Airlines operating in the Middle East might appear to offer the greatest stimulus to air transport optimists looking for signs of encouragement as the industry continues to suffer from travelers' extended reaction to the global economic crisis.

Such airlines remain "the bright spot," says International Air Transport Association (IATA) Director General Giovanni Bisignani in figures published last Thursday. But his remarks may be interpreted as something of a euphemism, given that the region's fortunes appear to be headed south. In fact, IATA had earlier given warning that the region faces increased financial losses, with the possibility of market trends elsewhere hitting their custom.

"Middle East carriers, despite strong traffic growth, will see losses deepen to $1.5 billion [in 2009]," the trade lobby group said in June. "The region’s intercontinental hubs are vulnerable to recessionary impacts in both European and Asian source markets." The sum loss represented a second consecutive fall in IATA forecasts: in March, it had predicted a $900 million loss for Middle East carriers in 2009, following a $200 million loss it had suggested in December 2008.

According to a Center for Asia Pacific Aviation (CAPA) perspective earlier this year, the Middle East had previously been seen as "the last bastion of growth" in airline premium traffic, as local long-haul carriers benefitted from strong regional economic trends and attractive cabin-service products. "In mid-2008, it appeared that Middle East carriers were in a strong position to weather the downturn, with strong economic growth, driven by surging oil process and the regional construction boom. Both of these driving forces for premium traffic have come to an abrupt halt."

Indeed, by March CAPA had characterized performance as having "spiraled into decline," a situation whose continuation now is apparently confirmed by the latest overall traffic statistics for the region. Analyses of traffic and capacity trends show that passenger growth is well outs-tripped by increased capacity, thus generating declining load factors.

For June, IATA reported "strong 12.9% growth" in Middle East carriers' international scheduled-service traffic (revenue-passenger-miles/kilometers RPM/Ks)). Operators in all other areas recorded negative traffic growth, with falls of 4.7-14.5% (and an average of 7.2%) over June 2008.

IATA statistics also show that Middle East operators also were the only ones to have recorded a positive passenger traffic growth throughout 2009: up 7.1% on the first six months of last year, while others were down 3.2-12.0% (and an average 7.6%).

"The region's airlines are growing market share, with particularly strong growth on routes to Europe and Asia," said Bisignani. Overall, they account for about a ninth (11.3%) of the worldwide international passenger market.

But like operators in all other areas, the carriers operating in the Middle East, have been unable to sustain passenger loads. A 15.2% increase in capacity (available passenger-miles/kilometers (ASM/Ks)) exceeded RPM/K growth by 2.3 percentage points during June as passenger load factors (PLF) dropped to 73.9%.

Overall, in the first half of the year, Middle East operators have seen a 71.1% PLF, with capacity gains of 12.5% being well over five percentage points ahead of passenger trends. But again, all other regions also saw a first-half decline in load factors.

Nor was Middle East operators' apparent out-performance of all other airlines restricted to the passenger market: in air cargo, they also came out "top," if only because their downturn was less than that of any other region. Compared with 12 months earlier, cargo traffic (freight ton-miles/kilometers (FTM/Ks)) in June was down 4.2%, compared with an industry average fall of 16.5%. For the half-year, carriers in the Middle East saw FTM/Ks fall 5.5%, alongside a whopping 20.6% worldwide industry decline.

In both periods, Middle East operators saw their cargo load factors fall dramatically as small traffic declines were accompanied by huge increases in capacity (available freight ton-miles/kilometers (AFTM/Ks)), while all around other airlines were cutting volume. While other regions cut capacity by up to almost 15% in June, the Middle East saw a 14.0% increase in AFTM/K; the half-year saw an 11.5% gain compared with an industry average decline of 10.4%. The region accounts for 10.1% of the international air-cargo market.

Airlines in the Middle East have six months in which to improve PLF trends by out-performing IATA's forecast that, while passenger traffic will remain positive, they will be overtaken by overall capacity gains.