Demand rises amid higher fuel prices

 “If we discount the industry’s growth by two percentage points as a result of the extraordinary events in 2011, airlines still managed an expansion in the range of 5-6 per cent.  Given the prevailing economic conditions with some European states returning to recession, passenger demand is holding up well. But this is bringing little relief to the bottom line because yields are not keeping pace with the continued very high price of oil,” said Tony Tyler, IATA’s director general and CEO.
 Brent crude oil prices have remained stubbornly above US$100/barrel (Brent crude) for the past 14 months. In 2008, oil prices rose from $90/barrel in January to a peak of $147/barrel in late July. But by November, they had fallen back to less than $50/barrel.
 “We have not seen such sustained high oil prices previously. Jet fuel prices have risen 8 per cent since January. Considering that fuel now accounts for 34 per cent of average operating costs, it’s an increase that hurts,” said Tyler.
 In March, total passenger capacity rose 4.4 per cent compared to March 2011, resulting in a load factor of 78.3 per cent, up 2.4 percentage points over the year-ago period. Freight capacity, however, climbed 1.7 per cent year-on-year, above the rate of demand, placing pressure on load factors.
 Asia-Pacific carriers experienced healthy growth, with demand up 8.1 per cent on a 4.3 per cent rise in capacity, pushing load factors up to 76.5 per cent.