KEY POINTS:
Slowing global growth and rocketing fuel prices have forced the International Air Transport Association (IATA) to again downgrade its industry profit expectations for this year to US$4.5 billion ($5.7 billion).
The assumption is based on economic growth slowing to 2.6 per cent and an average annualised oil price of US$86 per barrel.
This is the second downgrading of the 2008 forecast. In September last year, IATA predicted a US$7.6 billion profit for this year. The initial impact of the credit crunch saw that lowered to US$5 billion in December.
"We still expect a positive bottom line but it's turning out to be a very tough year," said IATA's director-general Giovanni Bisignani.
Skyrocketing oil prices during 2004-2008 were offset by efficiency gains and rising consumer confidence.
"The broadening impact of the US credit crunch has brought buoyant consumer confidence to an abrupt end. Oil prices continue to rise. Demand is softening and after the 64 per cent improvement in labour productivity and an 18 per cent reduction in non-fuel unit cost attained since 2001, efficiency gains are much more difficult to achieve," said Bisignani.
IATA figures also show passenger loadings falling last month at the greatest rate in four years.
IATA figures show that the global passenger load factor (PLF) fell to 73.3 per cent in February. This is down 0.6 percentage points from a year earlier.
Last week Aloha Airlines, which has been transporting island-hoppers around Hawaii, shut as a result of the soaring cost of fuel and competition, leaving 19,000 employees with an uncertain future.
Air New Zealand figures for February show load factors were strong for long-haul flights - up 2.7 per cent to 82.5 per cent - but on short-haul flights were down by 1.2 per cent as a result of strong domestic and transtasman competition.
IATA said its traffic data for February was skewed by the leap year, with the extra day masking the slowdown. When adjusted, passenger demand increased by 4-5 per cent and freight 2-3 per cent.
"Demand is still growing. But clearly we are in a different league from the 7.4 per cent and 4.3 per cent growth that we saw in 2007 for passenger and freight respectively. Things are slowing down," Bisignani said.
Load factors fell in the four largest carrier regions, showing the growing impact of the United States' economic slowdown on the airline industry.
COMING DOWN
Profit expectations for 2008:
North America: US$1.8 billion (down from US$2.8 billion in 2007)
Europe: US$1.8 billion (down from US$2.1 billion)
Asia Pacific: US$900 million (unchanged)
Middle East: US$200 million (down from US$300 million)
Latin America: Break-even (compared to a US$100 million loss)
Africa: US$300 million loss (up from US$400 million loss)
