IATA Gripped by Visions of Doom

(Transport Intelligence)

The International Air Transport Association (IATA) has released a pessimistic report on the air cargo sector showing a fall in global freight volumes during June alongside a big hit on general air transport industry profits.

The organisation’s director general, Giovanni Bisignani, described the overall airline industry as being “in trouble” and stated that “losses this year could reach US$6.1bn, more than wiping out the $5.6bn that airlines made in 2007”.

According to IATA’s monthly international traffic data, global air cargo actually fell in June, compared with the same month last year, for the first time in three years. Year-on-year overall freight volumes, measured in FTK (freight tonne kilometre) terms, shrank by 0.8% in June driven down by a fall of 4.8% in the crucial Asia Pacific market. North American traffic grew more slowly, but still respectably, at 4%. Growth was marginal in Europe at 0.7%, whilst the small Middle East market leapt at an annualised rate of 12%. South America, however, shrank by 12.7%.

The overall global air cargo sector performance in June was worse than that of the passenger market which expanded at an annualised 3.8% in terms of ‘revenue per passenger kilometre’. However, although the latter sector still grew in June, the rate was far less than the 5.5% seen in the same period of 2007.

Both parts of the air transport business have been affected by high oil prices but it is the freight sector that is the most concerning. The major reduction in Asia Pacific traffic suggests a fall in demand caused either by customers switching to other cheaper transport modes or simply moving lower volumes.

Bisignani suggested that the economic conditions were “reshaping the (airline) industry”. He demanded “urgent action” to survive the crisis. He also stated that: “Airports and air navigation service providers must come to the table with efficiencies that deliver cost savings. Labour must understand that efficiency is the only path to job security. And governments must stop crazy taxation and give airlines the freedom to merge and consolidate where it makes business sense.”
The IATA press release and link to data can be found here.