Aviation

Aviation sector in 2011 ends on a positive note

Geneva - The International Air Transport Association (IATA) reported that full year 2011 passenger demand rose 5.9% compared to 2010, in line with long-term growth trends. In contrast, cargo markets contracted by 0.7% for the year; but recorded positive demand growth in December of 0.2%. Growth in demand lagged capacity increases at 6.3% (passenger) and 4.1% (cargo) putting downward pressure on load factors. The average passenger load factor for 2011 was 78.1%, down from 78.3% in 2010, while the freight load factor was just 45.9%, down from 48.1% in 2010.

"Given the weak conditions in Western economies the passenger market held up well in 2011. But overall 2011 was a year of contrasts. Healthy passenger growth, primarily in the first half of the year, was offset by a declining cargo market. Optimism in China contrasted with gloom in Europe. Ironically, the weak euro supported business travel demand. But Europe's primarily tax and restrict approach to aviation policy left the continent's carriers with the weakest profitability among the industry's major regions. Cautious improving business confidence is good news. But 2012 is still going to be a tough year," said Tony Tyler, IATA's Director General and CEO.

Passenger demand for December rose 5.4% compared to the same month in 2010. But the trend since mid-year has clearly slowed, as travel markets react with a lag to the declines in confidence that weakened cargo in the second half of 2011. Comparisons with December 2010 are also distorted as severe winter weather in Europe and North America as well as strikes in Europe suppressed demand. December 2011 passenger demand was up just 0.7% over November while the load factor declined 0.2 percentage points. Freight capacity climbed 4.4% in December compared to December 2010. The freight load factor was just 46.1% for the month.

International Passenger Markets International air travel rose 6.9% last year, reflecting the strong growth of 6.2% recorded between February and July, compared to 1.2% between September and December. International capacity climbed 8.2%, pushing the passenger load factor down to 77.4%. For December, international traffic climbed 6.4% year over year, in part owing to depressed traffic levels in 2010 in North American and Europe, and rose 1.4% compared to November.

European carriers posted the second highest growth rates, behind Latin American carriers. Demand rose 9.5% last year while capacity climbed 10.2%, resulting in a load factor of 78.9%. December traffic rose 9.8% but this was surpassed by a 10.3% rise in capacity. Europe?s strong performance is somewhat surprising in light of the European sovereign debt crisis; however European airlines have benefited from robust business travel on long-haul markets, in part related to strong exports from Northern Europe.

* Middle Eastern carriers' traffic rose 8.9% for the year, against a 9.7% climb in capacity, putting pressure on load factors, which at 75.4%, was the lowest except for Africa. However, December ended on a more positive note, with traffic up 11.7% against an 11% rise in capacity and a load factor of 77.1%. Airlines in this region have slowed the pace at which they have expanded but price competitive products and geographically well-positioned hubs are enabling Middle East carriers to continue to improve their share of long-haul markets.

* Asia-Pacific airlines experienced the widest traffic/capacity gap for the year, with annual traffic up 4.1% versus a 6.4% climb in capacity. A significant part of this slowdown was due to the earthquake and tsunami in Japan, the impact of which on air travel should be temporary. However, the sharp fall in air freight in the region as Western demand for manufactured goods declined also reduced some business travel for the region?s airlines. The average load factor was 75.9%. In December, demand climbed 3.7% and capacity rose 5.9% producing a 74.7% load factor.

Domestic Passenger Markets Passenger demand in domestic markets for the full year rose 4.2% compared to a 3.1% rise in capacity, leading to a load factor of 79.3%. December demand rose 3.7% from a year earlier, however, this represented a 0.5% decline from November. It is not clear yet whether this signals a new trend or is just an anomaly. Individual markets varied dramatically in their performance.

* Chinese domestic demand rose a solid 10.9% for the year on a 7.8% lift in capacity, strengthening load factors to 82.2%, which helped the profitability of the country?s airlines. Economic growth slowed but by most standards still remained strong, underpinning air travel demand. December capacity rose 14% compared to the year-ago period with demand up 12.3%, achieving a 78.7% load factor.

* India had the strongest annual growth with demand up 16.4% but capacity rose 18.6% and the load factor was 74.7%. The demand/capacity gap was particularly acute in December, with traffic rising 9.3% on a 15.5% increase in capacity. The deterioration in load factors generated by this excess capacity is one of the factors behind the losses being reported by Indian airlines, in contrast to the current situation in China.

* The impact of last year's earthquake and tsunami meant Japan's airlines ended the year with demand down 15.2% on a capacity decline of 11.5%. By December, however, the domestic market had recovered to levels 4.7% below pre-earthquake levels. Even with an 8.7% drop in capacity load factors were the lowest among the group at just 58.8%.

* Brazilian carriers saw a 13.7% jump in demand from their home market last year on an 11.2% rise in capacity. Load factors remain below the industry average at 69.3%. December demand slipped back to 5.6% on a 9.6% rise in capacity, resulting in a load factor of 69.6%.

Air Freight (Domestic and International) Air freight markets turned up at the end of the year after shrinking through much of the summer and autumn as business confidence across major economies, and export orders, slumped. Surveys are now showing that business confidence, a leading indicator for changes in cargo markets, turned up in December, suggesting that industrial production and international trade may be stabilizing. Although international freight markets contracted 0.6% for the full year and 0.8% in December, compared to a year ago, December international demand was 1.5% ahead of the level in November, while domestic demand was up 3.2% compared to November and 5.5% compared to December 2010. Freight markets have now shown sequential month-over-month growth in November and December, adding evidence to the view that international trade may be stabilizing. However, the situation for airlines in these markets has deteriorated significantly. Freight load factors declined considerably to 45.9% in 2011, as measures to match capacity with demand by reducing the freighter fleet have been offset by introduction of new twin aisle passenger aircraft.

The Bottom Line

"Improving business confidence and encouraging news from the US economy are heartening developments. But it is far too early to start predicting a soft landing for 2012. The euro zone crisis is far from over. Failure to achieve a durable solution will have dire consequences for economies around the world. And it would most certainly tip the airline industry into the red," said Tyler.

"Airlines have made massive investments in new fuel-efficient, environmentally friendly aircraft. The challenge is to deploy them profitably into a dynamic and uncertain market. Governments, meanwhile, need to take a strategic view of the airline industry that recognizes its value as a catalyst for economic growth.

Airlines transport about 3 billion people a year. And over a third of the value of goods that aretraded internationally is transported by air. Getting people and goods to their destinations more efficiently improves competitiveness. Infrastructure investments to enable aircraft to land and takeoff with a minimum of delay and fly the most fuel and carbon efficient trajectories will return a far greater payout to global GDP than shortsighted and narrowly-focused tax grabs. Let's hope that 2012 will be the year when politicians put the required political capital behind important projects such as the Single European Sky and NextGen in the US," said Tyler.

Malaysia Airlines links with Global Explorer

Malaysia Airlines links up to Global Explorer round-the-world fare oneworld member elect Malaysia Airline’s full global schedule involving around 60 destinations worldwide will be included in the Global Explorer from tomorrow, adding one of the most attractive networks in South East Asia to the round-the-world fare offered by all members of the alliance and selected other airlines.

Through this coverage, more than 20 cities of Malaysia Airlines network in South East Asia, including two more countries namely Brunei and Myanmar, will be added to the Global Explorer map, expanding the round-the-world' global reach to more than 900 destinations in nearly 150 countries. Some destinations that Malaysia Airlines adds to Global Explorer include Johor Bahru, Langkawi and Kuching in Malaysia, Myanmar capital Yangon, Indonesia’s Medan and Cambodias Siem Reap.

Global Explorer covers all routes offered by oneworlds existing member airlines American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, LAN, Hungarian Airlines, Qantas, Royal Jordanian and Russias S7 plus some 20 affiliated carriers, including LAN Argentina, LAN Ecuador, LAN Peru, China02?s Dragonair and South Africa02?’ Comair.

Global Explorer is also offered by a number of airlines that have no links with oneworld Aer Lingus, Air Pacific, Alaska Airlines and its Horizon Airlines sister, Gulf Air and Meridianafly.

Flights carrying the Qantas code but operated by Air Tahiti Nui, Jetstar, South African Airways and Vietnam Airlines are included too, expanding the reach covered by the fare further still.

Child fares (between 2 to 11 years) and infant fares (up to 23 months ) are charged at 75% and 10% of the applicable adult fare.

Qatar Airways opens premium lounge

Qatar Airways has officially opened its new Premium Lounge for First and Business Class passengers at London’s Heathrow Airport for VIP guests drawn from the diplomatic world, travel industry, corporate business leaders and the British media.

Located airside at Terminal 4, the lounge is Qatar Airways’ first dedicated facility for premium passengers outside its Doha hub, where the carrier operates the award-winning Premium Terminal.

Qatar Airways flight

Qatar Airways Chief Executive Officer Akbar Al Baker officially opened the lounge with over fifty officials participating, later taken on a tour.

The event marked the start of another busy year for the carrier, with the launch of new routes, as well as additional capacity on the London Heathrow – Doha route, being stepped up from four to five flights a day. The lounge reinforces the importance of UK as one of the airline’s busiest routes.

Guests at the opening discovered a lounge designed to resemble a boutique hotel or private member’s club rather than a conventional airport facility for an airline. They experienced the ultimate in luxury and Five-Star service which reflects the airline’s drive to excel in all areas of operations. Qatar Airways recruited lounge staff from Five Star hotels and restaurants to work in the theatre-style Global Brasserie kitchen, innovative Delicatessen, and elegant Signature Martini bar that are key features of the new Heathrow lounge .

The lounge also includes private shower facilities, with heated floors and mirrors, hotel-style towels and luxury branded toiletries and amenities.

Business and leisure travellers can stay connected with free Wi-Fi throughout the lounge, discreet power sockets at every seat and a business centre that includes PCs and printers.

Following a landmark year in 2011, which saw Qatar Airways introduce 15 new destinations to its network and win the coveted Skytrax Airline of the Year Award, the airline’s new Heathrow lounge is set to become the benchmark for international airport lounges. Speaking at the official opening, The State of Qatar’s Ambassador to the United Kingdom, Khalid bin Rashid bin Salim Al-Hamoudi Al-Mansouri, congratulated Al Baker, stated “Qatar Airways has been continuously setting the standards in the aviation field across the globe for over a decade. This new lounge raises the bar yet again and reflects all that is best in Qatari standards, hospitality and luxury.”

SriLankan ‘Wings’ for Cadet Pilots

SriLankan Airlines latest batch of cadet pilots were awarded their ‘Wings’ when they passed out as Junior First Officers at a recently held ceremony in Katunayake.

The 2010 batch underwent a stringent one-year training programme before qualifying to fly with the national carrier, obtaining a CAASL license (Civil Aviation Authority) a globally recognised certification.

The nations flag carrier recruits two cadet batches each year for training and presently has a total strength of 267 pilots serving in its cadre.

Future trainee pilots with SriLankan will have the advantage of obtaining Flight Simulator experience at the airlines own Flight Academy, which saw the commissioning of an A320 Full Flight Simulator facility in October last year, thereby granting more affordable and easier access to a hitherto costly training overseas.

With plans for expanding the fleet size to 30 aircraft by 2015, more recruits will be initiated to meet growing demand with SriLankan gearing to increase its route network to propel the country towards achieving regional aviation hub status.