IATA numbers reveal slowing demand

IATA's August traffic figures show that, while passenger demand was up 4.5 per cent over the previous August, this represents a significant slowing from the six per cent recorded in July.

And the decline in freight markets accelerated, with the 3.8 per cent contraction in freight markets recorded in August more than double the pace of July’s 1.8 per cent decline.

“The industry has shifted gears downward," said IATA chief Tony Tyler. "The pace of growth in passenger markets has dipped and the freight business is now shrinking at a faster pace.

"With business and consumer confidence continuing to slump globally there is not a lot of optimism for improved conditions any time soon.”

Comparisons of July to August more clearly indicate the slowdown, with the total passenger market falling by 1.6 per cent in August compared to July.

International markets declined by 1.8 per cent, while already weak domestic markets shrank by one per cent. The total cargo market fell by 1.3 per cent.

Asia-Pacific carriers reported 5.3 per cent demand growth for August, slightly below a 5.6 per cent capacity expansion.

This is slightly better than the year-to-date growth of 4.4 per cent, reflecting the recovery in Japanese international travel.

Load factors of 78.9 per cent were below the global industry average of 81.2 per cent.

Japanese domestic demand was down 12.4 per cent compared to the previous August. Traffic was up strongly in August and has now recovered to within nine per cent of pre-earthquake and tsunami levels.

Chinese domestic travel demand was up only 2.8 per cent on the previous August. While positive, it is well below the double digit growth seen in 2009 and for much of 2010.

India recorded demand growth of 19.7 per cent, the top performer among domestic markets.

Global freight markets are showing clear signs of decline. Compared to the same month in the previous year, the decline accelerated to -3.8 per cent in August following the 1.8 per cent drop recorded in July.

IATA Says that, "Overall, utilization on freight markets has declined 4 percentage points since the second quarter of 2010. Coupled with falling volumes this makes the freight business a very difficult market in which to sustain profitability."

Tyler talks of "tough times ahead" for airlines.