September figures signal worst decline since 2001

Signalling the worst decline since the technology bubble burst in 2001, the International Air Transport Association (Iata) announced last week that cargo traffic had dropped 7.7% in September compared to the same month in 2007. International load factors tumbled by 4.4% percentage points from August to 74.8% in September. “The deterioration in traffic is alarmingly fast-paced and widespread,” said Giovanni Bisignani, Iata’s director general and CEO. “Even the good news that the oil price has fallen to half its July peak is not enough to offset the impact of the drop in demand. At this rate, losses may be even deeper than our forecast US$5.2 billion for this year,” said Bisignani. Declines in airfreight have slowed year-to-date growth to 0.1%, with all regions except the Middle East and Africa reporting negative results. The most alarming drop was with Asia Pacific carriers – the largest players in the market. The region’s carriers reported a 10.6% decline. Europe and North American carriers, which had seen flat growth through August, saw cargo traffic fall 6.8% and 6.0% respectively. “The industry crisis is deepening – along with the crisis in the global economy. Airlines, like all other businesses, are facing enormous challenges. But unlike other companies, they are denied some basic commercial freedoms – access to markets and to global capital – that could help them manage their business in this difficult time,” said Bisignani. The web of 3 500 bilateral air service agreements that govern international air transport denies market access until specifically agreed. And the ownership clauses that are contained in these agreements preclude mergers across borders. “Look at what the banking industry is doing. They are taking government handouts. They are accessing global capital. And we have seen mergers without anybody asking to see the investors’ passports. Airlines are not asking for handouts. But today’s crisis highlights the need for airlines to be able to run their businesses like normal global businesses,” said Bisignani from Istanbul on the eve of the Agenda for Freedom Summit.