skimming through the regional airline traffic figures for the last 10 years reveals a telling picture. Every year since 1999 has delivered 5-21% RPK growth, but this was not the case in 2008. Last year, as the economic crisis began to bite, traffic among the Airline Business Top 100 regional airlines shrunk 1.7%.And this picture masks the speed and severity of the downturn, which only began to properly bite towards the end of the year, from the third quarter onward.
On closer inspection, the historic trend shows that even during the post-September 2001 downturn growth did not turn negative. Instead it fell from 17.4% in 2000 to 5.3% in 2001, but the rebound was rapid and the sector returned to 19.9% growth in 2002. But since 2004 traffic growth among our ranked carriers has been slowing, a trend which has now culminated in negative figures.
As the slump in demand set in, regional airlines were swift to react, trimming capacity by 2%. This exceeded the 1.7% traffic decline. nudging load factors up 0.2 of a point to 71.6%. But these top level figures mask wide-ranging geographical differences. Unsurprisingly, the markets which have been harshest hit by the financialmeltdown posted the strongest traffic declines. Europe was the worst affected, with traffic falling 6.5%, followed by Asia Pacific where traffic was down 4.5%. Meanwhile, in North America the figure contracted by 1.3% against the prior year.
In sharp contrast, traffic growth in Latin America remained healthy at 14.2%. Also on the up were Africa and the Middle East, which collectively recorded 9.2% growth. But these markets are comparatively immature and the figures stem from a very low base. To put this in context, the largest Latin American carrier, Aeromexico Connect, carried 3.4 million passengers in 2008 compared with US regional SkyWest Airlines,which took the overall number one spot with 21 million.
Although they have undoubtedly been feeling the pinch of the downturn, US regionals continued to dominate the Top 10 by passenger numbers, ceding only seventh place to Air Canada Jazz. The first European player, Lufthansa CityLine, slots in at number 11 with 6.8 million passengers and Asia makes an entrance at number 15 through Chinese carrier Shandong Airlines.
Nine of the Top 10 posted lower traffic, but the revenue picture for 2008 was not too gloomy, with only eight of the Top 50 going backward. But unfortunately things have worsened considerably in 2009. Figures from the European Regions Airline Association show that passenger demand fell 10.7% during the first quarter. ERA director general Mike Ambrose says: "The industry is facing its worst ever crisis and costs have been cut back as far as they possibly can while yields are continuing to decline."
Every single section of the aviation market is feeling the same challenges and regionals are far from immune. In fact, it could be argued that regionals have felt the pinch more harshly than their bigger brothers. Their traffic mix is often highly-leveraged on the corporate sector, where the drop-off in traffic has been dramatic. This means regional airlines with a healthy mix of business and leisure traffic are likely to be more robust through the crisis.
Watch a video with commentary from Ambrose on the state of the regional sector