Analysis: 2009 year-end traffic

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Full-year traffic data for the three largest regions show just how deep the economic crisis hit airlines in 2009. Figures for selected leading carriers over the last 12 months show passenger traffic as measured by RPKs down 1% for Asia-Pacific carriers; 3% in the Americas and 4% for European operators. This contrasts with growth, albeit at modest levels, in 2008 when the crisis began, and growth in the range of 5-8% in the happier days of 2007. Indeed year-on-year traffic declines are something of a rarity. For example a look through the Airline Business Top 200 airline traffic rankings shows negative figures recorded just once in the last 25 years, in 2001.

Small wonder then that IATA reports 2009 as showing the largest ever post-war decline in scheduled air traffic. Its figures show a 3.5% fall in overall passenger demand in 2009 and an even heavier 10% fall in cargo. "We have permanently lost two and a half years of growth in passenger markets and three and a half years of growth in the freight business," says IATA director general Giovanni Bisignani.

Certainly there are similarities in the year-end numbers for carriers with those of two years ago. For Asia-Pacific the overall RPK numbers are roughly comparable with the 2007 and 2008 figures. But each year tells a very different story. In 2007, Asia-Pacific traffic was on the crest of a wave, growing 8% and airlines increasing traffic pretty much across the board. Traffic growth stalled in 2008 for the region, but this was largely driven by issues relating to China, including airspace restrictions imposed in Beijing around the Olympic Games.

For 2009, growth among Chinese carriers returned; China Eastern, Air China and China Southern all enjoying double-digit rises. But while there was a relative improvement for Chinese carriers, it was different picture for many of Asia's other network carriers. Japan Airlines, Malaysia Airlines and Singapore Airlines, for example, all seeing double-digit falls in traffic levels.

Asia Recovering

But Asia-Pacific is fast emerging from the economic crisis which prompted such sharps falls in demand. Comparisons with interim traffic figures shows passenger numbers picked up in the second half. December IATA traffic figures for Asia-Pacific carriers were some 8% higher than for December 2008, though this is set against heavy falls the previous year. The December 2008 figure was nearly 10% down on the corresponding 2007 number.

"Asia-Pacific's prospects are improving faster than other regions," says Bisignani. "Just look at industrial production. Globally, developed countries' economies are down 10% compared to 2009 but Asia, excluding Japan, is up 13%. We expect the region's $3.4 billion loss in 2009 to shrink to $700 million this year." A further sign of Asia's importance is IATA figures now show the intra-Asia-Pacific market overhauled North America as the largest passenger market in 2009 at around 647 million passengers.

It was a more uniform picture in 2009 for Europe, at least for network carriers. All but one from 22 selected network carriers saw passenger traffic fall in 2009. The one network carrier exception was Turkish Airlines. It continued its rapid growth by increasing passenger traffic almost a fifth in 2009, though this fell short of the near 25% capacity it added over the year. THY further underlined its ambitions in February by signing up as the second customer for Panasonic's broadband in-flight connectivity service and ordering another20 Boeing 737-800/900ERs. The latter order follows 20 more Airbus A320s ordered in January and almost completes its long-term fleet plans covering the purchase of up to 105 aircraft.

Low-cost carriers in Europe continued to grow, evidenced by Norwegian boosting traffic almost 15% across the year and Ryanair increasing passengers numbers 13% to 65 million in 2009.

In North America, where capacity cuts took hold earlier, there was a slower rate in traffic decline in 2009. But still only one mainline carrier, Hawaiian Airlines, increased traffic in 2009, while low-cost carrier Allegiant Air was the stand-out growth performer. Its passenger traffic rose 22% in 2009, boosting load factor more than a point in the process.

Load factors are generally one of the few brighter spots in 2009, largely remaining steady as capacity has been cut in line with reduced demand. For European carriers it is fractionally down, in Asia-Pacific and the Americas it is fractionally up.

But the key question remains at what cost have airlines been filling their aircraft? Yields, and thus revenues, are taking longer to recover. IATA already estimates that while the scale of losses will be mitigated this year, profitability will remain elusive for most regions and for the industry as a whole.

Upward Trend

Several recent business travel or corporate bookers surveys, such as those by Travel Leaders in the US and the UK's Business and Travel Meetings Show, have indicated hope of increased business travel for 2010. Even in Europe, where economies have been slower to recover, there are some brighter signs. British Airways chief executive Willie Walsh notes that as the carrier's seat factors in its premium cabins have increased in recent months, it has seen the trend towards more restricted fares starting to reverse. "We have still not got back to the mix [between fully-flexible and restricted fares] we would have had during the peak, but we have seen it reverse where more people are now buying the fully flexible fare than it would have been six months ago," he says.

What to expect in 2010? See our online video debate