Bloomberg News

Global Air-Travel Growth Slowing as Confidence Wanes, IATA Says

October 03, 2011

Oct. 3 (Bloomberg) -- Growth in global air travel slowed in August and a freight decline deepened as business and consumer confidence waned amid concern that economies may slide into recession, the International Air Transport Association said.

Passenger traffic grew 4.5 percent in August, slowing from a 6 percent gain in July, the trade group said in a statement today. Europe logged the biggest year-to-year advance at 7.4 percent and North America the smallest at 0.9 percent, with U.S. domestic travel contracting 0.3 percent, it said.

“The industry has shifted gears downward,” IATA Chief Executive Officer Tony Tyler said in the statement. “With business and consumer confidence continuing to slump there is not a lot of optimism for improved conditions anytime soon.”

Airline-industry net income will probably shrink to $4.9 billion in 2012 from an estimated $6.9 billion this year as the economy stalls, IATA said Sept. 20. Carriers collectively lose money if economic growth drops below 2 percent, it reckons.

A contraction in freight markets accelerated in August, with traffic down 3.8 percent versus a year earlier, more than double the pace of the 1.8 percent decline in July, IATA said.

The average passenger load factor, a measure of seat occupancy, fell 1.3 percentage points to 81.4 percent.

“Airlines are bracing for tough times ahead,” Tyler said in the statement. “Economic uncertainty owing to the European sovereign debt crisis and the growing likelihood of a protracted period of slow growth in developed economies mean the industry will be even more focused on reducing costs.”

The IATA chief repeated calls for cuts in aviation taxes and said a reduction in U.K. Air Passenger Duty in Northern Ireland, announced last week, should be extended to the rest of the country.

--Editor: Chris Jasper.

To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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