Airlines restore capacity on intl sectors post-recession

Airlines have started restoring capacity on international sectors that they had withdrawn during recession with an improvement in global air traffic despite the damage caused to the industry by the volcanic ash crisis.

Airlines are bringing capacity back into international air travel and air freight markets, "but still at a much slower pace than the expansion in demand," the International Air Transport Association (IATA) has said.

In its latest Financial Monitor of the aviation industry, the IATA has said the passenger capacity or the number of seats available in the international sectors grew by two per cent, compared to a travel expansion of over ten per cent since March last year.

During the first quarter of this year, international air travel volumes expanded at an annualised rate of nine per cent, while air freight expanded at a 26 per cent rate.

However, these growth rates were different across markets - strong in Middle East but weak in Europe, the report said.
    
As per the IATA figures, the highest growth in revenue per passenger per kilometre was recorded by the Middle East region at 25.9 per cent, followed by Africa at 13.6 and Asia- Pacific with 12.6. The North American and European airlines recorded a low of 7.8 and 6.0 per cent respectively.
    
Passenger load factors usually rise in March with holidays boosting travel for seasonal reasons. Even allowing for this, the average international load factor was strong in March at 78.7 per cent, the IATA report said.
     
The schedules, filed by the airlines for the rest of 2010, pointed to a five per cent increase this year compared with the same period in 2009, the report said, adding that freight capacity also went up over five per cent compared to a rise in demand of 28 per cent.
     
With the announced schedules suggesting that new capacity would not exceed the rise in demand, load factors are likely to remain high, the IATA said indicating more revenue for the industry.
     
Even after the damage caused by the volcanic ash plume, airline shares were still 15 per cent up so far in 2010, the report said, adding that this bullish view from the financial markets was buttressed by the improved first quarter financial results of particularly the US airlines.