Monday, January 5, 2009
Nov. Traffic Down 4.6 % Worldwide
“The 13.5% drop in international cargo is shocking,” said IATA Director General and CEO Giovanni Bisignani. “As air cargo handles 35 % of the value of goods traded internationally, it clearly shows the rapid fall in global trade and the broadening impact of the economic slowdown. By comparison, this is largest drop since 2001, in the aftermath of September 11. The industry is now shrinking by all measures. We can expect deep losses in the fourth quarter. With no end in sight for the worsening global economy, the 2008 gloom will carry over into the new year. Relief in the oil price has been outstripped by the falls in demand and capacity cuts are not keeping pace. The industry is back in intensive care. Improving efficiency everywhere will be theme for 2009.”
Meanwhile, OAG said the number of seats in the transatlantic market will drop by nearly 400,000 just in the first three months of 2009, a decline of five percent over the year-ago period and comes despite the new U.S.-E.U. open skies agreement effective since last March.
However, an October survey by the Travel Industry Association and Ypartnership found most of those surveyed intend to travel next year, albeit less expensively, impacting the number of nights at hotels and the cost of meals. The leisure and hospitality industry has lost 1.3 million jobs this year, according to TIA. Seventy six percent expect to save money with packaged vacations and half will be shopping for better rates on the internet.
While the survey may be more hopeful, the Commerce Department issued a report on New Year’s Eve saying that travel spending took its biggest hit since 2001. For the fourth consecutive quarter, air transportation was down and took the biggest hit of all travel sectors dropping by 20.4 percent in the third quarter following an 18.7 percent drop in the second quarter. The numbers include international flights which declined dramatically as well after strong demand in the previous two quarters.
The department’s Bureau of Economic Analysis indicated that real spending on travel and tourism declined at an annual rate of 8.1 percent in the third quarter after real spending – adjusted for price changes – grew 2.8 percent.
Suzanne Cook, research vice president for TIA, said her forecast, based on interviews with 2,291 adults in October, shows only a 1.3 percent decline in leisure travel next year from this year. The survey, conducted by TIA, a marketing firm, said that 7 out of 10 respondents said they intend to take an overnight trip of 50 miles or more in the next six months. Nearly half of those surveyed said they did not plan to change their future travel plans because of the financial turmoil.
With consumer spending falling off a cliff in November and December, it is likely that results have changed. Even so, joesentme.com’s Joe Brancatelli predicts a dramatic drop in fares.
IATA’s International Passenger Traffic Results
• The November passenger decline of 4.6% is a considerable worsening from both the 1.3% demand contraction in October and the 2.9% fall in September.
• Asia-Pacific carriers face the most difficult operating environment with a 9.7% decline in November, following a 6.1% contraction in October. The region also had the most aggressive capacity cuts at -5.1%. While Chinese domestic traffic rebounded after the Olympics, travel to and from international markets continues to decline, reflecting the weakness in both global trade and consumer confidence.
• North American carriers saw international traffic decline by 4.8% - the second largest drop among the regions. Until August, the region’s carriers had been shifting capacity to international markets. With the near collapse of the investment banking sector and consequent reductions in business travel, North Atlantic travel slumped. Carriers have started to cut international capacity with a 0.8% drop in November (following 0.4% growth in October)
• European carriers saw international traffic drop by 3.4% as all the region’s major markets (intra-Europe, North Atlantic, and Asia) slumped.
• Smaller emerging markets fared better. African carriers saw traffic decline by 1.6%. This is a considerable improvement from the 12.9% drop in October, resulting from stronger intra-African traffic. Middle Eastern carriers saw traffic increase by 5.6%. This is up from 3.5% growth in October, but represents a step-change from the double-digit expansion that characterized growth prior to the current financial crisis. Latin American carriers saw a slight decline in growth to 3.3% (compared to 4.5% growth in October), buoyed by the region’s positive, albeit slower, economic growth.
International Freight Traffic
• Asia-Pacific carriers (representing 44.6% of global freight) saw freight traffic fall by 16.9% in November—the largest decline of any region. As freight accounts for a larger percentage of revenues for the Asia-Pacific carriers, fourth quarter profits for the region’s carriers will be disproportionately (and negatively) impacted by the downturn in the global air freight market.
• Double-digit freight declines were also experienced by Latin American carriers (-15.7%), North American carriers (-14.4%) and European carriers (-11.0%). Freight traffic for Middle Eastern carriers turned negative (-1.6%), following 1.0% growth in October. African carriers, while being the only region posting freight growth (2.2%), saw a decline from the 3.0% growth posted in October. Plummeting business confidence and the continuing turmoil in financial markets indicates that the worsening trend will be continued in December.