Airline Groups See Growth Continue In October

Airline industry groups are reporting further strong gains in demand on international routes, with continuing growth dispelling fears that the recovery has run out of steam. Both the International Air Transport Association and the Association of Asia Pacific Airlines believe that demand is returning to a steady growth curve. The two groups reported another month of solid passenger and freight traffic increases in October, with load factors also rising. IATA says passenger traffic on international routes rose 10.1% year-on-year in October, which is slightly less than the 10.7% increase recorded in September but higher than the August increase. Capacity was up 8.2% in October. Slowing growth in August prompted IATA concerns of a growth slowdown in the fall. Market conditions appear to have brightened since then, however. “The picture is anything but clear, but for the time being, the recovery seems to be strengthening,” says IATA Director General Giovanni Bisignani. “As we approach the end of 2010, growth is returning to a more normal pattern.” On the freight side, traffic rose 14.4% in October on an 11.1% capacity gain. The October traffic growth was about one percentage point less than the increase in September. However, demand was up month-to-month when adjusted for seasonal fluctuations, IATA says. This ended a trend of month-to-month declines since May. “Freight appears to be at a turning point,” Bisignani says. However, “it remains to be seen if this is a stabilization in freight volumes or the start of an upward trend.” North American and Middle Eastern airlines saw the strongest passenger growth on international routes. North American carriers reported a 12.4% traffic gain on a capacity increase of 11.9%. For Middle Eastern airlines, traffic rose 18% on a 13.7% capacity gain. European carriers saw a 9.6% traffic gain and an 8.3% capacity hike. Those based in the Asia-Pacific region reported a 7.3% demand rise on a 5.3% capacity increase. Bisignani says demand improvements “are being met by a cautious approach to capacity expansion.” Over the first 10 months of the year, passenger traffic was up by 8.5%, with capacity rising 4%. Cargo traffic increased 24% on a 9.2% capacity hike. “Forward schedules show a continuation of this trend,” says Bisignani, with passenger capacity expected to rise by 7.5% for the six months from the end of October. Meanwhile, the AAPA says October results from 23 Asia-Pacific carriers “confirm the trend of continuing strong demand” in both traffic and cargo. Passenger traffic on international routes was up 8.2% year-on-year in October, with capacity rising 5.4%. Cargo traffic increased 16.6% on a 14.8% capacity hike. The “return of premium class passengers … is particularly welcome,” AAPA Director General Andrew Herdman notes. “The improving mix of business, coupled with disciplined capacity management, has seen Asian airlines leading the industry in returning to profitability.” For the first 10 months of the year, the 23 carriers have seen international passenger numbers rise 14.2%, with freight traffic up 28.5%. The overall outlook for the region for next year is “very positive,” Herdman says, although the double-digit increases seen in 2010 are expected to “gently ease back towards longer-term trends.”