AEA Records Passenger Growth

The Association of European Airlines (AEA) reports that in the first six months of 2012, the number of passengers carried by its member carriers increased by almost 6 million, to 177.6 million, a growth of 3.4% compared to the results of last year.  Measured in passenger-kilometres, the growth was even greater at 5.5%.  This was double the increase in seat capacity, leading to an improvement in passenger load factor of two percentage points to 77.1%.  
The AEA says that a part of the increase could be attributed to two factors which depressed traffic in the corresponding period in 2011 – the political turmoil in North Africa and the Japanese earthquake and its aftermath.
Cross-border traffic within Europe increased by 3.8% but domestic passenger traffic growth came to a standstill.  The passenger traffic to South America registered a strong growth and reflects the economic boom of several countries in the region.
Air cargo, a key enabler for economic development but also often a leading indicator of market trends, is strongly underperforming with a decline of 4.9%.
The AEA believes that European network carriers face a paradox as the air travel growth strongly contrasts the financial situation.  Passenger numbers throughout the first two quarters of the year showed a continued but moderate growth but, as in 2011, airlines are not able to offset the high rise in fuel and external costs.  AEA says that “the market is clearly not able to absorb higher fares due to the challenging situation of the European economies.  As a result, airlines are confronted with worsening financial results as surging fuel costs have erased their profitability.”
It adds that most of the airlines have implemented further rounds of cost-cutting, capacity adjustment and revenue improvement programmes which are expected to deliver results in the upcoming months.  Fuel prices have dropped since April but, the Association explains, “due to the negative euro/dollar evolution and the hedging programmes already in place, headwinds persist: the benefits of falling fuel prices are so far limited.”
Athar Husain Khan, Acting Secretary General of the Association commented: “2012 was foreseen with a gloomy, uncertain economic outlook and our forecasts are proving to be accurate.  According to our latest analysis, we forecast for our members an EBIT (earnings before interest and tax) loss of about 1.5 billion Euros in 2012.  Despite the extremely challenging financial situation we see that external costs imposed on the airlines by third parties continue to rise. European airlines are taking their responsibility to overcome the current challenges but they need a fertile soil in order to strengthen their positions in the global playing field and to accelerate their contribution to the much-needed recovery of Europe’s economy.”