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Montevideo, November 28th 2021 - 18:01 UTC

 

 

Air traffic strong recovery in 2010, but oil prices derail 2011 prospects

Thursday, February 3rd 2011 - 17:05 UTC
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Passenger traffic was up 8.2% and freight 20.6% Passenger traffic was up 8.2% and freight 20.6%

Air traffic increased 8.2% in the passenger business and 20.6% in freight according to the full 2010 report from the International Air Transport Association, IATA. Middle-East, Asia-Pacific and Africa regions were above average in passenger transport and Latinamerica led in cargo expansion.

However IATA’s Director General and CEO Giovanni Bisignani cautioned about prospects for 2011 given uncertainties in the Middle East which have pushed oil prices above the 100 USD per barrel mark. Fuel accounts for 27% operating costs and IATA projections for this year were based on an oil price of 84 USD per barrel.

“The story this month is the sharp rise in oil prices: for every dollar increase in the average price of a barrel of oil over the year, airlines face the difficult task of recovering an additional 1.6 billion USD in costs,” said Bisignani.

According to the 2010 IATA report demand growth outstripped capacity increases of 4.4% for passenger and 8.9% for cargo. Average passenger load factor for the year was 78.4% which is a 2.7 percentage point improvement on 2009. The freight load factor saw a 5.2 percentage point improvement to 53.8%.

Compared to the pre-recession levels of early 2008, December 2010 air travel volumes were 4% higher. Air freight was 1% higher than pre-recession levels; however volumes have fallen 5% since the peak of the post-recession inventory re-stocking boom in early 2010.

“The world is moving again. After the biggest demand decline in the history of aviation in 2009, people started to travel and do business again in 2010. Airlines ended the year slightly ahead of early 2008 volumes, but with a pathetic 2.7% profit margin. The challenge is to turn the demand for mobility into sustainable profits,” said Bisignani.

Severe weather Europe and North America in December put a dent in the industry’s recovery. It is estimated that this shaved 1% off of total traffic demand for the month.

A quick oversight of regions shows that Asia-Pacific carriers recorded a 9% year-on-year increase in passenger demand in 2010 boosted by the economies of China and India; European carriers saw a year-on-year passenger demand increase 5.1%; North American carriers recorded year-on-year increases in passenger demand of 7.4% in 2010 with a passenger load factor at 82.2% for the full year (up from 79.6% in 2009); Middle Eastern carriers reported the strongest full year growth at 17.8% on the back of a 13.2% capacity increase fuelled largely by aircraft deliveries to Gulf-based airlines; Latin American carriers saw the whole year demand grow 8.2% despite a 1.1% decrease in December, a reflection of the demise of Mexicana. But the reality is that for 2010 overall, the total is almost 8% more than 2008. Finally African carriers also experienced a sharp rebound of nearly 12.9% in 2010, although load factors remained well below the industry average, at 69.1%.

Freight demand growth varied wildly over the year from a high of 35.2% in May to a low of 5.8% in November. Overall the industry is trending towards normal growth pattern in line with the historical growth rate of 5-6%.

The regional variation in growth remains particularly marked. Latin American carriers recorded the highest full-year growth rate of 29.1%, followed by Middle East carriers (accounting for 11% of the market) at 26.7%, Asia Pacific airlines (with a 45% market share) grew by 24.0%, Africa at 23.8% and North America by 21.8%. Against these industry gains, Europe’s 10.8% growth stands out as exceptionally weak.
 

Categories: Economy, Tourism, International.

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