US slowdown takes growing toll on passenger flights

31st March 2008, Comments 0 comments

US economic slowdown is taking a growing toll on the airline industry as passenger occupancy rates hit the lowest level for four years.

   GENEVA, March 31, 2008  - The US economic slowdown is taking a growing toll on the airline industry as passenger occupancy rates hit the lowest level for four years, the top industry association said on Monday.
   The global passenger load factor (PLF) fell to 73.3 percent in February,
down 0.6 percent from the previous year, the International Air Transport
Association (IATA) said in a statement.
   "Things are slowing down," said IATA director general Giovanni Bisignani.
   "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," he added.
   The weak US dollar is boosting exports and outbound business flights, he
noted, while conversely the strong euro is damaging the competitiveness of
European carriers.
   Transatlantic air travel is set to undergo a sea-change in the coming
months as the long-awaited "Open Skies" agreement between the United States
and European Union comes into force, IATA noted. The agreement took effect on
   "US-EU Open Skies will be yet another variable in a very complicated
question," Bisignani said.
   The agreement, which allows many more airlines to fly between the two
continents, should boost figures in the short-term, with 25 percent more
weekly flights to the US out of London Heathrow alone, IATA said.
   "Consumers will benefit from greater choice and lower fares due to
intensified competition. We expect a counter-cylical boost in April traffic as
a result. The question will be how much and for how long," Bisignani asid.
   He called for further deregulation of ownership rules, "so that airlines
can merge or consolidate where it makes business sense".
   Europe has so far borne the brunt of the slowdown, with its PLF registering
the single biggest drop in February, down 1.6 percentage points to 71.7
percent, IATA said.
   Asian carriers saw PLF fall by 0.1 percentage points to 75.2 percent while
North American airlines dipped 0.5 percentage points to 74.0 percent.
   The Middle East saw PLF down 0.9 percentage points to 72.6 percent, though
this was balanced against a 20.3 percent growth in passenger traffic supported
by the oil business.
   Africa and Latin America were the exceptions to the rule, with PLF rising
in both continents.
   In Africa, a contraction in supply boosted PLF by 2.1 percentage points to
67.4 percent, while strong economic growth and travel demand boosted load
factors by 0.9 percentage points in Latin America to 73.0 percent.
   IATA said in January that it expects passenger demand growth at 5 percent
in 2008, down from 7.4 percent in 2007.
   Middle Eastern carriers registered the strongest growth in 2007 with
passenger demand up 18.1 percent, reflecting strong regional economies, the
impact of oil wealth, expanded capacity and new routes, IATA said.
   Asia Pacific carriers saw 7.3 percent growth, showing the "continuing
strength of the Chinese and Indian economoc expansion," it added.


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