Airline Industry Performance Improving

The airline industry turned the corner in June, according to Giovanni Bisignani, IATA`s Director General and CEO. “Although we are still well below where we were at the same time last year, travelers are returning,” he said. “We expect that traffic recovery will intensify through July and August as a result of pent-up demand and the northern hemisphere summer holiday season,” he said.

Preliminary IATA traffic figures for June 2003 show a 11.8% drop in international passenger traffic over June 2002, with SARS-hit Asia Pacific carriers experiencing a 35.8% drop, still the worst performance among all of the regions. These figures, however, show considerable improvement over the 21% and 55% year on year drops recorded respectively for May.

“The worst is over, but the road to recovery will be long. Even the most optimistic scenario for a robust traffic recovery will not see yields returning to normal for some time,” cautioned Mr. Bisignani.

“Controlling costs must become an automatic best practice for airlines and their industry partners.

Recovery to where we were in January 2003 or even January 2001 is not sufficient. That will only leave our industry as vulnerable to the next crisis as we have been to SARS, Iraq and the other recent crises. We are arriving at a new norm for the industry where crises are no longer extraordinary events, but part and parcel of the business cycle. The industry needs to evolve to a new cost structure that will allow it to weather these future crises as a matter of course,” he said.

The Association of European Airlines has released traffic figures for the week ending August 10th. Overall, traffic in week 32 was up 2.9% compared with 2002, a percentage point higher than week 31. The North Atlantic, at 7.9% has posted, for the 8 th consecutive week, a growth well above 5% with a cumulative rate of 3.8% from the beginning of the year.

Traffic in Europe, AEA’s most important market, increased by 1.0%, a figure slightly lower than previous week’s, but for the 7th time, since the end of the Gulf War, in the positive.