The Hindu : Business : Aviation sector upbeat despite high fuel price

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Aviation sector upbeat despite high fuel price

A Correspondent

International Air Transport Association releases scheduled traffic results

Domestic freight capacity down by 1 per cent
Profits squeezed by crises till April

Nedumbassery: The global aviation sector made a sharp rebound in April to reach 7 per cent more than the pre-recession peak of early 2008 despite fuel prices staying high.

According to the international scheduled traffic results released by the International Air Transport Association (IATA), international passenger demand grew by 16.5 per cent and was complemented with a 16.8 per cent increase in capacity.

Domestic markets showed a year-on-year growth of 4.7 per cent, outpacing a capacity increase of 3.1 per cent and pushing the passenger load factor to 78.8 per cent.

In the segment of cargo demand, international freight grew by 5.4 per cent against a capacity increase of 12.3 per cent while domestic traffic showed a 9.3 per cent fall against a capacity decrease of 1 per cent.

Squeeze in profit

According to IATA, profits are being squeezed by the succession of crises and shocks that marked the first four months of 2011.

Further, maintaining the high load factors needed to support profitable growth will be difficult given the ongoing challenge of matching capacity to volatile demand.

Modest growth

During the period, African carriers saw a modest 1.2 per cent growth in international passenger traffic even as Asia-Pacific carriers reversed the 0.6 per cent drop in March and registered a growth of 5.1 per cent.

In Asia, strength in Chinese and Indian markets helped offset the weakness in routes associated with Japan. European carriers reported a 29.3 per cent spike while Latin American carriers saw a 25.9 per cent increase in passenger demand.

Return of confidence

Indicating a return of confidence to the region's long-haul operations, Middle East carriers doubled its share to 12.1 percent.

Domestic markets have been the weakest segment of air travel over the past 9 months although Brazil and India continued the trend of high-speed growth at 23.8 per cent and 25.6 per cent respectively. Over the last five years, Indian domestic expansion had been the strongest with a tripling in size.

Although world trade had been expanding at an annualized rate of 10 per cent, air freight markets had shrunk by 6 per cent compared to their post-recession peak.

Freight on African carriers contracted by 5.8 per cent while Asia-Pacific carriers also saw a contraction, but by a smaller 2.5 per cent.

By contrast, European airlines are starting to benefit from improvement in international trade with a 12.9 per cent growth.

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