29-Jul-2010 12:24 PM

World airline passenger and freight traffic back above pre-recession peak; some “slowing” expected

IATA reported continued “strong demand growth” in international scheduled traffic in Jun-2010, as the industry recovers from the impact of the global financial crisis. IATA Director General, Giovanni Bisignani, commented that the industry “continues to recover faster than expected”.

But Mr Bisignani cautioned that there are “sharp” regional differences in the recovery path, stating: “Europe is recovering at half the speed of Asia with passenger growth of 7.8% compared to the 15.5% growth in Asia Pacific”.

IATA traffic results: Jun-2009 vs Jun-2010 growth levels

	RPK Growth	ASK Growth	PLF	FTK Growth	AFTK Growth
Africa	21.3%	12.1%	69.0%	54.0%	23.3%
Asia Pacific	15.5%	4.4%	77.9%	29.8%	20.5%
Europe	7.8%	4.3%	81.0%	15.3%	2.1%
Latin America	14.7%	9.5%	73.8%	44.9%	25.3%
Middle East	18.0%	13.1%	76.6%	39.6%	17.9%
North America	10.8%	5.6%	86.6%	24.2%	5.9%
Industry	11.9%	5.9%	79.8%	26.5%	12.2%

Double-digit traffic increases in Jun-2010; passenger volumes now above pre-recession peak

During the month, international passenger traffic (RPKs) increased 11.9% year-on-year, for the largest year-on-year month of traffic growth in over 12 months. It comes off deeply negative figures in Jun-2010. IATA added that, following a dip in Apr-2010 due to the volcanic ash crisis centered in Europe, international passenger demand has returned to its upward growth trend, adding that passenger volumes are now 1-2% above the pre-recession peak in 1Q2008.

IATA airlines RPK growth by region: Jun-2009 to Jun-2010

Load factor gains sustained

This double-digit traffic growth occurred despite only a 5.9% capacity (ASKs) increase. This was, however, the largest month of capacity growth in over 12 months.

IATA airlines ASK growth by region: Jun-2009 to Jun-2010

The gap between traffic and capacity growth pushed up the international passenger load factor to historical highs of 79.8%, for the seventh consecutive month with seasonally adjusted load factors near 79%.

IATA airlines passenger load factor by region: Jun-2009 to Jun-2010

Strong surge in cargo traffic; freight volumes 6% above pre-recession peak

Similarly, there was a 26.5% jump in freight demand in the month (following growth of 34.0% in May-2010, as some interrupted traffic from April’s ash crisis shifted to May). The strong surge in cargo traffic outstripped a capacity increase of 12.2%, resulting in volumes remaining 6% above the pre-recession peak in early May-2010. Load factors were also in line with historical highs at 53.8% for freight.

IATA airlines FTK growth by region: Jun-2009 to Jun-2010

Europe remains the weakest region

European carriers again showed the weakest freight growth, with the region still 5-6% below the pre-recession peak in freight traffic.

IATA passenger and freight growth analysis by region: Jun-2010

	Passenger growth	Freight growth
Africa	Posted a 21.3% increase in traffic in June, positively impacted by activities surrounding the FIFA World Cup.	Freight demand continues to follow economic recovery and trade patterns. African freight growth was the fastest growth market in the month at 54.0%
Europe	Reported 7.8% growth, down slightly from the 8.3% recorded in May-2010. While annualized growth of 6.2% is in line with the industry average, it is clear that the recovery in Europe is lagging behind the rest of the world.	Europe (+15.3%) is growing at half the rate of the fastest growing regions based on slower economic growth. This trend is particularly evident in Europe which is the only region still 5-6% below the pre-recession peak. The low value of the Euro will be a help to the region’s exporters and eventually drive up freight volumes
Asia/Pacific	Recorded the most significant demand improvement at 15.5%. China continues to be the region’s growth engine.	Freight demand continues to follow economic recovery and trade patterns
Latin America	Showed a 14.7% increase in passenger traffic. This reflects a more normal growth rate than the 23.6% recorded in May-2010 when results were heavily skewed by the Influenza A(H1N1) crisis which centered on the region in May-2009	Freight demand continues to follow economic recovery and trade patterns with airlines in Latin America reporting the second largest freight growth, after Africa, at 44.9%
Middle East	Continue to post the fastest growth—up 18.0% compared to Jun-2009. This is based on a strong regional economy and the ability to attract long-haul traffic through the region’s hubs.	Freight demand continues to follow economic recovery and trade patterns
North America	Posted growth of 10.8%, comparable to the 10.9% recorded for May-2010. Strong growth and the industry-leading load factor of 86.6% are contributing to strong second quarter financial results being announced by the region’s carriers.	Carriers in North America (+24.2%) occupy the middle ground in freight recovery

Cautiously optimistic but expects some “slowing” in months ahead

IATA commented that it remains “cautiously optimistic” about the outlook, stating “business confidence remains high and there is no indication that the recovery will stall any time soon”. IATA added that a “clear indication” of the growing confidence is the over 400 aircraft orders announced at the Farnborough Air Show. See related report: The Farnborough scorecard: 650 orders! Airbus tops Boeing as lessors come to the party

However, Mr Bisignani cautioned that new aircraft orders will “also make the challenge of matching capacity to demand much more difficult”. IATA also questioned “how long can the industry maintain the double-digit momentum”, warning that with government stimulus packages tailing off and restocking largely completed, "we do expect some slowing over the months ahead”.