Air Traffic Growth Slowed in November

Although international air traffic is up 4 percent over the pre-recession peak of early 2008, the rate of growth is slowing, according to the International Air Transport Association (IATA), which last week released the results of its November traffic report.

According to IATA, air traffic in November 2010 was up 8.2 percent over November 2009, although the rate of growth slowed from 10 percent in October 2010.

While the slowed growth equals a 0.8 percent drop in air traffic, in absolute terms, it does not necessarily signal a negative trend, according to IATA Director General and CEO Giovanni Bisignani.

"The industry is shifting gears in the recovery cycle," he said in a statement. "Growth is slowing towards normal historical levels in the 5 to 6 percent range. Relative weakness in developed markets is being offset by the momentum of economic expansion in developing markets. We see a strong end to 2010 that boosted the year's profit forecast to $15.1 billion. Slowing traffic growth is in line with our projections for a reduced profit of $9.1 billion in 2011. That's a 1.5 percent margin. More hard work will be needed in the New Year to achieve sustainable levels of profitability."

Worldwide, African carriers were the only ones to report an increase in November growth rates, which were 16.4 percent, versus 12.6 percent in October. Otherwise, November growth was strongest in the Middle East, where airlines recorded 16.7 percent growth, down from 17.8 percent in October. In North America and Europe, meanwhile, airlines recorded 9.5 percent and 7.3 percent growth, respectively, down from 12.4 percent and 9.4 percent. Finally, growth was weakest in Asia-Pacific and Latin America, where growth slowed from 7.3 percent and 4.9 percent, respectively, to 5.8 percent and virtually zero.

"The year-end holiday season has been tough for travelers and for airlines," Bisignani continued. "Exceptionally adverse weather conditions in Europe and the U.S. resulted in travel chaos. Passengers were inconvenienced. Airlines saw lost revenues and saw costs rise. As the backlogs of stranded passengers clear and the situation normalizes, there are two opportunities that must not be lost. The first is to learn and apply lessons from this difficult season so that all stakeholders in the industry's infrastructure are better prepared for future exceptional situations. The second opportunity is to evaluate the regulatory world in which aviation operates. In 2010, the Icelandic volcano and the year-end adverse weather made the value of air transport crystal clear. Modern life and the global economy depend on aviation. Whether you are a businessperson operating in the global market, families keeping in touch across distances or heads-of-state on important foreign missions, aviation is critical. While memories of the travel chaos are still fresh, it's time to evaluate a long list of government imposed industry handicaps, including excessive taxation, out-dated ownership restrictions, over-regulation where market forces could do better, under-investment in infrastructure and generally poor regulation of monopoly suppliers. We must not let governments forget all of this while waiting for a change of seasons."