Traffic in the first half of the year continued to show solid growth in many regions, but the picture for the remainder of the year is gloomy as many carriers react to high fuel prices and the economic slowdown with capacity cuts

Looking at the stellar traffic growth at India's Jet Airways, for example, it would be hard to conclude that this carrier is anything but flying high, both literally and in terms of ­traffic growth.

However, the bold data hides the real picture, both for Jet and many other carriers listed here. The first half traffic figures show few fallers, except in the USA. Quite simply the effects of the economic slowdown did not feed into demand during the first half. Expect a quite different result for the second half of 2008. This ­effect will be compounded by the many capacity cuts carriers are planning from the winter season.

In Europe, only Alitalia and British Airways of the mainline carriers showed traffic drops. The first mainly because of its pull back at Milan Malpensa airport and the second because of the problems transferring to London Heathrow's new Terminal 5. Aer Lingus, Swiss, TAP and Turkish all reported double-digit rises on the back of strong demand. They matched this demand will large capacity boosts, more than 30% in TAP's case.

In the Asia-Pacific, the continuing push of Jet into international markets, with new services to the USA and the Middle East, saw it posting stellar growth. Cathay Pacific also forged ahead, but will be cutting back later this year as market conditions deteriorate.

In the USA, only Alaska and Southwest Airlines showed significant growth in the first half. Southwest is determined to seize opportunities created by the current industry uncertainty. It was going to retire 22 Boeing 737s this year but will now see only 16 leaving the fleet. In particular it is adding capacity at Denver, the home base of Frontier Airlines, which went into bankruptcy reorganisation in April.

US low-fare players showed some big rises in the first half, with Allegiant Air growing by a third. Both AirTran Airways and Canada's WestJet posted double-digit capacity increases. Allegiant focuses on serving destination and small city markets and looks to have benefited from others pulling down service to these points. According to its chairman Maurice Gallagher: "The silver lining during the past three-quarters of increasing fuel prices has been industry capacity cuts."

In Latin America, Copa's hub in Panama continues to show strong growth, while Chile's Lan and Brazil's TAM had a buoyant first half. Also in Brazil the return of Varig shows that it is emerging once again under Gol's wing. It is concentrating on Latin service after axing its European routes at the end of 2007.


Source: Airline Business