AVIATION

Passenger decline stabilizes

Some improvement in freight:

The International Air Transport Association (IATA) announced international scheduled traffic results for May showing passenger demand declining 9.3 percent compared to the same month in the previous year while freight demand was down by 17.4 percent. International passenger load factors stood at 71.2 percent, down from 74.5 percent recorded in May 2008.

The 17.4 percent decline in international cargo demand is a relative improvement compared to the 21.7 percent drop in April. Since December 2008, cargo demand has been moving sideways in the -20 percent range. This is one of the first physical signs of the economic recovery being anticipated in equity markets.

International passenger demand weakened from the -3.1 percent recorded in April to -9.3 percent in May. The past two months have been slightly stronger than the 11.1 percent decline reached in March, even after adjusting for the distortions caused by the timing of Easter.

This indicates that a floor may now have been reached. However, the capacity adjustment of -5.0 percent in May did not keep pace with the fall in demand during the same month. Moreover, although the impact of the recession appears to be stabilizing, strong headwinds from debt and low asset prices are expected to weaken and delay any significant recovery.

“We may have hit bottom, but we are a long way from recovery,” said IATA’s Director General and CEO Giovanni Bisignani. “Capacity is not aligned with demand. Passenger load factors dropped 3.3 percentage points over the last 12 months.

The impact on revenue is dramatic. After a 20 percent fall in international passenger revenue in the first quarter, we estimate that the drop accelerated to as much as -30 percent in May. This crisis is the worst we have ever seen,” said Bisignani.

International passenger demand

May was the first full month to feel the impact of the Influenza A(H1N1) on travel. Mexican carriers saw their traffic fall almost 40 percent in May. Latin American carriers saw their traffic decline by 9.2 percent in May compared to the previous year. Against a capacity increase of 0.2 percent, the load factor plummeted to 64.7 percent.

That is a 6.7 percentage point drop compared to May 2008 and the lowest load factor among all the regions. The estimated global impact of Influenza A(H1N1) on global travel patterns in May was a 1 percent drop in passenger traffic.

Asia Pacific carriers recorded a 14.3 percent fall in demand. While capacity adjustments by the region’s carriers were the most severe (-9.3 percent), they did not keep pace with the fall in demand driven by weak economies and the impact of Influenza A(H1N1) on the region with the most vivid memories of the SARS crisis.

North American carriers posted a 10.9 percent fall in passenger demand, considerably worse than the 4.2 percent fall in April. This was the result of weak demand to Latin American destinations affected by Influenza A(H1N1) along with significant recession-driven drops in trans-Atlantic and trans-Pacific markets.

European carriers, in additional to weak long-haul markets, saw some loss of market share to European low cost carriers whose traffic grew by 2.1 percent, while the network carriers reported a 9.4 percent decline.

African carriers saw a slight improvement of a 6.0 percent fall in demand in May, compared to a 7.1 percent decline in April. Middle Eastern carriers bucked the declining trend with 9.5 percent growth in demand and a 14.5 percent expansion of capacity.

International air freight

In May, freight volumes rose by around 3 percent above April levels as manufacturers began to add to their product inventories in anticipation of an economic recovery.

However, inventories remain 10-15 percent higher than normal in relation to sales levels, indicating that a significant recovery is not expected in the near term. Surveys of purchasing managers indicate that the industry could experience a further improvement in air freight demand during June and July to levels that are 12-15 percent below last year’s levels.

Most regions were relatively aligned in the severity of the freight declines. Latin American carriers were the worst performers with a 21.0 percent fall, followed by Africa (-20.0 percent), Europe (-19.2 percent), North America (-18.8 percent), and Asia Pacific (-18.1 percent). Middle East carriers were the exception with a 3.7 percent fall.

Capacity adjustments in freight markets have been catching up to demand declines. Freight load factors are 3.6 percentage points lower than a year ago. Freight yields fell by 17 percent in the first quarter, reducing revenues by 35 percent. Given the continuing downward pressure on yields, even the improvement in volumes in May will likely come without a corresponding improvement in revenues.

‘A huge success’:

Qatar airways hails inaugural Business Travel Market in London

Qatar Airways hailed its partnership of the inaugural Business Travel Market in London as a huge success with the two-day event attracting hosted corporate travel buyers from across Europe.

The Doha-based airline was honoured to be the main Platinum sponsor of the show, held at the ExCeL Conference Centre in east London.

Qatar Airways used the show as the platform to announce the global roll-out of its Qbiz corporate travel rewards program for small and medium-sized companies, added its Australian flights to Melbourne will be launched on December 6.

Hundreds of visiting European corporate travel buyers were hosted by show organisers and had invitations to Qatar Airways’ VIP Hosted Buyer Lounge, where they enjoyed the airline’s award-winning Five Star hospitality.

Delegates also sampled the airline’s in flight experience on the Qatar Airways exhibition stand by trying out its new long-haul Business Class seats, which convert into fully-flat beds.

Qatar Airways Chief Executive Officer Akbar Al Baker said the show lived up to its promise of attracting key corporate travel buyers.

“These are the very people who book travel for their employees. With corporate travel budgets constrained in the current economic climate, it is vital that travel companies like ourselves remain at the forefront to help establish, renew and build on relationships,” he said.

“The Business Travel Market was a perfect opportunity for Qatar Airways to showcase its wonderful hospitality to European corporate travel buyers, and indeed rest of the travel industry present at the show. Qatar Airways has signed a three-year commitment for sponsorship of the show and we look forward to being back in London next year.”

Qatar Airways’ UK Area Manager Rachel Finn said that Business Travel Market was an exciting addition to the travel industry calendar. The Business Travel Market has been a terrific platform to conduct business.

The quality of the VIP hosted buyers has been outstanding and we were delighted to have participated with a number of successful and constructive meetings having taken place during the two days,” he said.

“There was an incredible amount of interest among corporates in our QBiz travel rewards program, which we announced and rolled out globally at the show. A number of corporates signed up.

With corporates and travelling employees able to earn QMiles through the airline’s Privilege Club loyalty program each time they fly, the added value benefits of our new corporate travel program far outweigh programmes offered by our competitors,” he said.