AIR TRAVEL GROWTH CONTINUES

IATA reports that global passenger traffic results for May indicate that air travel is continuing to expand at a healthy rate. The growth was led by emerging markets. Compared to the year-ago period, overall demand rose 5.6%, while capacity climbed 5.2% pushing the load factor up 0.3 percentage points to 78.1%. Tony Tyler, director general and CEO of IATA, said: “Global economic performance remains a concern; however, demand for air travel continues to expand. The primary driver is growing demand for connectivity to emerging markets. The business environment has also improved compared to mid-2012 with some indications of easing weakness in the Eurozone. It’s still a tough environment, but there are some reasons for optimism in the second half of the year.” Yet while the demand for air travel continues to be strong — despite less-than-robust economic indicators in some key markets — and is a further demonstration of the importance of air transport, that that importance does not carry through to the bottom line. IATA points out that this year airlines are expected to make $12.7 billion profits on $711 billion in revenues — that’s a 1.8% net profit margin, or around $4 profit for every passenger. Tyler observes: “The average profit per passenger is just enough to buy a sandwich in most parts of the world. Aviation will have to do much better than that in order to attract the $4-5 trillion in capital investment that will be needed over the next 20 years to meet the demands for aviation-enabled connectivity.” Go to http://www.iata.org for more.