Airlines face tough 2009 as freight collapses: IATA

GENEVA - International air freight traffic plunged 22.6 percent in December compared to a year earlier, an "unprecedented and shocking" free fall that signals a broader slump in world trade, industry data showed on Thursday.

By (Reuters)

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Published: Thu 29 Jan 2009, 7:42 PM

Last updated: Thu 2 Apr 2015, 4:35 AM

The International Air Transport Association said airlines faced one of their toughest years ever, with cross-border passenger traffic dropping 4.6 percent year-on-year in December, even after a boost from advance bookings of holiday travel.

The data is also bad news for the broader global economy -- in value terms, a third of world trade is in goods sent by air.

"Keep your seatbelts fastened and prepare for a bumpy ride and a hard landing," warned IATA Director-General Giovanni Bisignani.

"The 22.6 percent drop in international cargo traffic in December puts us in uncharted territory and the bottom is nowhere in sight," Bisignani, previously chief executive of Air Italia, added.

All regions showed major declines in international freight traffic, according to IATA. Asia-Pacific carriers, who make up 45 percent of the air cargo market, were hit hardest.

"The collapse in the airline industry's freight business is a reflection of 20-30 percent declines in export and import volumes being reported across Asia, North America and Europe as the global recession plumbs new depths in December," it said.

$2.5 BILLION LOSSES LOOM

Global airlines are set to post $2.5 billion in losses in 2009 after suffering a $5 billion loss last year, according to IATA whose 230 member airlines account for 93 percent of scheduled international air traffic. Its figures do not include domestic traffic.

Its projections remain based on a fuel price of $60 per barrel, a decline of 3.0 in passenger volumes and a drop of 5.0 percent in cargo traffic.

They came a day after a gloomy outlook from the International Monetary Fund which sees the global economy at a virtual standstill, forecast to grow just 0.5 percent in 2009.

For the full year of 2008, international air cargo traffic was down 4 percent, while international passenger traffic posted modest gains of 1.6 percent, according to the Geneva-based body.

Despite year-end holiday travel, carriers struggled to keep pace with falling demand in December, when the passenger load factor fell to 73.8 percent, meaning one in four seats was empty, it said.

"Airlines are struggling to match capacity with fast-falling demand. Until this comes into balance even the sharp fall in fuel prices cannot save the industry from drowning in red ink," said Bisignani.

Business travel -- driven largely by international trade and services -- has slumped since the financial turmoil began in September. It shrank further in November with the number of passengers travelling on premium tickets dropping by 11.5 percent year-on-year, according to IATA data earlier this month.

Revenues from premium tickets are a key source of profitability for airlines.

IATA called on Thursday for major structural changes to the beleaguered industry whose revenues it said were expected to contract by $35 billion to $501 billion.

"We don't want bail-outs. But we need to change the ownership rules. Almost every other business has the freedom to access to global capital and the ability to merge across borders where it makes sense. To manage this crisis airlines need the same management tools," Bisignani said.


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