Middle Eastern carriers were the only ones to experience growth in March, the International Air Transport Association (IATA) said on Tuesday.
The 4.7%, which is an improvement from the 0.4% growth in February, “represented an expansion of market share”, IATA said.
But this was out of balance with the 13.1% increase in the capacity of the region’s carriers, it noted.
In its March data for scheduled international traffic, the IATA said that passenger demand fell to 11.1% below March 2008 levels. Airlines cut international passenger capacity by 4.4% resulting in an average load factor of 72.1%, it added.
IATA estimates that international revenues in March will be impacted with a decline of up to 20%.
“The global economic crisis continues to reduce demand for international air travel,” said Giovanni Bisignani, IATA’s Director General and CEO.
“Airlines cannot adjust capacity to match demand. Load factors have dipped sharply from last year. All of this is hitting revenues hard,” said Bisignani.
In addition, rising concerns over the swine influenza could have a significant impact on traffic.
“Safety, as always, is our number one priority. IATA is working in close cooperation with the World Health Organization to ensure an efficient response of the air transport industry to the challenges that Swine Influenza will present,” said Bisignani.
“It is still too early to judge what the impact of swine flu will have on the bottom line. But it is sure that anything that shakes the confidence of passengers has a negative impact on the business. And the timing could not be worse given all of the other economic problems airlines are facing.”
Aside from swine influenza, Bisignani said that airlines face many challenges.
“Like the rest of the economy, recovery in the air transport sector rests on a rise in consumer confidence and consumer spending. Shedding debt will be a major headwind. US households, for example, are leveraged at 130% of annual income. Even bringing this down by 5% erases US$500 billion in consumer spending. The challenge for governments is to turn stimulus funds into spending that fuels trade,” said Bisignani.
Noting the deteriorating financial situation of many airlines, Bisignani urged governments to move forward with liberalisation - particularly of the archaic ownership restrictions that prevent cross-border access to capital and consolidation.
“Air transport is an economic catalyst and can play an important role in driving recovery, but only if we are financially sound. Access to global capital and the freedom to consolidate would go a long way to shoring up this industry - without government bailouts.”For all the latest travel news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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