Uncertainty in the skies ahead

IATA             AIR CARGO          RECESSION

Global - Air cargo demand decline may have slowed, but aviation companies are still in the red and must prepare for uncertainty in the months ahead, said IATA director general and CEO Giovanni Bisignani.

Air cargo freight demand slipped 11.3% in July, a relative improvement over the -16.5% recorded in June and the -19.3% average for the first seven months of the year.

"Demand may look better, but the bottom line has not improved. We have seen little change to the unprecedented fall in yields and revenues," said Bisignani.

"The months ahead are marked by many uncertainties, including the price of oil. The road to recovery will be both slow and volatile. In the meantime, the industry remains in intensive care," he added.

All regions except Africa saw improvement in demand compared to June. In Asia, carriers reported a 9.5% dip in demand. IATA said the stabilisation of air freight demand in the first quarter and its improvement in the second quarter has helped reduce the rate at which excess capacity has been growing. However, load factors remain lower than levels seen at the same time last year. Downward pressure on freight rates and revenues continued to intensify in July.

"The freight rates tell an interesting story. The sector is being boosted as companies re-stock depleted inventories. Once inventories are at desired levels in relation to sales, improvements in demand will level off until business and consumer confidence returns. Given the large amount of debt in all sectors of the economy, instant relief is not in the forecast," Bisignani said.

Passenger demand in July dipped 2.9%, an improvement over the 7.2% drop in June and 6.8% decline recorded over the first seven months of the year. Asia carriers are experiencing the worst of the recession in relation to passenger figures, being the largest decline of any region.

"Airlines need to make their money in the June-August peak travel season. Planes are full. Load factors are high. But revenues are way down. Conserving cash, effectively managing capacity and cutting costs will be the long-term theme for every business in the air transport value chain," Bisignani said.

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