Traffic To Fall For First Time Since 1991

Jan 5, 2009
Madhu Unnikrishnan madhu_unnikrishnan@aviationweek.com

The economic downturn will be far worse for airlines than previously forecast, marking only the second time in 35 years that traffic has fallen, IATA data show.

Global traffic is expected to fall by 3% next year, and growth worldwide is not expected to move beyond 4% per year until 2011. With economies the world over weaker than predicted, IATA forecasts that its travel forecast for 2016 will by 9% lower than previously thought.

After two years of declining traffic, the industry should begin its recovery by 2011, the IATA data show. This meshes with historical trends, which hold that weakness in travel markets generally lasts for three years before rebounding.

But IATA warns that the previously torrid growth forecast is unlikely to be repeated. "Travel volumes rarely return to the previous trend or peak-to-peak growth," IATA says, citing the previous downturns of 1979, 1991 and 2001.

The current downturn marks only the second time in 35 years that traffic growth has actually contracted. In 1991, traffic contracted after a global recession. In 2001, the unusual growth in the credit markets fueled a larger-than-expected bump in traffic, but this is unlikely to be replicated any time soon, IATA says.

Aggressive capacity cuts in the U.S. could insulate the industry's bottom line, IATA says, although this trend has not been mirrored elsewhere. IATA notes that worldwide, carriers are moving to cut capacity to bring it in line with demand for air travel, which could make this recession less harmful than the 1991 or 2001 recessions.

IATA logo: screen grab

AVIATION WEEK Copyright 2008, The McGraw-Hill Companies, Inc.

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