Middle East air travel defies global trends

Region to show growth in airline demand in 2009, IATA figures reveal

IATA director general and CEO Giovanni Bisignani.
IATA director general and CEO Giovanni Bisignani.

The Middle East will be the only region to report airline demand growth in 2009, the latest IATA statistics reveal.

The region will report 1.2% growth for the year compared to a 5.7% decline in passenger demand growth globally.

However, IATA said this increase would be "overshadowed" by the impact of a 3.8% increase in capacity ahead of demand,and as a result, the Middle East aviation industry would witness losses of US $900 million - a $100 million deterioration on last year's figures. 

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The report revealed that worldwide losses were expected to reach $4.7 billion in 2009, which is significantly worse than IATA's December 2008 forecast of a $2.5 billion loss.

“The state of the airline industry today is grim. Demand has deteriorated much more rapidly with the economic slowdown than could've been anticipated even a few months ago,” said IATA director general and CEO Giovanni Bisignani.

Furthermore, industry revenues are expected to fall by 12% to $467 billion, with passenger traffic expected to reduce to 5.7% over the year. It is predicted there will be an even sharper fall in premium traffic, and cargo demand is expected to decline by 13%.

On the other hand, fuel prices are expected to drop to a quarter of operating costs, from an average of $99 per barrel in 2008 to $50 per barrel (Brent oil). Combined with lower demand, expenditure on fuel will fall from $168 billion (2008) to $116 billion.

“Fuel is the only good news, but the relief of lower fuel prices is overshadowed by falling demand and plummeting revenues. The industry is in intensive care. Airlines face two immediate fundamental challenges; conserving cash and carfully matching capacity to demand,” said Bisignani.

The report highlighted the best performance in North America, where a 7.5% fall in demand had been matched with a 7.5% cut in capacity, which had resulted in a combined $100 million profit in 2009.

Bisignani added that recovery would not come without change, which meant access to global capital, the ability to merge and consolidate, and the freedom to access markets. He concluded that “expecting a significant recovery in 2010 would require more optimism than realism”.

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