Air volumes continue to rise

Air
cargo and passenger markets have continued to expand during July, showing
above-trend growth, according to a new report.

The
study, by the International Air Transport Association, shows that travel
volumes were up by 9.2 per cent this July compared to the same month in 2009.
Air freight was 22.7 per cent better than last year. The amount of the rise
fell slightly from June’s figures of 11.6 per cent improvement in travel and
26.6 per cent freight. Analysts noted that this is due to the fact that July 2009
marked the start of an improvement from the very poor first quarter performance
at the start of last year when the industry was suffering the most from poor
economic conditions.

Worldwide
travel up

The
travel market worldwide is now 3 per cent above the levels of early 2008 but
the air travel association also noted that the recession had meant the loss of
2 years’ growth. This could be regained if current rates of growth continued
for the next 36 months, but the association also warned that this was unlikely
considering economic conditions, particularly in Europe. The recovery has been
led by the Asia-Pacific and Latin American regions and much of this has been
driven by business rather than leisure travellers.

“Perhaps
the best way of looking at the state of air travel markets is to see whether
there are broad phases emerging. This seems to be the case. There was a very
rapid phase of post-recession rebound from early 2009 until the end of the year
when travel markets expanded at an annualised pace of 12 per cent.

“So far
this year a slower growth phase has been evident, with an annualised pace of
expansion closer to 8 per cent. June and July’s results are consistent with
that pace of growth. While slower than the 2009 rebound the travel market
expansion we are seeing remains significantly above trend at 6 per cent,” read
the report.

Freight
volume growing

A
volatile second quarter affected by European airspace closures had impacted on
air freight figures. Air freight kilometres flown in July 2010 were up by 22.7
per cent compared to the same month last year. At this point, said analysts,
annualised growth is running at 10 per cent but some slowdown in air freight
should be anticipated.

“The
economic cycle is also is moving into a different phase with business inventory
rebuilding having come to an end, with more comfortable inventory-sales ratios
regained. The inventory cycle drove the very rapid expansion in air freight in
2009, as business needed the speed of air travel to get goods to market and
components to assembly facilities on time.

“Now
that cycle is complete air freight will expand more in line with final goods
sales, like consumer spending and business capital spending. Consumer spending
has been soft in the western economies but corporate profits and capital
spending has been strong. The latter may still be driving relatively robust
above-trend growth rates in air freight,” said the document.

Load
factor stable

Capacity was up by 6.1 per
cent in July compared to the same month in 2009, with load factors at 82.9 per
cent during the month. July is the peak month for air travel and 84 aircraft
were brought out of storage during the month. Capacity is expected to grow by 5
per cent for the rest of the year, which is slightly less than expected growth
in demand. Fares and yields are rising due to this tighter set of supply and
demand conditions.

Average fares worldwide
rose by 3.5 per cent from December to June 2010 and during the second quarter
fares were higher than the same period in 2009.

Air
freight demand has dipped from its peak record level earlier in 2010 but
remains strong, said the International Air Transport Association, who noted
that they had less information for the freight market but nonetheless felt that
significant further improvements in the sector were unlikely.

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