Financial meltdown to hit aviation harder than fuel crisis

The repercussions of the current financial market meltdown could be more detrimental to the aviation industry than this year’s high oil prices, according to a new report from Geneva-based The Airports Council International.ACI Director of Economics, Andreas Schimm, said, “While the effect of high oil prices may begin to fade as we head into fall, the implication of the international crisis in the financial markets for air traffic demand could be worse.”

The warning comes as the world’s airports reported “resilient” international passenger traffic (with the exception of the Asia Pacific region) in the peak summer month of August 2008, but poor domestic throughput.

The Asia Pacific region slumped 6.2% with the slowdown most marked in China, Taiwan, Japan and Korea.

However international traffic worldwide grew in August. Impaired by the sharp decline in Asia-Pacific, global international traffic grew by +0.6%. Europe (+1%) and North America (+2%) grew moderately. Africa (+9%), Latin America-Caribbean (+9%) and the Middle East (+8%) managed solid growth benefiting from the holiday season.

International traffic growth has slowed markedly in the Middle East (+8.3%) where the dominant international airport Dubai only saw an increase of +2.8% in August while Abu Dhabi, Bahrain, Sharjah and Beirut continued to perform two digit growth figures.

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Domestic traffic with the exception of Latin America-Caribbean (+4%) fell considerably across the world leading to a decrease of total domestic traffic of minus 4%. India has been affected hardest with Delhi down -16% and Mumbai -18%. German, UK and Spanish airports suffered the greatest domestic reductions in Europe while North America declined by 5%.

While total passenger numbers were down 2% in August year-on-year, over the 2008 eight months period, international traffic was still growing by 4.2% and domestic passengers were unchanged. Total passenger numbers have grown by 1.7% over the eight months period.

Domestic freight continued its decline in August (-19%) mainly driven by North America (-27%) and Africa (-28%). International freight shrunk by 2.6% lead by North America (-8%) and Asia Pacific (-4.3%). Overall freight was down 8% in August, while over the eight months period total freight defended a 1% increase.

Andreas Schimm said, “The drop in international passenger numbers in Asia Pacific can be largely attributed to the effects of the Olympics on industry production and visa rules in China as well as a continued contraction in Japan. Demand for domestic travel has proven very elastic and price sensitive leading to significant declines in the wake of high oil prices during summer.”
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