Aviation

Air travel rebounds above pre-recession levels in May

The International Air Transport Association (IATA) announced international scheduled traffic statistics for May which showed an 11.7 percent increase in passenger traffic and a 34.3 percent jump in freight demand compared to May 2009.

'Demand rebounded strongly in May following the impact of the European volcanic ash fiasco in April. Passenger traffic is now 1 percent above pre-recession levels, while the freight market is 6 percent bigger,' IATA's Director General and CEO Giovanni Bisignani said. A capacity increase of 4.8 percent in May lagged behind the strong upturn in passenger demand. This pushed May's international passenger load factor to 76 percent (78.7 percent when adjusted for seasonality).

This is the sixth consecutive month with seasonally adjusted load factors near 79 percent. Matching capacity to demand will become increasingly challenging in the coming months. Aircraft utilization remains 5 percent below pre-recession levels for single-aisle aircraft and 8 percent for longer-range twin-aisle aircraft.

The 100 aircraft taken out of storage during May and 93 new aircraft delivered globally add further capacity pressure.

Similarly, the strong surge in cargo traffic outstripped a capacity increase of 12.3 percent, pushing load factors to a record high of 55.7 percent (56.3 percent when adjusted for seasonality).

International Scheduled Passenger Demand

* European airlines recorded an 8.3 percent growth compared to May 2009 however this still puts Europe as the region with the weakest growth. Weak economic growth, questions over financial stability and sharply tightening fiscal policies will likely result in continued slower demand growth than is experienced in other parts of the world.

* Asia-Pacific carriers recorded a 13.2 percent increase in demand in May 2010 over the same month in 2009. Asia-Pacific carriers continue to drive the recovery based on robust economic growth, primarily in China.

* North American carriers saw a 10.9 percent increase in May over the same month last year. Careful matching of capacity to demand has driven the load factor to 82.4 percent, the highest among all regions.

* Latin American carriers recorded the fastest growth in demand at 23.6% in May, supported by the region's strong economic upturn.

* Middle Eastern carriers recorded a 17.5 percent growth in May. The region's carriers continue to post strong growth with connecting traffic through their hubs, although the pace of growth has dropped from the over 20 percent increases recorded earlier in the year.

* African carriers reported a demand increase of 16.9 percent in May as the region's carriers benefit from growing economies and more success in maintaining market share. At the same time, the region's load factor was the weakest at 66.5 percent.

* International Scheduled Freight Demand

* Air freight growth surged in May to 34.3 percent (significantly up from the 26.0 percent recorded in April).

* Latin American and African carriers recorded the fastest increases at 60.2 percent and 58.2 percent respectively.

* Asia-Pacific airlines, which represent the largest market share (45 percent) grew by 38.7 percent compared to the previous May on the strength of resurgent regional manufacturing. North American and Middle East airlines posted a similar growth of 35.3 percent and 38.6 percent respectively.

* European carriers showed the weakest growth at 21.9 percent. It is anticipated that the 15 percent fall in the value of the Euro will stimulate outbound traffic with cheaper European exports.

* Strong traffic growth is contributing to a strengthening industry bottom line. Airlines are expected to post a $2.5 billion profit in 2010 in a dramatic turnaround from the $9.9 billion lost in 2009.

'This is good news, but it is only a 0.5 percent margin. We are still a long way from sustainable profitability,' said Bisignani.

'In the short-term, airlines need to focus our efforts on nurturing the recovery by continuing to match capacity carefully to improving demand conditions. And everybody must control costs.

This includes airports, air navigation service providers, global distribution systems and labour. There are no exceptions,' Bisignani said. 'Two months ago, the Icelandic volcano made it clear that aviation is vital to the global economy. When the volcano went to sleep, politicians developed amnesia to the lessons-learned. Germany proposed a EUR 1 billion departure tax that will dampen demand instead of stimulating growth.

The new UK government is talking about a future without domestic aviation and no capacity growth, without any analysis of the devastation that this would bring to the UK's economy.

And the much anticipated accelerated progress on the EUR 5 billion savings of the Single European Sky has been truncated at incremental change. The traveling public and Europe's struggling economy deserves much better than this short-sighted policy myopia,' Bisignani said.

At its recent Annual General Meeting, IATA announced Vision 2050. This is an initiative to build a common vision among industry stakeholders for a sustainable future for air transport.

Announcing the vision, Bisignani pointed to four cornerstones of change: a new and sustainable energy source, a regulatory regime that allows airlines to operate as normal businesses, cost-efficient infrastructure that meets the needs of users, and services that exceed customer expectations.

Virgin America goes international

Billionaire Sir Richard Branson propped up his shoeless feet as he headed from San Francisco to Toronto on his technology-loving airline's inaugural international flight.

He dreamed of a day when Virgin America would whisk him and other globetrotters from California to Australia in a mere two hours with the help of rockets developed in another of his endeavours: commercial space travel. "I'm determined to do it in my lifetime," said Branson, who turns 60 in July. "Fortunately, both my parents are still alive and in their nineties, so I've got a few years to get it worked out."

Branson was confident that the world would see commercial space flight in about two years, but said it could take 10 times that long to put the science to work on that quick flight to Sydney or Melbourne. Meanwhile on Tuesday he was celebrating Virgin America's first international route with service to Toronto.

Later this year the airline plans to add Mexican cities to its list of destinations.

California's celebrity Governor Arnold Schwarzenegger stopped by San Francisco International Airport to take part in a send-off ceremony. AFP