Crisis brought sensible capacity response for first time: IATA

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In a more upbeat 2010 forecast IATA chief Giovanni Bisignani has praised airlines for their capacity-cutting measures, but he cautions that short-haul business travel may have undergone a permanent change.

Speaking as he unveiled the forecast today, Bisignani said that airlines had become much better at matching capacity to demand, leading to a record 75.9% average load factor in January.

"I think this is a clear indicator how airlines are able to adapt quite quickly to changes in demand. In 2009 airlines really handled capacity correctly. This is probably the first time during a big crisis when capacity has been handled in the right way," he says.

Last year yields for both passenger and cargo operations were down 14%, leading IATA to forecast zero change this year. But Bisignani says: "Tighter supply and demand conditions have given airlines some pricing power." Passenger yields are expected to grow by 2% and cargo by 3.1%.

Short-haul premium yields in Europe have fallen by 10% and by 13% in North America, prompting concerns about permanent change. Bisignani says: "We have certain concerns because this could not just be cyclical, but an indicator of structural change."

IATA has halved its loss forecast for the year. Bisignani describes this as "very, very positive" for both the industry and the economy, adding: "We can see from the numbers that the industry situation is improving. Passengers are returning to flying."

He concedes that the speed of change has taken IATA by surprise, saying the year "started strongly" and that there has been "good follow-up" from the "very good numbers" recorded in December. "The increase is much better than expected," he says.

Industry-wide revenues for 2008 stood at $564 billion, and dropped to $479 billion last year, but are forecast to reach $522 billion this year. IATA hopes that, by next year, revenues will return to 2008 levels. But Bisignani cautions: "This is not the time to have a big party. The situation is still in the red."