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IATA


US slowdown takes growing toll on passenger flights: industry group

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Mar 31, 2008

GENEVA — The US economic slowdown is taking a growing toll on the airline industry as passenger occupancy rates hit the lowest level for four years, the top industry association said on Monday.

The global passenger load factor (PLF) fell to 73.3 percent in February, down 0.6 percent from the previous year, the International Air Transport Association (IATA) said in a statement.

"Things are slowing down," said IATA director general Giovanni Bisignani.

"Load factors tell the story. They fell in the four largest carrier regions showing the growing impact of the US economic slowdown on the airline industry," he added.

The weak US dollar is boosting exports and outbound business flights, he noted, while conversely the strong euro is damaging the competitiveness of European carriers.

Transatlantic air travel is set to undergo a sea-change in the coming months as the long-awaited "Open Skies" agreement between the United States and European Union comes into force, IATA noted. The agreement took effect on Sunday.

"US-EU Open Skies will be yet another variable in a very complicated question," Bisignani said.

The agreement, which allows many more airlines to fly between the two continents, should boost figures in the short-term, with 25 percent more weekly flights to the US out of London Heathrow alone, IATA said.

"Consumers will benefit from greater choice and lower fares due to intensified competition. We expect a counter-cylical boost in April traffic as a result. The question will be how much and for how long," said Bisignani.

He called for further deregulation of ownership rules, "so that airlines can merge or consolidate where it makes business sense".

Europe has so far borne the brunt of the slowdown, with its PLF registering the single biggest drop in February, down 1.6 percentage points to 71.7 percent, IATA said.

Asian carriers saw PLF fall by 0.1 percentage points to 75.2 percent while North American airlines dipped 0.5 percentage points to 74.0 percent.

The Middle East saw PLF down 0.9 percentage points to 72.6 percent, though this was balanced against a 20.3 percent growth in passenger traffic supported by the oil business.

Africa and Latin America were the exceptions to the rule, with PLF rising in both continents.

In Africa, a contraction in supply boosted PLF by 2.1 percentage points to 67.4 percent, while strong economic growth and travel demand boosted load factors by 0.9 percentage points in Latin America to 73.0 percent.

IATA said in January that it expects passenger demand growth at 5 percent in 2008, down from 7.4 percent in 2007.

Middle Eastern carriers registered the strongest growth in 2007 with passenger demand up 18.1 percent, reflecting strong regional economies, the impact of oil wealth, expanded capacity and new routes, IATA said.

Asia Pacific carriers saw 7.3 percent growth, showing the "continuing strength of the Chinese and Indian economic expansion," it added.

AFP

US slowdown takes growing toll on passenger flights: industry group
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