Economic growth reflected in strong passenger and freight demand

Geneva, July 2: The International Air Transport Association (IATA) has released international traffic data for May showing seven per cent growth in passenger demand and 5.1 per cent growth for freight over the same period in 2005.

The load factor for May achieved an average of 73.6 per cent.

''Strong economies are supporting strong demand growth for both freight and passenger traffic,'' said IATA's director general and CEO Giovanni Bisignani.

''This positive demand environment is helping the global airline industry to offset some of the sharp increase in jet fuel prices.

And it is helping airlines boost revenues by an average of 10 per cent over the past three years.'' International passenger traffic in May grew seven per cent year on year, down from 9.9 per cent growth in April when traffic was artificially boosted by the Easter effect.

However, the seven per cent growth represents a pick-up in the underlying growth rate, helping to boost growth in the year to date to an above average 6.8 per cent.

Airlines are also benefiting from improved capacity utilisation.

Capacity expanded by only 4.9 per cent, driving load factors to 73.6 per cent, which is 1.4 per cent higher than in May 2005.

For the first five months of the year, the Middle East continued to lead growth with a 17.8 per cent increase over the same period in 2005.

International freight traffic in May grew 5.1 per cent year on year, down from 6.1 per cent seen in April. A fall in freight traffic in Latin America -- largely due to the problems and lower volumes at Brazilian carrier Varig -- was the main factor behind the slowdown in the overall growth rate.

Excluding Varig, other Latin American airlines were on track with five per cent growth in May, similar to the global average. Overall, freight traffic remains on course to grow by at least double the 2005 rate, and the IATA has forecast growth of seven per cent for 2006 as a whole.

For the first five months of the year, Middle Eastern carriers lead growth at 19.6 per cent, followed by North America (6.5 per cent), Latin America (5.3 per cent) and Asia-Pacific (5.2 per cent) with African and European carriers at 3.8 per cent and 2.1 per cent respectively.

''Airlines continue to cut costs and improve efficiency but we must not let the strong revenue environment distract us from further change,'' said Mr Bisignani.

''Although load factors are at historically high levels, we need to continue to manage capacity carefully to make sure that record aircraft orders do not become our Achilles heel.'' There is a risk that high oil prices and rising interest rates in many major economies will trigger an economic slowdown later this year, he said, removing the support provided by demand-led revenue growth.

''That is why even more efficiency and greater change are needed.''

UNI