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MENAFN - Khaleej Times - 02/02/2013

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(MENAFN - Khaleej Times) Global air travel demand growth is projected to slow to 4.5 per cent this year after recording a 5.3 per cent increase in 2012 in passenger demand, mostly triggered by Middle East airlines, the International Air Transport Association, or Iata, said on Thursday.

Middle East airlines contributed almost a third of the total expansion in international passenger markets with 15.4 per cent growth (ahead of the 8.9 per cent growth recorded in 2011 that was impacted by the Arab Spring).

Middle east airlines - led by emirates, etihad and Qatar airways - contributed almost a third of the total expansion in international passenger markets with 15.4 per cent growth.

Middle East airlines, led by the world's fastest growing Gulf carriers - Emirates, Etihad and Qatar Airways - achieved such growth rate with a capacity expansion of 12.5 per cent while improving the load factor to 77.4 per cent.

Iata said the region's carriers increased the connectivity of their expanding hubs with significant increases in both network (destinations) and frequency. "Despite the expansion, the improved load factor indicates that the growth is sustainable and that airlines in the region have been successful in attracting new passengers," it said.

Iata's full-year traffic data for 2012 shows a 1.5 per cent fall for cargo. The global body warned that the air travel demand growth would slow to 4.5 per cent this year but freight markets will recover from a decline in 2012. "2013 will not be a banner year for profitability, but we should see some improvement on 2012," Iata chief executive Tony Tyler said in a statement.

"We are entering 2013 with some guarded optimism. Business confidence is up. The eurozone situation is more stable than it was a year-ago and the US avoided the fiscal cliff. Significant headwinds remain.

There is no end in sight for high fuel prices and GDP growth is projected at just 2.3 per cent. But improved business confidence should help cargo markets to recover the lost ground from 2012.

And the momentum built-up at the year-end should see the passenger business expand close to the five per cent historical growth trend. 2013 will not be a banner year for profitability, but we should see some improvement on 2012," said Tyler.

In its December outlook for 2013, Iata projected that 2013 would see 4.5 per cent growth in passenger markets and 1.4 per cent growth for cargo demand. That will contribute to an improvement in profitability from 6.7 billion (1.0 per cent net profit margin) in 2012 to 8.4 billion (1.3 per cent net profit margin) in 2013.

The 5.3 per cent increase in passenger demand was slightly down on 2011 growth of 5.9 per cent but above the five per cent twenty-year average.

Load factors for the year were near record levels at 79.1 per cent. Demand in international markets expanded at a faster rate (six per cent) than domestic travel (four per cent). In both cases emerging markets were the main drivers of growth.

The 1.5 per cent fall in demand for air cargo compared to 2011 marked the second consecutive year of decline, following a 0.6 per cent contraction in 2011. The freight load factor for the year was 45.2 per cent.

"Passenger demand grew strongly in 2012 despite the economic bad news that dominated much of the last twelve months. This demonstrates just how integral global air travel is for today's connected world. At the same time, near-record load factors illustrate the extreme care with which airlines manage capacity.

Growth and high aircraft utilisation combined to help airlines deliver an estimated 6.7 billion profit in 2012 despite high fuel prices. But with a net profit margin of just 1.0 per cent the industry is only just keeping its head above water," said Tyler.

"In contrast to the growth in passenger markets the air cargo market contracted by 1.5 per cent.

Domestic air travel grew by 4.0 per cent in 2012. China (9.5 per cent) and Brazil (8.6 per cent) were the strongest performers. India was the weakest with a 2.1 per cent contraction on 2011 levels. Total capacity growth (3.8 per cent) was in line with demand (4.0 per cent) and the domestic load factor stood at 79.5 per cent.

Indian domestic travel shrank by 2.1 per cent on 2011 levels. Weak economic growth was exacerbated by increasing operational costs, insufficient infrastructure, high taxes and onerous regulation. Capacity growth fell to 0.3 per cent (from 16.2 per cent in 2011) and the average load factor for the year was 72.9 per cent.

International passenger demand grew by 6.0 per cent in 2012. The strongest growth came from emerging markets, particularly the Middle East (15.4 per cent), Latin America (8.4 per cent) and Africa (7.5 per cent). Capacity grew more slowly than demand (4.0 per cent) supporting a near record level international load factor of 78.9 per cent.


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