Passenger Demand Growth Reaches 18-month High

Passenger demand growth reaches 18-month high

According to traffic results released by the International Air Transport Association (IATA) for the month of November 2007, year-on-year passenger demand has increased 9.3 percent to reach an 18-month high. Average international passenger load factors also increased 1.1 percentage points from November 2006 to reach 75.4 percent in November 2007.

The traffic results showed that passenger demand was strong across most regions. Asia Pacific (8.8 percent), North America (7.6 percent) and Europe (7.6 percent) all experienced robust growth in November with no sign yet of any weakening in demand as a result of economic uncertainty. Latin American carriers also showed a strong recovery in traffic share, with a 20.1 percent increase in demand. Meanwhile, carriers in the Middle East continued its four years of double-digit growth with an 18.3 percent increase in passenger demand. Weaker demand and stronger competition slowed African carrier’s growth to 5.8 percent.

In looking at freight traffic, strong competition from sea shipping and uncertainty over the 2008 economic outlook slowed international freight demand growth to 3.5 percent in November, down from 3.6 percent in October.

“It’s a mixed picture,” said Giovanni Bisignani, IATA’s Director General and CEO. “The global economy ended 2007 on a surprisingly strong note. The November surge in passenger demand has been critical in combating high oil prices and helping airlines end 2007 with an industry profit of US$5.6 billion—the first since 2000. But against a backdrop of robust world trade, sluggish freight growth continued to be a disappointment.”

“We ring in 2008 with a warning bell. Passenger demand growth is expected to fall to 5.0 percent. And the expected increase in freight demand growth to 4.3 percent will only help us recover some of the ground lost against sea shipping. High oil prices and the impact of the credit crunch will see industry profitability slip to US$5.0 billion in 2008. Since 2001 efficiency gains have been impressive: 64 percent improvement in labour productivity, 25 percent reduction in sales and marketing unit costs and a 16 percent decrease in non-fuel unit costs. The challenge for 2008 will be much more of the same—efficiency everywhere,” Bisignani added.

Peter