Air traffic hit by economic downturn

The Association of European Airlines has released traffic and capacity data for its
members in August and September 2008 concluding that air traffic has fallen for the first time in 25 years due to the economic slowdown.
Passenger traffic development reached a tipping point in late summer, when a marginal
growth of 1.6% in August was followed by a decrease of 1.1% in September. While
negative monthly figures are not unprecedented, previous decreases have been
triggered by external shocks such as 9/11, SARS and the Gulf Wars; this was the first
traffic loss since the early 1980s which was attributable to essentially economic factors.

The August figure was the third in a succession of low growth figures (June: 2.0%, July:
1.2%) which demonstrated a continued resilience in the market while conditions
worsened on all fronts.
AEA members’ three major operating regions - cross-border Europe, North Atlantic and
Far East - which together account for 70% of passenger-kilometres, increased at 1.4%,
0.9% and 1.5% respectively in August and slipped to decreases of 1.1%, 1.1% and 0.8%
in September. The downward trend was compounded by a strong decrease in Domestic
traffic, of minus 7.9% in August and 12.4% in September.
The South Atlantic market continued to buck the trend with a 13.0% increase in August
and 9.5% in September, and some buoyancy remained in Middle Eastern markets.
Load factors continued to slide as traffic development failed to match modest 3.0%
increases in capacity in August and 2.3% in September. While the North Atlantic, with a
0.5% capacity increase in August and decrease of 0.5% in September, was still able to
record a small load factor improvement in August, by September figures were down
across all operating regions, for an overall loss of 2.6 percentage points - translating into
a massive burden on the industry’s profitability.
Said AEA Secretary General Ulrich Schulte-Strathaus: “In terms of response to purely
economic stimuli, these figures are the weakest our industry has seen for 25 years, and
with the major European economies still in transition to a recessionary state they cannot
be expected to recover in the immediate future. The toxic combination of economic
slowdown, a steep decline in business and consumer confidence, and fuel price-driven
inflation which is hitting both the airlines and their customers is challenging the very
structure of the industry”.
“The time could not be worse,” he added, “to be hastily finalising, without any impact
assessment, the design elements of the looming Emissions Trading Scheme, which high
auctioning levels have transformed into a barely disguised kerosene tax - and this on top
of a proliferation of national taxes, making both airlines and their passengers pay for their
carbon footprint several times over.”