Political unrest dents February growth: IATA

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Political turmoil stretching across swathes of North Africa and the Middle East noticeably dented growth in both passenger and cargo traffic in February, says IATA.

While February's statistics showed a 6% year-on-year rise in passenger numbers and a 2.3% increase in freight, these were sharply down over the respective figures of 8.4% and 8.7% for the same categories recorded in January.

The freight figures were also affected by the Chinese New Year, which saw a shutdown of factories throughout China and subsequent fall in exports of manufactured goods.

Growth for March is also likely to be badly affected, not only by the continuing political unrest but also the effects of the natural disaster that struck Japan earlier this month, notes IATA.

"The industry fundamentals are good. But extraordinary circumstances have made the first quarter of 2011 very difficult," says IATA director general Giovanni Bisignani.

"As the unrest in Egypt and Tunisia spreads across the Middle East and North Africa, demand growth across the region is taking a step back. The tragic earthquake and its aftermath in Japan will most certainly see a further dampening of demand from March."

The troubles in Egypt have seen a slump in that nation's inbound tourist traffic. Overall, the problems in the region are estimated to have cut international traffic by about 1%.

Load factors were also down in February. Passenger load factors were 73%, down 2.2 percentage points on peak levels on a seasonally-adjusted basis as new capacity coming online consistently exceeded the growth in demand. On the same seasonally-adjusted basis, freight dropped even more sharply to 51.6%, 4% below its May 2010 peak.

Furthermore, the steady upward ratcheting of oil prices is creating rising concern in the aviation sector, says Bisignani.

"The industry situation is volatile and we are watching higher fuel prices carefully. Demand is still supported by strong economic fundamentals. But with looser supply and demand conditions it will be a challenge for airlines to recover the added costs of fuel."

The industry's anticipated 2011 profit margin - already wafer-thin at just 1.4% - "is under considerable pressure", concedes Bisignani.