The International Air Transport Association (IATA) released international traffic data showing that the global passenger load factor (PLF) fell to 73.3% in February. This is 0.6 percentage points below the PLF in February 2007. Moreover it is the most significant drop in the PLF in 4 years. Traffic: Traffic data for February is skewed by the leap year. The extra day hides the continuing slow down in…
The International Air Transport Association (IATA) released international traffic data showing that the global passenger load factor (PLF) fell to 73.3% in February. This is 0.6 percentage points below the PLF in February 2007. Moreover it is the most significant drop in the PLF in 4 years.
Traffic: Traffic data for February is skewed by the leap year. The extra day hides the continuing slow down in demand. Unadjusted traffic figures showed year-on-year increases of 9.2% for passenger demand.
“When we adjust for the impact of the leap year, passenger demand increased by 4-5% while freight was even more sluggish in the 2-3% range. Demand is still growing. But clearly we are in a different league from the 7.4% and 4.3% growth that we saw in 2007 for passenger and freight respectively. Things are slowing down,” said Giovanni Bisignani, IATA’s Director General and CEO.
Passenger Load Factors: “Load factors tell the story. They fell in the four largest carrier regions showing the growing impact of the US economic slowdown on the airline industry,” said Bisignani.
European PLF recorded the largest single drop of 1.6 percentage points to 71.7%. Asian carriers saw their PLF fall by 0.1 percentage points to 75.2% while North American airlines experienced a 0.5 percentage point drop to 74.0%. The Middle East saw a 0.9 percentage point fall to 72.6%, balanced against a 20.3% growth in passenger traffic supported by the oil business. This is strong growth even taking into consideration the leap year impact.
The exceptions were Africa, where a contraction in supply boosted the PLF by 2.1 percentage points to 67.4% and Latin America where strong economic growth and travel demand boosted load factors by 0.9 percentage points to 73.0%.
US-EU Open Skies: Against the backdrop of a slowing US economy, the US-EU Agreement on Open Skies took effect. The weak US dollar and strong Asian and European economies are boosting US exports and outbound business travel. US carriers are growing trans-Atlantic traffic in double-digit figures. By contrast, the competitiveness of Europe’s carriers is negatively impacted by the strong Euro which is also dampening European exports.
“US-EU Open Skies will be yet another variable in a very complicated equation,” said Bisignani. “Out of Europe’s busiest international hub – Heathrow – there are 25% more weekly flights scheduled to serve the US market. Consumers will benefit from greater choice and lower fares due to intensified competition. We expect a counter-cyclical boost in April traffic as result. The question will be how much and for how long.”
“Trans-Atlantic competition will increase in April thanks to new route opportunities. Now what we need is the full set of commercial freedoms to be able to serve those opportunities most effectively. The stage two talks must address the liberalisation of ownership rules so that airlines can merge or consolidate where it makes business sense. Every other industry has the opportunity to go global. Why not the airlines?” said Bisignani.
Explanation of measurement terms:
RPK: Revenue Passenger Kilometres measures actual passenger traffic
ASK: Available Seat Kilometres measures available passenger capacity
PLF: Passenger Load Factor is % of ASKs used. In comparison of 2007 to 2006, PLF indicates point differential between the periods compared
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