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IATA Predicts Traffic Growth Set to Slow

The International Air Transport Association (IATA) recently released full-year traffic results for 2007. The results show international passenger traffic demand grew 7.4 percent for the year 2007 that is a considerable increase from the 5.9 percent increase recorded in 2006. In December 2007 passenger traffic demand rose 6.7 percent, a large decrease from the 9.3 percent jump recorded in November. According to IATA, “This sudden decrease reflects the impact of rising prices and economic uncertainty that grew more acute in December.”

Average international passenger load factors reached an industry record of 77 percent in 2007, up from 76 percent in 2006 and 75.1 percent in 2005. The association claims “this trend will likely end in 2008 as demand growth is forecast to slow to five percent while capacity rises 5.2 percent.”

Regional results for the year varied. For Middle Eastern carriers, an 18.1 percent increase in passenger demand was recorded, continuing a four-year trend of double digit increases. This was the highest among all regions, a result of the strong regional economies and oil wealth, expanded capacity and new routes. Latin American airlines recorded an 8.4 percent demand growth resulting from the effects of restructuring in the region. This is a sharp recovery compared with the 2.4 percent fall in 2006. African carriers recorded above average growth of 8 percent reflecting the strong economic growth and successful market liberalization in parts of the continent.

Asia Pacific carriers’ 7.3 percent growth mirrored that of the global average. Growth indicates the continuing strength of Chinese and Indian economic expansion making air travel accessible to large new markets.

Europe saw demand rise from 5.3 percent in 2006 to six percent in 2007, reflecting steady economic growth and expansion on long-haul routes to Asia and the Middle East. North America recorded 5.5 percent growth in 2007. This reflects the growth of 5.7 percent recorded in 2006 as the region’s carriers transfer capacity to more lucrative international markets. Asia Pacific carriers’ 7.3 percent growth mirrors that of the global average. Growth indicates the continuing strength of the Chinese and Indian economic expansion making air travel accessible to large new markets.

IATA’s Director General Giovanni Bisignani said: “Strong passenger traffic growth of 7.4 percent was a key component of the industry’s 3.8 billion euro profit in 2007 but it’s not all good news.”

He added, “Despite the ambiguity of strong passenger growth accompanied by weaker freight demand, we can say clearly that 2007 was the best in recent memory and we can assert equally clearly that there will be no encore performance in 2008.”

Mr. Bisignani explained, “Oil prices are higher than ever; economic uncertainty accompanying the United States credit crunch is broadening and the slower growth for passenger demand in December sets the trend for the coming months.”

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