A net of 68 aircraft were removed from storage in June of this year even as carriers move to adjust their supply to match demand in a still-weak economy.

IATA in its latest financial update cites the uptick in removals, and along with 124 new aircraft delivered in June, "that shows a significant increase in the size of the fleet".

The association does think there could be some under-reporting of unused aircraft at the moment, "but that does not seem to explain the net withdrawals". IATA's data suggest the worldwide fleet this year has expanded by almost two percent "at a time when airlines have been trying to shrink capacity in response to the slump in demand".

Expansion of the global fleet count is contrasting with capacity levels that are higher than demand. Although passenger capacity has remained 4%-5% below 2008 levels for the past few months, demand is still trending below those levels, and "as a result excess capacity is still growing", IATA explains.

As fuel costs are roughly half of 2008 levels, IATA says aircraft costs are once again fixed, "which together with slot reduction hinders capacity reduction".

IATA does believe passenger markets appear to be stabilising, but also cautions that is largely attributable to substantial fare discounting. "Moreover, H1N1 remains a downside risk."

Examining second quarter financial results of US carriers, IATA estimates that H1N1 accounts for $300 million of the total net $373 million in losses recorded by those airlines during the June quarter. Carriers typically log 80% of the year's profits during the second and third quarters, IATA says, warning that the fall in yields and the effects of H1N1 during the second quarter have more than offset any improvements in costs.

Source: Air Transport Intelligence news