IATA Figures Show Decline in Airline Demand Slows

The International Air Transport Association (IATA) released international traffic data for April showing a 3.1 percent decline in passenger demand and a 21.7 percent fall in cargo demand compared to April 2008.

The average passenger load factor stood at 74.4 percent. While April’s 3.1 percent passenger demand drop was a clear improvement compared to the 11.1 percent fall in March, this improvement should be viewed with caution. Easter holidays, which fell in the month of April, positively skews the data by at least 2 percent.

Traffic gains were at the expense of yields in most regions. And preliminary data for May suggests a renewed double-digit decline, at least for European airlines. Freight demand appears to have found a solid floor with a fifth consecutive month at more than 20 percent below previous year levels.

Load factors improved to 74.4 percent in April (compared to 72.1 percent in March); however this is slightly distorted by high volume holiday travel. Forward schedules show a return to previous-year capacity levels by the end of the third quarter. Without a corresponding sharp improvement in demand, load factors are likely to decline rather than improve.

An acceleration of fare discounting saw demand increase on North Atlantic routes. North American carriers, who experienced a 13.4 percent drop in demand in March, saw this reduced to a 4.2 percent drop in April. The capacity adjustment down 4.0 percent much more closely matched the fall in demand than in March when there was a 7.7 percentage point gap.

Asia Pacific carriers continued to see the most significant demand deterioration. Their 8.6 percent fall outstripped capacity adjustments, which dropped 7.4 percent. For European carriers, the 11.6 percent decline in passenger demand reported for March improved to a 2.7 drop percent in April, closely matching the capacity adjustment decline of 2.6 percent.

Middle Eastern carriers saw demand growth in April of 11.2 percent, against a capacity expansion of 12.3 percent. Latin American carriers saw demand expand by 7.5 percent, outstripping a capacity increase of 6 percent. Nonetheless, Latin American carriers recorded the weakest load factor at 71.2 percent. Africa’s carriers experienced a 7.1 percent fall in demand, outpacing the capacity cut of 5 percent.