Global Aviation: Out of squall in 2013?

Having trekked a thorny course in 2012, global aviation seemed out of intricacies at the year end, hailing 2013 with open arms. This insight is in accordance with the December data released by IATA, whereby air travel rebounded by 4.2 percent YoY in December, 2012.
Global air transport market witnessed signs of modest recovery in 4QCY12, which cushioned the slowdown experienced in the earlier months of 2012. Thus, on the whole, air transport expanded by 5.3 percent YoY in 2012, which is slightly above the 20-year average growth of five percent.
In 2012, international travel grew at a faster pace than the domestic travel. The mainstream growth in the international travel market came on the heels of the Middle Eastern market which touted a staggering YoY growth of 15.4 percent in 2012. While the ongoing crisis in the Euro zone and the consolidation process in the US took its toll on the air traffic in these markets, which albeit grew, however at a decelerating pace.
Domestic transport market posted four percent growth which is mainly attributable to a remarkable growth of 9.5 percent in China and 8.6 percent in Brazil, supported by capacity enhancement. Japan domestic market also grew by 3.6 percent YoY in 2012, however could achieve the Pre-Tsunami level. US domestic travel which is approximately half of the global domestic travel eked out a meager 0.8 percent expansion. Conversely, Indian travel market shrank by 2.1 percent YoY.
In contrary to the passenger market, air freight market faced headwinds from global economic weakness and high fuel prices, all through 2012, thus tumbling by 1.5 percent YoY. This contraction is substantiated by a decline in world trade growth, coupled with countries preferring sea transport over air freight.
Among the markets taking the major hit, was the Asia-Pacific having 39 percent share in the global air freight market. In 2012, Asia-Pacific market saw a nail-biting contraction of 5.5 percent in air freight due to weak demand from Europe and North America, its major export destinations.
For the ongoing year, the hopes of recovery in the global air freight are pinned on Middle Eastern and African markets which posted growths of 14.7 percent and 7.1 percent in 2012, on the back of new trade lanes and developing trade links between Africa and Asia.
Going forward, many factors contribute towards global aviation turning its gaze up in 2013. Business confidence is up. The Euro zone situation is more stable than it was a year ago. Moreover, US has shunned away the fiscal cliff. On the darker side, myriad factors still impede the air transport growth. There is no imminent respite in fuel prices while GDP growth is projected at a mere 2.3 percent.
Thus, 2013 might not be a banner year for the global aviation, nevertheless the impetus built up at the end of 2012, is expected to persist in 2013. IATA projects that 2013 would see 4.5 percent growth in passenger markets and 1.4 percent growth in cargo demand. That will contribute to an enhancement in profitability from 6.7 billion dollars in 2012 to 8.4 billion dollars in 2013.