Global airline demand up but problems remain

Global airline demand up but problems remain

Stronger business confidence in emerging regions of the world helped push up global airline passenger demand by 3.7% in February.

Demand has been growing at an annualized rate of 9% since October - almost double the growth trend over the first nine months of 2012, according to Iata.

But the airline body warned that dark clouds still exist in Europe and the US.

Director general and chief executive Tony Tyler said: “The industry’s fortunes appear to be moving in the right direction. But the margins are wafer thin. And any shock - the continuing eurozone crisis or budget sequestration in the US - could negatively impact the outlook.

Budget sequestration measures began to take effect on Monday. Alongside the economic impact of uncertainty and reduced US government spending, operational concerns are “significant”, Iata warned.

Passengers in the US could face flight delays and even longer lines then usual at security and border control.

“It’s unfair that air travellers should suffer the impact of sequestration given that airlines and passengers already pay around $4.5 billion a year in fees and taxes for the essential services of border control and airport security,” Tyler said.

“It is unlikely that the savings that will be achieved from sequestration will offset the damage to the economy if air travel is discouraged by these cutbacks.

“Aviation is an important catalyst for economic growth and prosperity. The cost of the shocks, uncertainty and unpleasant surprises can only hamper efforts to revive the economy.

“The government’s priority should be on extracting the greatest economic benefit possible from aviation - not making it more difficult to do business.”

He added that the February figures show that demand for air travel continues to rise on economic optimism and improved business confidence.

“But that comes with a few caveats,” Tyler said. “Much of the growth is concentrated on emerging markets. Europe continues to be a laggard. And the handling of the banking crisis in Cyprus has reminded all of us that the deep problems in the eurozone economies still remain.”

European carriers have not seen any growth in international demand since October, reflecting the contraction of the Eurozone economy in the fourth quarter of 2012, according to Iata. Overall growth was up by just 0.8% compared to February last year.

They have responded by tightly managing capacity, which declined by 2% year-on-year in February. This pushed the load factor up to 76.5%.

 

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