IATA Reports Stabilization in Air Traffic Decline

The International Air Transport Association (IATA) announced international scheduled traffic results for May 2009 showing passenger demand declining 9.3 percent compared to May 2008, while freight demand was down by 17.4 percent. International passenger load factors stood at 71.2 percent, down from 74.5 percent recorded in May 2008.

The 17.4 percent decline in international cargo demand is a relative improvement compared to the 21.7 percent drop in April. Since December 2008, monthly cargo demand has had consistent declines in the 20 percent 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 percent decline recorded in April to the 9.3 percent decline in May. But both of the past two months have been slightly stronger than the 11.1 percent 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 a 5.0 percent decline 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.

May was the first full month to feel the impact of the Influenza A (H1N1) outbreak on travel. Mexican carriers saw their traffic fall almost 40 percent in May. Latin American carriers saw their traffic decline by 9.2 percent in May compared to the previous year.

Against a capacity increase of 0.2 percent, the load factor plummeted to 64.7 percent -- a 6.7 percentage point drop compared to May 2008 and the lowest load factor among all the regions. The IATA estimated that the global impact of H1N1 on global travel patterns in May was a 1 percent drop in passenger traffic.

Asia Pacific carriers recorded a 14.3 percent fall in demand. While capacity adjustments by the region’s carriers were the most severe (down 9.3 percent), they did not keep pace with the fall in demand driven by weak economies and the impact of H1N1 on the region with the most vivid memories of the SARS crisis.

North American carriers posted a 10.9 percent fall in passenger demand, considerably worse than the 4.2 percent fall in April. This was the result of weak demand to Latin American destinations affected by H1N1, along with significant recession-driven drops in both trans-Atlantic and trans-Pacific markets.

European carriers, in additional to weak long-haul markets, saw some loss of market share to European low cost carriers whose traffic grew by 2.1 percent, while the network carriers reported a 9.4 percent decline. African carriers saw a slight improvement of a 6 percent fall in demand in May, compared to a 7.1 percent decline in April.