Cargo and passenger growth is sluggish

THE International Air Transport Association, released international traffic data showing that the global passenger load factor (PLF), fell to 73.3 per cent in February. This is 0.6 percentage points below the PLF in February 2007. Moreover it is the most significant drop in the PLF in four years.

Traffic data for February is skewed by the leap year. The extra day hides the continuing slow down in demand. Unadjusted traffic figures showed year-on-year increases of 9.2 per cent and 5.9 per cent for passenger and cargo demand respectively.

“When we adjust for the impact of the leap year, passenger demand increased by four-five per cent while freight was even more sluggish in the two-three per cent range. Demand is still growing. But clearly we are in a different league from the 7.4 per cent and 4.3 per cent growth that we saw in 2007 for passenger and freight respectively. Things are slowing down,” said Giovanni Bisignani, IATA’s director general and chief executive officer.

Against the backdrop of a slowing US economy, the US-EU Agreement on Open Skies takes effect 31 March, 2008. The weak US dollar and strong Asian and European economies are boosting US exports and outbound business travel. US carriers are growing trans-Atlantic traffic in double-digit figures. By contrast, the competitiveness of Europe’s carriers is negatively impacted by the strong Euro, which is also dampening European exports.

“US-EU Open skies will be yet another variable in a very complicated equation,” said Bisignani. “Out of Europe’s busiest international hub – Heathrow – there are 25 per cent more weekly flights scheduled to serve the US market. Consumers will benefit from greater choice and lower fares due to intensified competition. We expect a counter-cyclical boost in April traffic as result. The question will be how much and for how long.

“Trans-Atlantic competition will increase in April thanks to new route opportunities. Now what we need is the full set of commercial freedoms to be able to serve those opportunities most effectively. The stage two talks must address the liberalisation of ownership rules so that airlines can merge or consolidate where it makes business sense. Every other industry has the opportunity to go global. Why not the airlines?” said Bisignani.