The downturn in the aviation sector is expected to continue till at least the end of this year as record oil prices compel airlines to raise fares, according to International Air Transport Association (IATA) and Centre for Asia Pacific Aviation (CAPA).
The global air passenger demand growth fell to a five-year low of 3.8 per cent in June, compared to 5.4 per cent year-to-date, IATA said in a statement. The demand growth has declined by an average four per cent across the world. The Latin American carriers, however, registered a strong growth of 12.5 per cent, said IATA.
“With falling consumer and business confidence, and sky-high oil prices, the situation will get a lot worse,’’ said Giovanni Bisignani, Director General and CEO of IATA.
IATA is a leading world trade association of international airlines, consisting of 230 airline members, whereas CAPA provides market intelligence reports and aviation analysis for the Asia-Pacific region.
The capacity addition has outstripped the demand by registering a growth of 5.5 per cent, thereby pushing the load factor down to 77.6 per cent. This has added to the aviation woes, according to IATA.
If the international numbers are not too encouraging, CAPA predicts bad times for Indian airlines as well.
“The Indian airlines will have a negative growth of 10 per cent in the second quarter of this financial year. Though international traffic from India will continue to grow, the domestic growth will be hit especially as airlines continue to hike the fares,” said Kapil Kaul, CEO, CAPA. This will impact the last two quarters of this financial year as well, added Kaul.
IATA has revised its estimates for the industry from profits of $4.5 billion to losses of $6.1 billion, adding the current losses will wipe out the profits of $5.6 billion earned by airlines made last year.
“To survive the crisis, airports and navigation service providers must come to the table with efficiencies that deliver cost savings. Labour must understand that efficiency is the only path to job security and government must stop crazy taxation and give airlines the freedom to merge and consolidate whereever it makes business sense,’’ said Bisignani, CEO, IATA.
The international freight business registered a negative growth of -0.8 per cent. The Asia Pacific region led the contraction in growth, with the June traffic declining by -4.8 per cent on a year-on-year basis.
