

International Passenger Demand

  • Europe’s carriers saw demand levels of 5.3% above March 2010. This was down from the 7.4% year-on-year growth in February. Compared to February levels, Europe’s carriers added 0.5% to capacity but experienced zero demand growth. This pushed load factors down by 0.3 percentage points to 75.3%. Long-haul business travel is strong (except to Japan) but weak economic prospects continue to dampen intra-European traffic.
  • North American carriers saw a 3.7% year-on-year improvement in demand in March. This was a 3 percentage point tumble from the 6.7% growth recorded in February. Compared to February levels, demand dropped 0.9% while capacity was up 0.3%. This led to a 0.9 percentage point drop in load factors from their February levels to 76.9%.
  • Asia-Pacific carriers saw the broadest negative turn of fortunes in March. Compared to the previous year passenger demand was flat. Compared to February however demand contracted by 2.2% while 0.8% was added to capacity. This led to a sharp 2.3 percentage point fall in load factors to 74.2% in March.
  • Latin American carriers experienced a 22.2% increase in demand compared to the previous March which was severely depressed due to the earthquake in Chile. Compared to February, demand was up by 4.7% while capacity expanded by 2.2%. Load factors improved 1.9 percentage points to 77% in March—the highest among all regions.
  • Middle East carriers saw year-on-year demand growth fall from 8.3% in February to 5.6% in March. Compared to the previous month (February) demand was up by 0.1% while capacity expanded by 0.8%. This pushed the load factor down 0.6 percentage points to 73.2%.
  • African carriers saw demand fall 7.0% compared to the previous March. This is an improvement from the 9.7% drop recorded in February. Compared to the previous month, the region saw demand expand by 6.5% against an increase in capacity of 6.2%. Load factors improved by 0.2 percentage points to 62.7%. This is sharply below the industry average of 74.6%.

Looking Ahead

The second quarter is likely to see continued depressed air travel markets due to the events in Japan and MENA. However, strong underlining economic growth trends should support recovery in both passenger and cargo markets in the second half of 2011.

“The big uncertainty is the price of oil. Even in the $120 a barrel range, it appears that strong economic growth in markets outside of Europe is continuing. We see this in the strong demand from business for premium travel which maintained 7.7% growth through February. But many leisure travelers are putting off flying because of the impact of high oil prices. The fragility of the situation is demonstrated by the considerably weaker 3.3% year-on-year growth in economy class travel in February. And, despite efficiency gains, the industry’s 1.4% profit margin leaves it vulnerable in the face of volatile markets,” said Bisignani.