…as global airlines make $6.7b profit
Africa’s economic expansion has driven the air transport market to record a solid growth during the year 2012, the International Air Transport Association (IATA) has said.
According to the association, African airlines had a solid year of passenger growth up 7.5% in 2012 with capacity expansion of 7.1% traffic growth and an improved load factor of 67.1%.
“African airlines had a solid year of growth, up 7.5%, as the continent’s economic expansion drove traffic demand, said IATA when it announced the global air passenger traffic for 2012 on January 31, 2013.
Africa’s freight capacity also grew 9.2%, outstripping demand. The freight load factor fell to just 24.7%, the lowest of any region by a significant margin, IATA said.
It however noted that Africa still has the weakest air transport market of all regions.
Globally, air passenger traffic rose 5.3% as cargo demand fell during last year and this helped airlines deliver an estimated $6.7 billion profit in 2012 despite high fuel prices.
The Geneva-based group announced that full-year traffic data for 2012 showed “a 5.3% year-on-year increase in passenger demand and a 1.5% fall for cargo”.
The 5.3% increase in passenger demand was slightly down on the 2011 growth of 5.9% but above the 5% 20-year average, the group said indicating that load factors for the year were near record levels at 79.1%.
The IATA data showed that demand in international markets expanded at a faster rate of 6% than domestic travel’s 4% and in both cases, emerging markets were the main drivers of growth.
It noted that the 1.5% fall in demand for air cargo compared to 2011 marked the second consecutive year of decline, following a 0.6% contraction in 2011.
“Passenger demand grew strongly in 2012 despite the economic bad news that dominated much of the last twelve months. This demonstrates just how integral global air travel is for today’s connected world. At the same time, near-record load factors illustrate the extreme care with which airlines manage capacity. Growth and high aircraft utilization combined to help airlines deliver an estimated $6.7 billion profit in 2012 despite high fuel prices. But with a net profit margin of just 1.0% the industry is only just keeping its head above water,” said Tony Tyler, IATA’s Director General and CEO.
“In contrast to the growth in passenger markets the air cargo market contracted by 1.5%. The industry suffered a one-two punch. World trade declined sharply. And the goods that were traded shifted towards bulk commodities more suited for sea shipping. The outstanding bright spot was the development of trade between Asia and Africa which supported strong growth for airlines based in the Middle East (14.7%) and Africa (7.1%),” said Tyler.
In its December 2013 outlook, IATA has projected a 4.5% growth in passenger markets and 1.4% growth for cargo demand saying “that will contribute to an improvement in profitability from $6.7 billion (1.0% net profit margin) in 2012 to $8.4 billion (1.3% net profit margin) in 2013.”
The association made the 2013 projections based on the fact that business confidence was up, the stability of the Eurozone situation and the avoidance of the US fiscal cliff.
IATA believes business confidence will help cargo markets to recover the lost ground from 2012.
“2013 will not be a banner year for profitability, but we should see some improvement on 2012,” said Tyler.
By Ekow Quandzie
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