Air traffic slowly recovering

A global industry body says that airlines continue to struggle, but are showing modest signs of improvement.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)

Where transportation stimulus is going
As of Aug. 14, the Department of Transportation has approved 7,701 transportation stimulus projects worth $25 billion. More
Should Ben Bernanke be reconfirmed for a second term as Fed chairman?
  • Yes
  • No

GENEVA (Reuters) -- A recovery in air traffic is under way, according to latest data from a global industry body, in another sign the world economy is clawing its way out of recession.

But the recovery will be "volatile and weak", the International Air Transport Association said on Thursday, indicating the turbulence that has buffeted an industry facing another year of multi-billion dollar losses is not at an end.

Airlines carried 11.3% less cargo and 2.9% fewer people in July than a year earlier, IATA said in its latest monthly reading of cross-border traffic, a leading indicator for the health of world trade.

The figures represented an improvement from June, when the year-on-year declines were 16.5% for cargo and 7.2% for passengers.

Air freight is a good leading indicator of world trade movements, since shippers tend to switch to air when speed is more important than cost -- at the start of an upturn -- and switch to ocean transport in a recession, IATA says.

As a result, air freight is first into recession but usually is first out, it said in a recent analysis.

So far this year, freight volumes have fallen 19.3% and air travel is down 6.8%, according to IATA, whose data exclude domestic flights.

And compared with June and adjusted for seasonal factors, both freight and passenger travel grew by more than 3% in July, it said.

"The data can be rather volatile but this does confirm earlier signs that a recovery in demand for air transport has begun, though there are good reasons for expecting the path of further recovery to be volatile and weaker than recoveries from previous recessions," IATA said.

IATA said there was a varied regional pattern, with passenger traffic in the Asia-Pacific remaining weak but improving, with a strong rebound in air freight reflecting recovery in several Asian economies.

Airlines in Europe and North America are seeing less improvement in freight, but a stronger improvement in passenger volumes which could reflect earlier cuts in fares.

Passenger capacity was more in line with demand in July, with passenger load factors averaging 80.3%, but excess capacity continued to emerge in the freight sector, it said.

"Downward pressure on freight rates and revenues continues to increase," said the Geneva-based body, which represents 230 carriers including British Airways, Cathay Pacific, Emirates and United Airlines.

IATA has estimated airlines will lose $9 billion in 2009 after an $8.5 billion loss in 2008, when high oil prices hit profits and then the global credit and financial crisis slashed demand for business and leisure air travel.

IATA estimated last year that $3.5 trillion of goods were transported by air in 2006, representing 35% of international trade. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
These 10 food trends could dominate 2015 So long, kale. Here's what's expected to shake up the food industry next year. More
Beyond Russia: Geopolitical hot spots in 2015 Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More
These 20 antique guns could fetch big bucks Morphy Auctions in Pennsylvania is putting nearly 1,000 old guns on the block. Here are just a few. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Copyright 2009 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.