Oil prices are higher than ever- Economic uncertainty (US credit crunch) is broadening and the slower growth for passenger demand in December, sets the trend for the coming months.
In a tough business environment the mantra remains the same: efficiency everywhere is everything.
The International Air Transport Association (IATA) released full-year traffic results for 2007. The highlights are:
Passenger Traffic- International passenger traffic demand grew 7.4% for the full-year 2007 up considerably from the 5.9% increase recorded during 2006.
- December passenger traffic demand rose 6.7% down from the 9.3% jump recorded in November. This step down reflects the impact of rising prices and economic uncertainty that grew more acute in December.
- Average international passenger load factors reached an industry record 77.0% in 2007, up from 76.0% in 2006 and 75.1% in 2005. This trend will likely end in 2008 as demand growth is forecast to slow to 5% while capacity rises 5.2%.
Regional results for the full-year were varied: - Carriers in the Middle East recorded an 18.1% increase in passenger demand continuing a four-year trend of double digit increases. This was the highest among all regions, resulting from strong regional economies, the impact of oil wealth, expanded capacity and new routes.
- Latin American airlines recorded 8.4% demand growth resulting from the effects of restructuring in the region - a sharp recovery compared with the 2.4% fall in 2006.
- African carriers recorded above average growth of 8% reflecting the strong economic growth and successful market liberalisation in parts of the continent.
- Asia Pacific carriers' 7.3% growth mirrored that of the global average. Growth indicates the continuing strength of the Chinese and Indian economic expansion making air travel accessible to large new markets.
- Europe saw demand rise from 5.3% in 2006 to 6.0% in 2007, reflecting steady economic growth and expansion on long-haul routes to Asia and the Middle East.
- North America recorded 5.5% growth in 2007. This continues the growth of 5.7% recorded in 2006 as region's carriers transfer capacity to more lucrative international markets.
Freight Traffic- International air freight traffic grew by 4.3% in 2007. This is down slightly from growth of 4.6% seen in 2006 and much lower than the 7-8% growth trend of recent years.
- Air freight demand grew 4.7% in December, up from 3.5% in November, largely due to temporary, year-end related, factors.
- The air freight demand environment will remain challenging. Growth is expected to slow in the first half of 2008 before picking up with overall growth of 4-4.5% projected for 2008.
- Middle East carriers led all regions in 2007 with a 10.1% increase in freight demand down sharply from 16.1% in 2006. Airlines in Asia Pacific, which account for 45% of the international total, saw freight demand rise 6.5% in 2007, driven by strong growth in several economies in the region.
"Strong passenger traffic growth of 7.4% was a key component of the industry's US$5.6 billion profit in 2007—the first black number since 2000," said Giovanni Bisignani, IATA's Director General and CEO. "But it wasn't all good news. Freight slowed to 4.3%, below the 4.6% recorded in 2006. It was also below the 7.5% at which global trade expanded, highlighting a competitiveness issue with shipping."
"Despite the ambiguity of strong passenger growth accompanied by weaker freight demand, we can say clearly that 2007 was the best in recent memory. We can state equally clearly that there will be no encore performance in 2008. Oil prices are higher than ever. Economic uncertainty accompanying the US credit crunch is broadening. And the slower growth for passenger demand in December sets the trend for the coming months. In a tough business environment the mantra remains the same: efficiency everywhere is everything," said Bisignani.
