IATA report: International passenger and air freight demand at 16-month high
3 October 2007

Geneva: The International Air Transport Association (IATA) has said that year-on-year international passenger demand increased 8.6% for the month of August, which according to it was the fastest growth rate for 16 months.

According to the agency, the acceleration in growth in August shows an underlying improvement in travel going into the third quarter of 2007 as airlines - Asia-Pacific in particular - benefited from traffic generated by robust economic growth in the region.

According to IATA, Asia-Pacific based airlines have added 42 per cent to their passenger carrying capacity, outstripping their counterparts in Europe and North America. This was primarily driven by the massive growth in air traffic in India and China, it said.

Airlines based in Asia-Pacific "preparing to serve the massive opportunities in China and India added 42 per cent to their capacity and improved load factors by two percentage points". North American carriers added 11 per cent to their capacity in comparison and improved load factors by six percentage points, while the Europeans added 29 per cent capacity with five percentage point increase in load factor.

IATA said that the average passenger load factor was 80.3% in August, down slightly from July's record levels but 0.9 percentage points higher than August 2006. This also marked the first time that average load factors have been reported higher than 80% in a month other than July.

IATA had recently revised its industry profit forecast for 2007 upward from $5.1 billion to $5.6 billion.

As for freight traffic, IATA said that international demand grew 6% in August, which was also its strongest rate of growth for 16 months. Growth for the sector, year-to-date, is 3.9%.

IATA has said that this recent improvement in freight demand growth indicates airlines may be winning back market share from other transport modes with competitive pricing and operations.

"While the credit crunch clearly shook both business and consumer confidence in August, demand for air travel remained solid with record high load factors for August. This, combined with strong revenues over the first half of the year, is behind our improved industry profitability forecast of $5.6 billion for 2007. None-the-less, the industry's financial situation remains fragile and the potential for weakening demand must continue to be met with improved efficiency across the value chain," said Giovanni Bisignani, IATA's Director General and CEO.

"The trend of increasing load factors is a concrete example of how aviation's business and environmental goals are aligned with efficiency as a common denominator. As governments continue to squabble over emissions trading in the aftermath of the triennial Assembly of the International Civil Aviation Organization, the industry is getting on with the business of meeting consumer demand with ever-improving environmental performance," said Bisignani.