IATA meets as airline industry shows signs of recovery

6th June 2010, Comments 0 comments

The commercial aviation industry, battered by plunging sales and fallout from the Icelandic ash cloud, is at last emerging from a steep downturn, the International Air Transport Association (IATA) says.

"We are meeting as the industry continues its recovery from the global financial meltdown," IATA general director Giovanni Bisignani said ahead of its general assembly starting Monday.

The organisation represents 230 airlines that account for 93 percent of commercial air traffic.

The pace of the sector's recovery has been slowed by the eruption in April of an Icelandic volcano, which spread an ash cloud over Europe that brought commercial air travel to a standstill for a week.

International passenger traffic, after rising 10.3 percent in March, showed only a 2.4 percent gain in April.

Bisignani said however that the strong growth recorded prior to the volcano eruption presages a sustained recovery.

"It is finally time for some cautious optimism," he said.

IATA estimates that the global civil aviation industry lost 9.4 billion dollars (7.8 billion euros) last year, with Europe accounting for 3.8 billion dollars.

The Franco-Dutch airline Air France-KLM last week reported a 4.3 percent gain in traffic in May.

"If this year we see no growth, it is possible that we will be able to regain momentum in 2011," company chief executive Pierre-Henri Gourgeon said.

"In 2012, the air transport industry will be at a level that will exceed that reached before the (2008 global financial) crisis."

Industry analyst Christophe Menard of Bryan, Garnier and Co. said that "overall, the trend has been positive over the last months.

"We will incorporate signs of recovery starting in the second half of the year and ... should be at the top of the cycle in two years."

Airlines have taken account of recovery prospects and have told manufacturers they planned to take delivery of aircraft as scheduled in 2011.

Results in the first quarter of the year improved, notably in Asia and North America, according to IATA. The first quarter is traditionally the weakest of the year.

"Airlines typically make 80 percent of their earnings in the second and third quarters," IATA noted.

Menard said recent airline mergers in the United States should help absorb excess capacity.

At research group Oliver Wyman, analyst Olivier Fainsilber stressed that the economic recovery could prompt an increase in business travel and sales of flexible tickets at higher prices.

"This should be a fillip to generalist companies that have continued to offer a wide range of flight schedules during the crisis but without getting the benefit of sales of flexible tickets," he said.

© 2010 AFP

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