The international traffic data for May showed a significant drop in cargo growth to 1.3 percent while passenger traffic grew 6.0 percent, the International Air Transport Association (IATA) reported on Wednesday. At 1.3 percent, cargo demand is considerably down from the 4.3 percent recorded for the full year 2007. For the first five months of 2008, airfreight volumes were up 2.8 percent. The biggest cause of the slow growth came from a 0.5 percent contraction in Asian carrier traffic. This resulted from the impact of the earthquake in China and weakness in the Japanese economy. Asian carriers also saw weakness in transpacific markets with increased competition from US carriers taking advantage of the weak US dollar. International passenger demand grew 6 percent in May. This is slower than the 7.4 percent increase recorded for the full year 2007, but stronger than expected given the economic downturn. The results were skewed by a shift in the US of 1.7 billion available seat miles (2.72 billion available seat kilometers) from domestic routes to international routes (a 7.9 percent rise in capacity in international markets). North American carrier international traffic grew 8.2 percent, while domestic capacity fell 3.3 percent. Overall the underlying growth rate in global domestic and international traffic was 3 to 4 percent (down from an average of 6 percent for 2007). International load factors rose slightly for the first time in three months to 74.3 percent on slower capacity growth of 5.4 percent during the month. “The high price of oil is re-shaping the industry. The major shifts in traffic flows experienced during May reflect this,” said Bisignani, IATA's director general and CEO. During May jet fuel averaged $160 per barrel - 87 percent higher than the same time in 2007. By comparison, crude prices averaged $123 per barrel - an 81 percent increase. “Jet fuel margins are increasing the impact of skyrocketing oil prices for the aviation industry. Unit costs are up 20-30 percent and that is going to take its toll on the bottom line. Efficiency everywhere is the imperative. That must be understood by governments, labor and our industry partners,” said Bisignani. North American cargo traffic grew 4.6 percent as US carriers shifted capacity from domestic to international routes. In addition to expanded transpacific opportunities, the US-EU Open Skies agreement created new opportunities in Europe. Europe recorded a sluggish 1.4 percent increase. The strong euro is damaging competitiveness for both European exports and the European air cargo business. Latin America freight volumes contracted 13.2 percent. Industry restructuring saw the replacement of retiring wide-body aircraft with narrow-bodies with limited cargo capacity. Africa recorded its 11th month of airfreight contraction out of the past 12 months with a fall of 6.5 percent during May as industry restructuring removes freight capacity. The lone bright spot was the Middle East where volumes rose 10.7 percent on the back of oil-based economic growth. On passenger traffic, IATA said airlines in Latin America continued strong growth of 13.6 percent reflecting robust commodity-driven economic growth in the region. Middle Eastern airlines expanded their traffic 12.8 percent, lower than the 18.1 percent increase achieved for the full year 2007 due to slower economic growth in origin-destination regions using Middle East airports as connecting points. The further decline in traffic carried (-2.2 percent) and capacity provided (-5.1 percent) by African airlines reflects a loss of market share and the reduction of unprofitable capacity in the face of high and rising fuel prices. Reversing the trend of the previous three months, load factors rose slightly in May to 74.3 percent as high fuel prices are forcing cuts in capacity and the retirement of older aircraft. __
