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IATA. Passenger Decline Stabilizes -Some Improvement in Freight-

[1]The International Air Transport Association (IATA) announced international scheduled traffic results for May showing passenger demand declining 9.3% compared to the same month in previous year while freight demand was down by 17.4%. International passenger load factors stood at 71.2%, down from 74.5% recorded in May 2008. 

The 17.4% decline in international cargo demand is a relative improvement compared to the 21.7% drop in April. Since December 2008, cargo demand has been moving sideways in the -20% range. This is one of the first physical signs of the economic recovery being anticipated in equity markets. 

International passenger demand weakened from the -3.1% recorded in April to -9.3% in May.  But both of the past two months have been slightly stronger than the 11.1% decline reached in March, even after adjusting for the distortions caused by the timing of Easter. This indicates that a floor may now have been reached. However, the capacity adjustment of -5.0% in May did not keep pace with the fall in demand during the same month. Moreover, although the impact of the recession appears to be stabilizing, strong headwinds from debt and low asset prices are expected to weaken and delay any significant recovery. 

“We may have hit bottom, but we are a long way from recovery,” said Giovanni Bisignani, IATA’s Director General and CEO. “Capacity is not aligned with demand. Passenger load factors dropped 3.3 percentage points over the last 12 months. The impact on revenue is dramatic. After a 20% fall in international passenger revenue in the first quarter, we estimate that the drop accelerated to as much as -30% in May. This crisis is the worst we have ever seen,” said Bisignani. 

International Passenger Demand

International Air Freight

“We have lost several years of growth and yields are under severe pressure. Airlines are in survival mode. Cutting costs and conserving cash are the priorities,” said Bisignani. 

“Even if we look beyond the crisis, it is difficult to see a return to business as usual. This crisis is re-shaping the industry. The burden cannot be placed on airlines alone. All partners in the value chain must be prepared to change-reducing costs and improving efficiencies. Too often we get the opposite. Already this year we have seen US$1.5 billion in cost increases from airports and air navigation service providers. It’s irresponsible in the best of times and a completely unacceptable abuse of monopoly position in a crisis,” said Bisignani.