Aviation growth slows down across globe: IATA

The uncertain global economic environment is now having a telling impact on growth of airline companies across the globe as recent data released by the International Air Transport Association or IATA reveals the May numbers are sluggish across the world when compared with May last year.

So while there was some spike in growth of passengers numbers the industry growth remained flat compared to April. “While passenger demand was 4.5% ahead of levels in May 2011, growth was virtually flat compared to April. Capacity increased by 4.0% and load factors stood at 77.6%, below the historically high levels recorded in April,” The report said.

The largest commercial airline body with over 250 members warned that the margins will be thinning in what already seems to be a challenging year ahead for airlines thus cutting any hopes short of big profit margins for airlines.

“The airline industry is fragile. Relief in oil prices provides some good news. Unfortunately, the softness in oil markets comes on the back of fears of deterioration in the European economy. Business and consumer confidence are falling.

And we are seeing the first signs of that in slowing demand and softer load factors. This does not bode well for industry profitability. Airlines are expected to return a $3 billion profit in 2012 on $631 billion in revenues. That’s a razor-thin 0.5% margin,” said Tony Tyler, IATA’s Director General and CEO.

In what cannot be a very encouraging sign for a beleaguered Indian aviation industry IATA observed that Indian domestic traffic rose just 0.1% year-over-year, but fell 2.7% compared to April. Load factors stood at 76.8%.