Strong performance, fragile outlook: IATA

IATA reports that global traffic results for Feb. 2012 were on the rise, with passenger demand increasing by 8.6% compared to Feb. 2011. However, IATA also points out that several factors inflated February 2012 results and distorted comparisons with the year-ago period. Those factors 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. When comparing to January 2012 levels, the picture becomes much more moderate, with passenger demand growing by just 0.4%. Global passenger capacity expanded by 7.4% compared to previous-year levels, lagging behind the 8.6% increase in demand. This has had a positive impact on load factors, which airlines have maintained at 75.3% — better than the 74.4% recorded in February 2011. IATA director general, Tony Tyler observed, “The outlook is fragile. Improvements in business confidence slowed in February. This will limit the potential for business class travel growth… 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% margin can ill-afford.” Go to http://www.iata.org for more.