Stronger than expected start to 2005

"We are off to a great start for 2005 for international traffic," said Giovanni Bisignani, Director General and CEO of the International Air Transport Association (IATA) as IATA released international traffic data for January. "There is stronger than expected growth in all regions, except for Asia Pacific which suffered from the impact of the Indian Ocean Tsunami."

Passenger traffic showed a 7.9% increase over the same period in 2004, while cargo improved by 15.5%. Asia-Pacific growth was stunted at 2.5% in the aftermath of the Tsunami tragedy. Overall passenger capacity rose by 7.8% leaving the global passenger load factor at 73.5% for January. With the exception of Asia Pacific and the Middle East, traffic gains lead capacity expansion.

Asia-Pacific, Middle Eastern and European carriers are reporting increasingly better profit numbers while the US industry continues to experience severe difficulties. This is particularly true as US domestic yields suffer severe pressure. Redeployment of US domestic capacity to international routes and the continuing weakness of the US dollar are largely responsible for the 11.8% rise in traffic by North American carriers.

"We will likely achieve 5.9% passenger growth this year, the bottom line remains at risk," said Bisignani. "The persistent high price of fuel will be difficult to absorb. While the profitability picture for the industry is increasingly regionalised there is a universal theme for 2005?austerity.. There is no panacea for the problems of the industry, but cost control must be firmly at the top of the agenda for all players."

"There is also a severe 'policy risk' to air transport. Politicians and bureaucrats mis-understand and mis-regulate the industry, harming the employer of 4 million people who support a global economic output of over US$1.3 trillion," said Bisignani.

"February was highlighted by two potentially disastrous developments. Europe implemented new rules on compensation for delays and cancellations that fail both the good law and good sense tests. These add costs and complexity to an industry that is simplifying to reduce costs to provide better value to consumers. At the same time politicians are bantering proposals for new taxes on aviation that ignore the fact that aviation already entirely funds its own infrastructure. The industry is beginning to recover?in many ways despite the efforts of some of our regulators," said Bisignani.