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GLOBAL PASSENGER DEMAND UP 5pc

ME airlines grow 14.7pc on Asia-Africa trade

Geneva, January 31, 2013

Middle East and Africa based airlines grew 14.7 per cent and 7.1 per cent respectively in 2012, supported by the development of trade between Asia and Africa, said the director general and CEO of the International Air Transport Association.

The IATA announced full-year traffic data for 2012 showing a 5.3 per cent year-on-year increase in passenger demand and a 1.5 per cent fall for cargo.

The 5.3 per cent increase in passenger demand was slightly down on 2011 growth of 5.9 per cent but above the 5 per cent twenty-year average. Load factors for the year were near record levels at 79.1 per cent. Demand in international markets expanded at a faster rate (6.0 per cent) than domestic travel (4.0 per cent). In both cases emerging markets were the main drivers of growth.

The 1.5 per cent fall in demand for air cargo compared to 2011 marked the second consecutive year of decline, following a 0.6 per cent contraction in 2011. The freight load factor for the year was 45.2 per cent.

“Passenger demand grew strongly in 2012 despite the economic bad news that dominated much of the last twelve months,” added Tony Tyler.

“This demonstrates just how integral global air travel is for today’s connected world. At the same time, near-record load factors illustrate the extreme care with which airlines manage capacity. Growth and high aircraft utilization combined to help airlines deliver an estimated $6.7 billion profit in 2012 despite high fuel prices. But with a net profit margin of just 1.0 per cent the industry is only just keeping its head above water,” he said.

“In contrast to the growth in passenger markets the air cargo market contracted by 1.5 per cent. The industry suffered a one-two punch. World trade declined sharply. And the goods that were traded shifted towards bulk commodities more suited for sea shipping.”

Middle East airlines contributed almost a third of the total expansion in international passenger markets with 15.4 per cent growth (ahead of the 8.9 per cent growth recorded in 2011 that was impacted by the Arab Spring).

This was achieved with a capacity expansion of 12.5 per cent while improving the load factor to 77.4 per cent. The region’s carriers increased the connectivity of their expanding hubs with significant increases in both network (destinations) and frequency.

Despite the expansion, the improved load factor indicates that the growth is sustainable and that airlines in the region have been successful in attracting new passengers.

African airlines had a solid year of growth, up 7.5 per cent, as the continent’s economic expansion drove traffic demand. Capacity expansion of 7.1 per cent was just below traffic growth. This improved the load factor to 67.1 per cent, but it was still the weakest of all regions.

Air cargo

Air freight markets declined for a second straight year, falling a further 1.5 per cent in 2012 after a 0.6 per cent decline in 2011.

Air cargo has come under pressure from a slowdown in world trade growth, and shifts in the freight commodity mix. Expanding emerging economies have driven demand for bulk items carried by sea, while economic weakness in the West dampened demand for high-value consumer goods transported by air. Freight capacity grew just 0.2 per cent over the year, and the freight load factor was 45.2 per cent.

African and Middle Eastern carriers were beneficiaries of new trade lanes and developing trade links between the two regions. Freight demand grew 7.1 per cent and 14.7 per cent respectively, both improvements on 2011 when the Middle East expanded 8.2 per cent and Africa declined by 2.1 per cent.

The Middle East had the fastest capacity expansion of any freight region (11.4 per cent) but the load factor still improved to 44.8 per cent. Africa’s freight capacity grew 9.2 per cent, outstripping demand. The freight load factor fell to just 24.7 per cent, the lowest of any region by a significant margin.

“We are entering 2013 with some guarded optimism. Business confidence is up. The Euro zone situation is more stable than it was a year-ago and the US avoided the fiscal cliff. Significant headwinds remain,” said Tyler.

“There is no end in sight for high fuel prices and GDP growth is projected at just 2.3 per cent. But improved business confidence should help cargo markets to recover the lost ground from 2012. And the momentum built-up at the year-end should see the passenger business expand close to the 5 per cent historical growth trend. 2013 will not be a banner year for profitability, but we should see some improvement on 2012,” Tyler concluded.

In its December outlook for 2013, IATA projected that 2013 would see 4.5 per cent growth in passenger markets and 1.4 per cent growth for cargo demand. That will contribute to an improvement in profitability from $6.7 billion (1.0 per cent net profit margin) in 2012 to $8.4 billion (1.3 per cent net profit margin) in 2013. – TradeArabia News Service




Tags: Iata | Africa | Middle East Airlines | air cargo | Passenger Demand | fuel prices |

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