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Airline Industry

Middle Eastern carriers remain the bright spot with strong growth in demand

Aug 02, 2009

Latest international passenger airline figures show that numbers are still down by 7.2 per cent in June compared to the same month last year, says the International Air Transport Association (IATA).

But the Middle East is faring better than anyone expected with the only figures that are increasing.

“Middle Eastern carriers remained the bright spot with strong 12.9 per cent growth in demand with a 15.2 per cent expansion of capacity,” said the IATA on Sunday which represents roughly 230 airlines and nine out of every 10 flights in the world.

“The region’s airlines are growing market share with particularly strong traffic growth on routes to Europe and Asia.”

“International passenger demand remains very weak,” said Giovanni Bisignani, IATA’s Director General and CEO in a statement. “Airlines are seeing international revenue falls of up to 30 per cent at the start of the busy June-August period when airlines traditionally make their money. The outlook remains bleak,” said Bisignani.

Further risks could hurt the airline industry harder, he said, noting that airlines can’t cut fares after years of sharp competition and reduce ticket prices.

“These are extremely challenging times for airlines. There are no signs of an early economic recovery. Other external risks are potentially great, including rising oil prices and the impact of Influenza A(H1N1) on demand. Cash flow is threatened by weak demand, exaggerated by fare discounting. And, after years of cost reduction, the scope for further cuts is limited. Flexibility is critical in finding new sources of capital and new markets. This crisis highlights the need for governments to replace outdated restrictions on ownership and market access with modern commercial freedoms. Quick action is needed,” said Bisignani.

That said, the IATA said there was a marginal improvement over May’s bleak numbers.

The 7.2 per cent June decline in international passenger demand was better the 9.3 decline recorded for May.

The Numbers

“North American airlines reported a relative improvement in June, with demand falling 6.7 per cent in June (compared to the 10.9 per cent fall in May).

European carriers saw traffic fall 7.1 per cent in June, not as deep as the May decline of 9.4 per cent. Load factor for June was 77.3 per cent for the region.

Latin American airlines posted a 4.7 per cent fall in passenger demand, significantly better than the 9.2 per cent drop in May.

There are early indications that the region is starting to recover from the Influenza A(H1N1) crisis, which hit in May. The Mexican carriers reported a 25 per cent decline in demand, an improvement from the 40 per cent drop in May.
African carriers struggled in June with a 5.9 per cent fall in traffic on international routes. Since many African economies are growing despite the global recession, this drop in demand represents market share loss.”

Middle Eastern carriers remain the bright spot with strong growth in demand
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