On 28th February, the International Air Transport Association (IATA) announced international scheduled traffic results for January showing an 8.2% increase in passenger traffic and 9.1% growth in air freight compared to January 2010. By January 2011, air travel volumes were 18% higher compared to the low point reached in early 2009 and some 6% above the pre-recession peak of early 2008. Air freight in January was 39% above the low point reached at the end of 2009 and some 6% above the pre-recession peak of early 2008. Freight has, however, fallen 2% since its May 2010 peak at the height of the re-stocking bubble.
But today, the IATA downgraded its airline industry outlook for 2011 to $8.6 billion from the $9.1 billion it estimated in December 2010. The high oil price cuts airline profits by almost 50%. “Political unrest in the Middle East has sent oil over $100 per barrel. That is significantly higher than the $84 per barrel that was the assumption in December. At the same time the global economy is now forecast to grow by 3.1% this year—a full 0.5 percentage point better than predicted just three months ago. But stronger revenues will provide only a partial offset to higher costs. Profits will be cut in half compared to last year and margins are a pathetic 1.4%,” said Giovanni Bisignani, IATA’s Director General and CEO.
Although the strong growth of international passenger demand, the unrest of the middle east caused high oil price could be a big factor to global travel industry. But more interestingly, just as what Bisignani said “As if the rising price of oil was not challenging enough, governments are increasing the cost of mobility with a growing contagion of taxes. In 2010 the industry was hit with billions of dollars of new or increased taxes in the UK, Austria and Germany. Now we see South Africa and Iceland planning increases. Governments need to improve their finances and restart their economies. Mobility is a catalyst for economic growth. Governments must understand that taxing air transport out of the range of price sensitive travellers and businesses makes very little economic sense”. We all could well expect what the global travellers would suffer as the end consumers.
