Economic Gloom Continues in January Traffic

The International Air Transport Association (IATA) announced international scheduled traffic results for January showing a deepening year-on-year demand slump.

International passenger demand fell by 5.6% in January 2009 compared to the same month in 2008. It is also a full percentage point worse than the 4.6% year-on-year drop recorded in December. The January fall in demand is the fifth consecutive month of contraction.

The 5.6% drop in passenger demand outpaced capacity cuts of 2.0% driving the load factor to 72.8%, or 2.8% below what was recorded for January 2008.

The alarming collapse in cargo markets in December (-22.6%) worsened in January 2009 with a 23.2% year-on-year demand drop. This is the eighth consecutive month of contraction for freight traffic.

Alarm bells are ringing everywhere. Every region? carriers are reporting big drops in cargo. And, aside from the Middle East carriers, passenger demand is falling in all regions. The industry is in a global crisis and we have not yet seen the bottom,?said Giovanni Bisignani, IATA? Director General and CEO.

Asia Pacific carriers, representing 43% of the market, led the cargo decline with a 28.1% year-on-year drop. This was followed closely by the other major market players: European carriers (-23.0%) and North American carriers (-19.3%).

While this may appear to be relatively stabilized compared to the precipitous December drop, it is too soon to call a bottom in the air freight market. Manufacturers are still shedding inventory and cutting production which is expected to lead to further falls in freight volumes.

The only good news is that fuel prices remain well below last year? level. But the drop in demand is much more harmful. The industry is shrinking with revenues expected to fall by US$35 billion to US$500 billion, delivering a loss of US$2.5 billion this year,said Bisignani.<Korea Shipping Gazette>