In light of rising fuel costs and fragile global economic conditions, the airline industry continues to perform poorly this year with the rate of global air traffic tumbling persistently according to the September results released by IATA.
While passenger traffic touted a meager growth of 4.1 percent over last year; air cargo to airlines despair, didn do much either, posting fragile growth of 0.6 percent. Moreover, the trivial 0.6 percent year-on-year growth posted for air cargo is less significant than the 0.6 percent fall in air freight volumes between August and September CY12.
Region-wise, passenger carriers in China and Brazil are on a robust rise fumed by faltering markets in Japan and India. Likewise, Latin America, Africa and Europe airlines are also growing vigorously albeit the growth in Europe seems unfruitful in an approach to manage elevated fixed costs and taxes.
Middle Eastern carriers, so far, tout the highest traffic growth in September with demand up 13.3 percent YoY.
On the bleak front of the picture are Japan and India. Japans domestic market plummeted by 0.3 percent in September on year-on-year basis with countrys domestic market hovering at 10 percent smaller size than the pre-earthquake levels. The export-driven economy continues to suffer from frail demand for its products owing to the global slowdown, leading to decreased domestic demand for air travel.
Indian domestic traffic plummeted 9.9 percent compared to a year ago; echoing the slowing economy and capacity reductions that have held back domestic travel.
Putting aside regional diversity, the fact that airlines are making any money on the face of high fuel prices and global economic uncertainty is an accolade to their strong business performance, as illustrated by maintaining global load factors close to 80 percent since the start of CY12.
Going forward, IATA estimates CY13 to be a bit better for the aviation sector amid expectations of slightly stronger economic growth and lower oil prices. Passenger traffic is expected to boost by 4.5 percent in CY13, with anticipations of cargo loads to bounce by 2.4 percent.
However, the fact that the industry is expected to eke out a skimpy 1.1 percent return on capital, which is woefully behind the rate enjoyed by other major industries, underscores the major challenges that the aviation sector still faces.
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