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Release Date:
Release ID: 837

Air Freight Growth Dips Sharply

The International Air Transport Association (IATA) released international traffic data for May that showed a significant drop in cargo growth to 1.3% while passenger traffic grew 6.0%.

Press Release

At 1.3%, cargo demand is considerably down from the 4.3% recorded for the full year 2007. For the first five months of 2008, air freight volumes were up 2.8%. The biggest cause of the slow growth came from a 0.5% contraction in Asian carrier traffic. This resulted from the impact of the earthquake in China and weakness in the Japanese economy. Asian carriers also saw weakness in transpacific markets with increased competition from US carriers taking advantage of the weak US dollar.



International passenger demand grew 6% in May. This is slower than the 7.4% increase recorded for the full year 2007, but stronger than expected given the economic downturn. The results were skewed by a shift in the US of 1.7 billion available seat miles (2.72 billion available seat kilometers) from domestic routes to international routes (a 7.9% rise in capacity in international markets). North American carrier international traffic grew 8.2%, while domestic capacity fell 3.3%. Overall the underlying growth rate in global domestic and international traffic was 3 to 4% (down from an average of 6% for 2007).



International load factors rose slightly for the first time in three months to 74.3% on slower capacity growth of 5.4% during the month.



“The high price of oil is re-shaping the industry. The major shifts in traffic flows experienced during May reflect this,” said Giovanni Bisignani, IATA’s Director General and CEO.



During May, jet fuel averaged US$160 per barrel - 87% higher than the same time in 2007. By comparison, crude prices averaged US$123 per barrel - an 81% increase. “Jet fuel margins are increasing the impact of skyrocketing oil prices for the aviation industry. Unit costs are up 20-30% and that is going to take its toll on the bottom line. Efficiency everywhere is the imperative. That must be understood by governments, labour and our industry partners,” said Bisignani.



Cargo



* North American cargo traffic grew 4.6% as US carriers shifted capacity from domestic to international routes. In addition to expanded transpacific opportunities, the US-EU Open Skies agreement created new opportunities in Europe.

* Europe recorded a sluggish 1.4% increase. The strong Euro is damaging competitiveness for both European exports and the European air cargo business.

* Latin America freight volumes contracted 13.2%. Industry restructuring saw the replacement of retiring wide-body aircraft with narrow-bodies with limited cargo capacity.

* Africa recorded its 11th month of air freight contraction out of the past 12 months with a fall of 6.5% during May as industry restructuring removes freight capacity.

* The lone bright spot was the Middle East where volumes rose 10.7% on the back of oil-based economic growth.



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