For the aviation industry, the term “business as usual†has not seen much use over the past few years. But, after an unexpectedly strong year in 2005 for traffic growth and only a modest slowdown forecast for this year, the coming 12 months could be as close to a steady-state business as the industry has witnessed since the late 1990s. The most gloomy outlook remains in North America, but even there some bright spots are emerging.
IATA is forecasting international and domestic traffic to grow at 4.5% globally this year, says its chief economist Brian Pearce, compared with an expected 7.1% climb in 2005 when the final figures are announced. ICAO’s forecast is rather more optimistic, with traffic predicted to rise by 6.5% this year (see table). “World economies are slowing and the effect of fuel surcharges will affect volumes with a push back from customers,†says Pearce. As economies pick up again in 2007, IATA sees rates recovering to the 7% level.
Booming traffic helped revenues to grow by almost 10% last year as the industry reached the peak of the cycle. As the downward leg begins, revenues will slide back to grow at around 4% this year, says Pearce. Despite such strength, driven in equal measure by improving yields and fuel surcharges, sky-high oil prices have robbed airlines of the financial benefits of this upcycle, he explains. “These peak revenues did not translate to the bottom line.â€
IATA’s forecast for the industry’s financial performance over the year has see-sawed with fluctuating oil prices, but it has tracked its expectation back from a total net loss of $7.4 billion to one of $6 billion for 2005. Although this is encouraging, “let’s not forget that takes total losses for the past five years up to $42 billionâ€, says Pearce. In nominal terms these losses have now entirely wiped out the profits made by the industry since ICAO started to publish the numbers in 1968.
Flight International
IATA is forecasting international and domestic traffic to grow at 4.5% globally this year, says its chief economist Brian Pearce, compared with an expected 7.1% climb in 2005 when the final figures are announced. ICAO’s forecast is rather more optimistic, with traffic predicted to rise by 6.5% this year (see table). “World economies are slowing and the effect of fuel surcharges will affect volumes with a push back from customers,†says Pearce. As economies pick up again in 2007, IATA sees rates recovering to the 7% level.
Booming traffic helped revenues to grow by almost 10% last year as the industry reached the peak of the cycle. As the downward leg begins, revenues will slide back to grow at around 4% this year, says Pearce. Despite such strength, driven in equal measure by improving yields and fuel surcharges, sky-high oil prices have robbed airlines of the financial benefits of this upcycle, he explains. “These peak revenues did not translate to the bottom line.â€
IATA’s forecast for the industry’s financial performance over the year has see-sawed with fluctuating oil prices, but it has tracked its expectation back from a total net loss of $7.4 billion to one of $6 billion for 2005. Although this is encouraging, “let’s not forget that takes total losses for the past five years up to $42 billionâ€, says Pearce. In nominal terms these losses have now entirely wiped out the profits made by the industry since ICAO started to publish the numbers in 1968.
Flight International
