The International Air Transport Association (IATA), the industry trade group of international airlines based in Montreal, Canada, is projecting a slower growth for air transport for the remainder of the year due to economic uncertainties and increasing fuel prices in the world market.
 
“The uncertain economic outlook is having a negative impact on demand for air transport,” Tony Tyler, IATA’s director general and chief executive, said in a statement Friday.
 
“The growth trend is clearly slowing. This, along with rising fuel prices, is likely to make it a tough second half of the year," Tyler added.
 
Tyler made the statement after data gathered by IATA showed that global traffic results for July indicated slower growth in both air travel and freight – although considerable variations by region and market were noted. 
 
Asia-Pacific carriers, for instance, saw a minimal demand growth of 0.9 percent, a major slowdown from the 5.8 percent recorded in the June year-on-year comparison. Against June 2012, demand contracted by 1.3 percent.
 
With the exception of Africa, China-domestic and the Middle East, which still experienced month-to-month growth, the rest of passenger markets worldwide saw demand fall from June to July.
 
Overall, July international passenger demand in aggregate was 3.4 percent higher than the same month last year, compared to a 6.3-percent increase in June and average growth of 6.5 percent over the first half of the year.
 
July freight demand was also 3.2 percent lower year-on-year. This was down from the 0.1 percent year-on-year growth rate of June. “The cargo business is 3.2 percent smaller than it was a year ago,” Tyler said.
 
Statistics showed that a large part of that decline was due to a comparison with a relatively strong July last year. Overall, however, the trend in airfreight is weak in line with subdued world trade growth.
 
In response to this slower growth environment, airlines have resorted to reducing the capacity added to markets – a move which has stabilized load factors at relatively high levels and provided some support for profitability in the face of high fuel prices.
 
Statistics also showed that in July, passenger capacity rose 3.6 percent in line with the expansion of traffic that kept the load factor at a relatively high 83.1 percent.
 
The Middle East and Ramadan
 
Middle East carriers experienced the strongest traffic growth at 11.2 percent year-on-year, although this was surpassed by a 12.4-percent increase in capacity. Against June, traffic rose just 0.1 percent. The region’s growth trends were impacted by Ramadan, which commenced last July.
 
Still, total global passenger demand was up 3.5 percent compared to the year-ago period, exactly in line with a 3.5-percent expansion in capacity. Load factors stood at 83.3 percent.
 
The slowdown becomes evident when comparing to June when the year-on-year rate was 7.5 percent. Growth on average during the first half of the year was also 7.5 percent.
 
The slowdown in international air travel growth has been concentrated in the last few months, in line with the decline of business confidence. Weakness in some key domestic air travel markets has been evident for rather longer period, IATA noted.
 
A modest slowdown from Europe
 
European carriers recorded a 4.8-percent growth (down from 7.3 percent in June) on international services compared to July 2011 with an average load factor of 85.7 percent. That was a relatively modest slowdown from the 6.5-percent average growth seen during the first half of the year.
 
Despite the recession in many European home markets, airlines from the region have been able to sustain growth on long-haul markets to regions where economic growth is stronger.
 
European airlines appear to be benefiting more than Asia-Pacific airlines from the recently stronger trade flows from West to East, while the Middle Eastern airlines continue to offer strong competition on long-haul markets. The downward growth trend began in the second quarter of 2012 and has now continued into the third.
 
North and Latin American traffic
 
North American airlines’ international traffic fell 2.1 percent year-on-year in July (after rising 1.6 percent in June) in part owing to decisions to trim capacity, particularly on the North Atlantic market. Compared to June, demand contracted by 1.3 percent. The load factor was 86.7 percent, the highest among all regions.
 
Latin American airlines posted growth of 5.7 percent, second highest among the regions. The load factor stood at 82.0 percent. But the region’s carriers could not buck the downtrend, after average growth of 10.1 percent in the first half of the year. Recently, key economies in the region – such as Brazil – have seen an interruption of economic growth, which has affected travel and freight.
 
African load factor
 
African airlines’ traffic climbed 5.2 percent year-on-year, carried by a 6.3- percent rise in capacity. Load factor was 73.1 percent – by far the lowest from any region.
 
The continent’s airlines have recorded a growth of 10.8 percent on average during the first half of the year, partly because of a rebound from the Arab Spring’s impact, and reflects the relative success of many African economies at present.
 
Domestic markets also experienced slow growth, continuing the trend that began early this year.
 
Asian domestic markets
 
In total, traffic rose 3.1 percent year-on year, down from 4.2 percent in June. But the slowdown was not universal, with China and Brazil recording strong growth that was offset by weakness in India and Japan.
 
China’s domestic market rebounded sharply from the slowdown earlier this year to post 9-percent demand growth in July, up from the 7.8 percent year-on -year growth in June. With capacity up 12.1 percent, load factor fell to 84.1 percent from 86.5 percent last year.
 
Japan’s domestic market rose just 4.2 percent year-on-year and actually declined 1 percent versus June. Capacity rose 7.9 percent and load factor was the lowest for any market at 58.7 percent. Overall, the market has contracted 4 percent this year and is 10-percent smaller than pre-earthquake levels. — VS, GMA News