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Business confidence slowing growth

IATA reports that global traffic growth continued to slow in July. July passenger demand in aggregate was 3.4% higher than the same month last year, compared to a 6.3% increase in June and average growth of 6.5% over the first half of the year. This slowdown in travel growth is being driven largely by the recent fall in business confidence in many economies. The industry association said that airlines have responded to this slower growth environment by reducing the capacity added to markets, a move which has stabilized load factors at relatively high levels and provided some support for profitability in the face of high fuel prices. In July passenger capacity rose 3.6%, in line with the expansion of traffic, keeping the load factor at a relatively high 83.1%. Tony Tyler, director general and CEO of IATA, said: “The uncertain economic outlook is having a negative impact on demand for air transport. The cargo business is 3.2% smaller than it was a year ago. And passenger markets — with the exception of Africa, China-domestic and the Middle East — saw demand fall from June to July. Overall passenger demand is still up 3.4% on the previous July. But the growth trend is clearly slowing. This, along with rising fuel prices is likely to make it a tough second half of the year.” Go to http://www.iata.org for more.

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