Airline consolidation is critical says IATA

[2nd May 2008]

Airport scene

Releasing the air passenger figures for March, airline industry association IATA says that the industry has taken a major turn for the worse and consolidation is now critical.

Passenger growth in March was 5.8%, but adjusted for the early Easter holiday real growth was only 4% says IATA (International Air Transport Association). Similarly adjusted for Easter, passenger load factors were 1.7% lower than March 2007 at 76.1%.

“Traffic only tells a part of the story. Astronomical oil prices are hitting hard. And the buffer of an expanding economy has disappeared. The fortunes of the industry have taken a major turn for the worse,” comments IATA director general and CEO, Giovanni Bisignani.

IATA says that regional differences in passenger traffic growth are also significant. International traffic for North American airlines grew by 6.3% as they shifted traffic from low-yielding domestic markets. US airlines also took advantage of the strong Euro to grow North Atlantic traffic by 10%, while European airlines contracted in the same area by 2%.

Growth remained strong in some areas, with airlines in the Middle East seeing a rise of 15.4%, although this was down from the 20.4% in 2007. In the Asia-Pacific region passenger traffic increased by 4.3%, a significant slowdown says IATA in a region where a booming economy was expected to make it immune from the problems in the US.

“In the face of such dramatic shifts in the global economy, consolidation is critical. The proposed consolidation in the U.S. is good news. But it makes no sense that consolidation is limited to domestic partners. This is a global industry that needs to be run like a global business," concludes Bisignani.

Written by: Nick Purdom


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