The International Air Transport Association’s (IATA) latest ‘state of the nation’ report on the airline industry shows continued declining passenger numbers and freight demand. July’s near 3% fall in passenger traffic was less than previous months, but IATA’s Director General and Chief Executive Officer Giovanni Bisignani warned against optimism that the turnabout in economic fortune is just around the corner.
“Demand may look better,” he said, “but the bottom line has not improved. We have seen little change to the unprecedented fall in yields and revenues. The months ahead are marked by many uncertainties, including the price of oil. The road to recovery will be both slow and volatile. In the meantime, the industry remains in intensive care.”
“The freight numbers tell an interesting story,” he added. An 11% decline in cargo demand for July was a relative improvement over the average for the first seven months of the year. “The sector is being boosted as companies re-stock depleted inventories,” said Bisignani. “Once inventories are at desired levels in relation to sales, improvements in demand will level off until business and consumer confidence returns. Given the large amount of debt in all sectors of the economy, instant relief is not in the forecast.”
The current season will be critical, says Bisignani. “Airlines need to make their money in the June-August peak travel season. Planes are full. Load factors are high. But revenues are way down. Conserving cash, effectively managing capacity and cutting costs will be the long-term theme for every business in the air transport value chain.”