Global passenger demand has improved by 8.6 per cent while cargo demand witnessed a 5.2 per cent rise compared to the same month in the previous year. According to the International Air Transport Association (IATA), global traffic results have shown that several factors had inflated those results. These included weaker traffic during the Arab Spring a year ago and the occurrence of Carnival in Brazil in February, a month earlier than in 2011. Cargo demand was also subject to positive distortion by the occurrence of the Chinese New Year in January which pushed some deliveries into February. When comparing to January 2012 levels, the picture becomes much more moderate, with passenger demand growing by 0.4 per cent and cargo demand declining by 1.2 per cent. Global passenger capacity expanded by 7.4 per cent compared to previous-year levels, lagging behind the 8.6 per cent increase in demand. This has had a positive impact on load factors, which airlines have maintained at 75.3 per cent--better than the 74.4 per cent recorded in February 2011. Freight demand continued to be relatively stable. This trend started to develop in September 2011 and is consistent with improvements in business confidence. "The outlook is fragile. Improvements in business confidence slowed in February. This will limit the potential for business class travel growth and it implies that an uptick for cargo is not imminent. At the same time, airlines trying to recoup rising fuel costs could risk reduced volumes on price sensitive market segments. Weak economic conditions and rising fuel costs are a double-whammy that an industry anticipating a 0.5 per cent margin can ill-afford," said Tony Tyler, IATA's director general and CEO. International air travel stood 9.3 per cent above February 2011 levels. Capacity expanded by 7.3 per cent and load factors stood at 74.4 per cent. It should be noted that except for Asia-Pacific, all regions saw demand expand ahead of capacity when compared to February 2011. Middle East carriers posted 23.4 per cent international growth which is distorted by the poor performance in February 2011 owing to the impact of the Arab Spring. Capacity growth stood at 16.1 per cent. Average load factors for the region showed the most dramatic improvement to 76.9 per cent in February 2012 compared to 72.4 per cent in the previous year. Stripping out the distortions, we estimate that the region has now fully recovered. African carriers also saw a positively distorted performance in February due to the Arab Spring with 24.7 per cent growth in demand and 20.2 per cent growth in capacity. The first impacts of the Arab Spring were felt in the Northern Africa region--primarily Egypt and Tunisia. Load factors for the region stood at 62.7 per cent. Although this was the lowest among all the regions, it was significantly better than the 60.5 per cent for February 2011. Our estimate is that African carriers have fully recovered from the traffic losses resulting from the Arab Spring. Overall domestic demand expanded by 7.6 per cent, only slightly ahead of the 7.5 per cent increase in capacity. Average load factor was 76.7 per cent, which was higher than the 74.4 per cent achieved on international routes. Air freight volumes increased in February from a year ago by 5.2 per cent. This was largely as a result of cargo shipments that were postponed in January due to the Chinese New Year holiday and the comparison to the previous year which was impacted by weak demand associated with the Arab Spring. Air freight volumes showed a decline on January's performance of 1.2 per cent. Cargo growth was led by Middle East carriers with an 18.2 per cent increase in demand which was matched exactly with an 18.2 per cent increase in capacity. The largest volume contributor to February's growth, however, was the Asia-Pacific region which posted a 10.2 per cent year-on-year gain. European and North American carriers saw year-on-year declines in cargo traffic of 1.4 per cent and 0.3 per cent respectively. Latin American airlines saw the most significant decline with a 3.6 per cent fall compared to previous-year levels. African carriers posted growth of 3.2 per cent over the previous year demand levels but on very small volumes. "We are ending the first quarter with a considerable amount of uncertainty. While the threat of a European financial meltdown seems more remote than it did only a few months ago, the political risks that aviation faces are growing. The rapid increase in the price of oil is already biting hard. The UK is increasing the onerous Air Passenger Duty. Europe is adding to the burden with the inclusion of international aviation in its emissions trading scheme--the extra-territorial aspects of which are creating the possibility of a trade war that nobody can afford. The exact conditions vary from country to country, but around the world we see ill-conceived policy initiatives that over-regulate, excessively tax or otherwise restrain the aviation industry. This prevents it from being the catalyst for economic growth that it can be," said Tyler. "Aviation has transformed the world into a global village. We did this even while making profit margins of less than 1 per cent in a policy framework best described as 'tax-and-restrict' in many markets. Aviation could achieve much more with competitiveness-enabling policies that support sustainable growth," said Tyler.
