January traffic could signal start of slowdown: IATA

New Delhi: The International Air Transport Association (IATA) has released international traffic data for January.

Year-on-year international passenger demand grew by 4.3 per cent in January. This is sharply down from the 6.7 per cent growth recorded in December, and the 7.4 per cent recorded for the full-year of 2007.

Capacity growth of 4.2 per cent saw load factors inch-up to 75.1 per cent. International cargo demand growth remained sluggish. At 4.5 per cent for January it was largely unchanged from the 4.7 per cent year-on-year growth recorded in December.


  • At 0.3 per cent, European carriers saw the largest fall (from 5.5 per cent in December) and weakest growth of all regions. While intra-Europe traffic remained relatively strong, the largest drop came in long-haul markets. This is largely due the strong Euro weakening the competitiveness of Europe's airlines.
  • North American carriers recorded 5.0 per cent growth in international passenger traffic, down slightly from the 6.0 per cent recorded in December. US Domestic traffic contracted by 3-4 per cent, as carriers re-deployed capacity to more lucrative international routes. Increased competitiveness from a weak US dollar helped drive load factors to an industry leading 77.2 per cent.
  • Asia Pacific carriers saw a marginal drop in demand growth from 6.2 per cent in December to 5.7 per cent in January. Despite the weak Japanese economy, carriers in the region benefited from increased competitiveness due to the strong Euro and the booming economies of both India and China.
  • Latin American airlines continue to see a sharp recovery (16.9 per cent growth in January) on the back of strong economies, driven partly by Asian commodity demand, and continued restructuring. Middle Eastern growth slowed sharply to 7.4 per cent but this seems due to slower growth in capacity rather than any change in the strong oil-driven upward trend in growth. African airlines saw a second disappointingly slow month of growth (2.8 per cent), despite good regional economic growth.


  • Steady year-on-year air freight growth of 4.5 per cent was recorded in January. This runs contrary to downward trends in many leading indicators including semi-conductor shipments and manufacturing business confidence levels. 
  • Air cargo has been growing at half the rate of global trade expansion, indicating a loss of market share to shipping which has benefited from faster ships and cheaper fuel costs. While aviation fuel rose 300 per cent between 2002 and the first half of 2007, residual fuel for ships increased by 200 per cent. During the last half of 2007 the gap narrowed with the sharp increase in prices. Both modes are experiencing a 500 per cent increase in fuel costs compared to 2002. The result is that air cargo has clawed back some lost market share, masking any early impacts from the downturn in the US economy.
  • In the larger freight markets there is continued strength. Asia Pacific airlines saw demand increase 6.5 per cent, up from 6 per cent in December, boosted by the booming economies in China and India. European airlines saw freight slump to 0.4 per cent in a pattern very similar to passenger traffic. Most of the air freight is carried on long-haul markets where business for the European airlines has suffered from the strong Euro.

According to Giovanni Bisignani, IATA's Director General and CEO, ''January traffic results show that we could be at a turning point. A month's data is not enough to define a trend; however, the sharp shift in demand growth patterns makes it clear that the US credit crunch is negatively impacting air travel. Fasten your seatbelts. There is likely to be turbulence ahead.''

''This is an unusual situation for the industry. Asia outside of Japan is looking strong, even as the US economy weakens. This highlights the need for the air transport industry to globalise. The outdated bilateral system and national ownership rules will prevent the industry from responding as a normal business to economic shifts. Airlines cannot diversify risk, so the parts of the industry will see the impact of the US credit crunch with very little buffer. This must change,'' said Bisignani.