Air freight markets suffer from slowdown

 "Passenger travel bucked the gloomy economic outlook with a 5.9 per cent increase in July. This increase was likely based on the much more optimistic economic outlook that marked the beginning of the year. With business and consumer confidence now tanking, sluggishness in international trade, and high fuel prices, the expectation is for a weaker end to the year. We are already seeing this in the shrinking air freight markets, which were 0.4 per cent down on the previous year," said Tony Tyler, IATA's Director General and CEO.

"July is the peak in the annual cycle for passenger traffic. This year was no exception. But even if the industry's performance could be classified as stronger than expected, we do face headwinds as we look towards the end of the year. Some of our challenges have a high percentage of government-made content. The recent downsizing of Air Berlin is a clear reminder of the high cost of the German departure tax on the economy, jobs and communities. Governments should not compromise aviation's role as an economic catalyst for the short-term revenue gain of gratuitous taxation—particularly when economies remain weak," said Tyler.

 Passenger load factors improved by half a percentage point over July 2010 to 83.1 per cent: North American carriers (86.9 per cent) and European carriers (84.1 per cent) were in the lead. Latin American carriers saw the biggest improvement (from 76.5 per cent last July to 79.6 per cent this year).

 With very little growth since the end of third quarter 2010, domestic demand has been much more sluggish than that for international travel. US domestic markets, which represent 50 per cent of the world's market, grew 2.1 per cent compared to July 2010. China, with the second biggest domestic market (18 per cent of the world), slowed abruptly to just a 5.1 per cent increase in July. This accelerated the trend of slowing domestic traffic growth that began in the second half of 2010. After growing at around 20 per cent in the first half of 2010, China finished the year with a 14.6 per cent annual increase that has now slipped to single digits. 

  The Japanese market is recovering slowly from the shock of the March earthquake and tsunami. While June showed a 20.3 per cent decline on previous year's levels, July was 16.7 per cent down.

 Brazil and India recorded the highest growth rates of 17.8 per cent and 20.6 per cent respectively. Both were stronger than June's performance.

 The freight market, which reflects economic sentiment more quickly than passenger markets, due mainly to the earthquake and tsunami in Japan, coupled with the general economic gloom.

 Asia-Pacific carriers continue to show the weakest freight performance with a 3.6 per cent decline compared to July 2010. Middle East and Latin American carriers showed the strongest performance with gains of 8.4 per cent and 8.2 per cent respectively.

 Freight load factors have declined significantly (1.8 percentage points) to the pre-recession level of 45 per cent. Asia-Pacific carriers, the largest in the market, have seen load factors slip to 58.1 per cent (from 60.2 per cent in July 2010). While the region suffers from a major imbalance with strong outward flows of manufactured goods and weak inbound traffic, the scale of their home carrier operations allows for better capacity utilisation.