SLOWER GROWTH: IATA reports results

IATA reports that global traffic results for September showed a continued slowdown in the rate of traffic growth. Demand for passenger traffic was 4.1% above the level of September 2011. For air cargo, demand growth was even weaker at 0.6%. The growth trend in air travel started to flatten in the second quarter, with no growth in the passenger market between April and August. The year-on-year comparisons are now also starting to show slower rates of growth. In September, passenger travel increased 4.1% on a year ago, down on the 5.3% year-on-year growth rate in August and well below the 6% average growth rate seen throughout the first half of the year. Capacity increased by 3.1% over the year-ago period, and the load factor stood at 80%, up 0.7% points compared to September 2011. Tony Tyler, IATA’s director general and CEO, observed that: “A ‘two-speed’ recovery is emerging into a ‘multi-speed’ reality. Carriers in China, Latin America and the Middle East are growing strongly. Europe’s airlines are experiencing profitless growth in a strategy to manage high fixed costs and taxes. In Africa the challenge is to turn growth opportunities into profits. But for North American airlines the focus is on tightly managing capacity in order to optimize profits in a slow to no-growth environment. Asia-Pacific carriers outside of China are a mixed bag. Robust growth in China is being tempered by faltering markets in Japan and India.” Tyler continued: “Putting regional diversity aside, the fact that airlines are making any money at all with weak markets and high fuel prices is a tribute to their strong business performance, as evidenced by maintaining global load factors close to 80% since the start of 2012. Even with that, airlines are expected to eke out a global net profit margin of only 0.6%. It’s a tough year.” In its report on the results for September, IATA boss noted that tough times deliver innovation, saying that: “High oil prices have turned fuel management into a fine art of conserving every last drop. Consumer demand for convenience and simplified process supported the development of a whole new way to travel facilitated by e-tickets, bar-coded boarding passes and kiosk technology. And the recent approval of the foundation standard for a New Distribution Capability (NDC) means that travellers are set to benefit from a revolution in airline retailing.” IATA notes that the World Passenger Symposium (WPS) 2012 boasted attendance of some 600 global leaders from across the travel value chain — including airlines, airports, travel agents and technology companies. The Passenger Services Conference, meeting on the sidelines of the WPS approved development of NDC based on XML standards. Tyler said that: “NDC will enable airlines to retail their products in a modern way and with much greater product transparency to their customers across all channels — including travel agents. Now that the foundation standard is agreed, we are working with partner-experts across the travel value chain to move from theory to reality. Within the next five years, shopping for travel will take place in a much more customer-centric environment,”