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International Air Travel Rebounds In April

The International Air Transport Association (IATA) announced traffic results for April which showed a rebound in international markets with 16.5% growth compared to April 2010. While this is exaggerated by the comparison to April 2010 during which European airspace was closed due to the volcanic ash crisis, international travel markets in April had grown to reach a level 7% higher than the pre-recession peak of early 2008.

Top line highlights include:

  • International: A 16.5% increase in passenger demand was met by a 16.8% increase in capacity. Passenger load factors fell slightly from 76.8% in April 2010 to 76.7% in April this year.
  • Domestic: Domestic markets showed 4.7% growth over the previous year, outpacing a capacity increase of 3.1%, pushing the passenger load factor to 78.8%.
  • System-wide: System-wide, passenger traffic grew by 11.9%, slightly ahead of an 11.5% capacity expansion pushing the system-wide load factor to 77.4%.

“Demand improved significantly in April. Eliminating all distortions, we are growing at 3-4%. International traffic is now 7% above the early 2008 pre-recession levels, load factors are hovering around 77% and business confidence is high. Unfortunately two things are spoiling the party - demand shocks and high jet fuel prices,” said Giovanni Bisignani, IATA’s Director General and CEO.

“Despite the enormous restructuring over the last decade, the industry is not shock-proof. Profits are being squeezed by the succession of crises and shocks that have marked the first four months of this year. Their impact on demand will continue to ease as we move into the second half. But maintaining the high load factors needed to support profitable growth will be difficult given the ongoing challenge of matching capacity to volatile demand,” said Bisignani.

International Passenger Markets

  • African carriers saw a modest 1.2% growth in international markets compared to April 2010. This is significantly better than the 7.1% decrease recorded in March due to more stability returning to North Africa. While the number of flights operated to/from Egypt and Tunisia is down by about a quarter compared to last year, about half of February’s 18% loss in traffic in these two markets has been recovered. Libyan airspace remains closed.
  • Asia-Pacific carriers saw 5.1% growth in international markets, reversing the 0.6% drop in March. Strength in Chinese and Indian markets helped offset the weakness in routes associated with Japan. Japan’s international traffic is down 20%, knocking a full 1% off of total international travel.
  • North American carriers are seeing much stronger demand in international markets (+11.9%) than in domestic, for which the US carriers reported 1.2% growth.
  • European carriers reported a 29.3% spike, due mostly to the comparison to April 2010 which was severely impacted by the volcanic ash crisis.
  • Latin American carriers saw a 25.9% increase in international demand in April, higher than the 22.7% recorded in March. The region’s airlines are continuing to benefit from the strong demand for commodities, and the dynamic growth of trade within the region and along trade lanes with Asia
  • Middle East carriers reported a 12.1% increase in international markets, more than double the 5.3% recorded for March, indicating a return of confidence to the region’s long-haul operations. While political unrest in Bahrain, Yemen and Syria continued through the month, the impact was small as the three markets combined account for only 6% of Middle East traffic.
  • Utilization of seats improved significantly in April after large falls in February and March due to various demand shocks. While a downward trend is still visible, a load factor of 76.7% means that half of the 4 percentage point decline since mid-2010 (when profits peaked) has been recovered.

Domestic Passenger Markets

  • Domestic markets have been the weakest segment of air travel over the past 9 months.
  • Japanese domestic travel was 31% below previous year levels in the aftermath of March’s earthquake and tsunami. While capacity was adjusted downwards by 15.9%, the gap with the fall in demand pushed load factors down to 47.4% for the month.
  • China’s domestic market has also seen a decline in growth to 10.8% in April. Against a 3.7% increase in capacity, load factors were pushed upwards to 84.1%. While this is still robust growth in China, the world’s second largest domestic market, tighter economic policies have resulted in a significant slowing from the 14.6% growth recorded in 2010.
  • Brazil and India showed the strongest domestic growth at 23.8% and 25.6% respectively. Both are continuing their trend of high-speed growth.
  • The United States reported sluggish growth of 1.2%. The sluggishness in the mature US domestic market (which represents about half of global domestic travel) travel is responsible for the overall slow growth in domestic travel. It is also a very price sensitive market that has declined with rises in jet fuel costs this year.
  • Over the last five years, Indian domestic expansion has been the strongest with a tripling in size. China and Brazil doubled in size over the same period.

Global air transport leaders have gathered in Singapore for the IATA Annual General Meeting and World Air Transport Summit from 5-7 June. Topics on the agenda include the search for sustainable profitability, security and environment.