"Continuing economic uncertainty will likely mean market shortcomings deepening as we enter 2012," Tony Tyler, IATA Director General and CEO eyes vulnerable market for the year ahead. The calendar year for global aviation ended with unsettled hopes. While cargo markets continued to stay weedy through most part of the year, passenger markets, to airlines despair, did not do much either. Freight markets have reportedly contracted by more than 4 percent since January, while the passenger market has started to wither away the growth it attained in the beginning of the year. According to data released by IATA, the year-on-year growth in passenger traffic in November 2011 was 4.3 percent compared to 3.6 percent in October 2011. However, the month on month comparison demonstrates a contraction of 0.5 percent. The softening in the passenger market can also be seen as a result of comparison to a comparatively weaker month, November 2010, for the year-on-year growth in passenger air travel. The industry has witnessed a failure by the airlines to catch up with the waning travel demand, which has resulted in passenger load factors falling from 78.5 percent in October 2011 to 76.3 percent in November 2011. Unlike last month, international passenger markets in November 2011 weakened by 1.5 percent compared to domestic demand, which grew by 1.3 percent. The international airlines faced difficulty in maintaining 3QCY11 revenues amid falling passenger load factors. Middle Eastern and Latin American carriers stood out in international markets due to vibrant trade activity and price competitive products. They recorded the strongest year-on-year growth of 9.8 percent and 8.8 percent, respectively, and capacity increase surpassing 10.4 percent and 11.4 percent, respectively. On the other hand, European carriers witnessed a steep decline in demand and capacity growth with the Eurozone crisis in full swing. However, demand experienced a growth of 4.9 percent in November on the back of business travel in export-driven Germany. With declining consumer confidence, North American airlines also experienced a year-on-year contraction in November 2011 demand by 1.2 percent and capacity reduction of 1 percent. The performance of domestic markets was relatively healthier with demand improvement of 4.7 percent and PLF of 79.2 percent. However, unlike international markets, domestic market performance was marked with much divergence. Where Chinese demand for domestic travel boomed and sprang back giving rise to 17.2 percent year-on-year growth in November 2011, capacity cuts in US carriers and falling load factors in Japan affected the profitability of the global passenger domestic market. Summarily, IATA is expecting to earn a net profit margin of 1.2 percent for CY11 with bleak forecasts of half the net profit margin for CY12. There remains a high risk that the eurozone crisis could spiral out of control and turn into an economic catastrophe. How accurate these estimates are depends on the vulnerability of the eurozone to the continuing debt crisis.
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