28 March 2011

Air4Casts Sounds Warning Bells On Global Air Slowdown

In the depths of the recession in 2008/9 us pundits were trying to predict the likely shape of the recovery. Those were very scary times and we are all scarred by the impact.

I went back to look at some of my prognostications. I see a progression that indicated that the recovery would be muted in 2010 and hopefully would rise like a Phoenix in 2011 or possibly into 2012.

Well here we are ending the first quarter of 2011 and things are not quite as rosy as we would like.

We have seen some good numbers and the impact of things like a boost in premium traffic. We are definitely seeing good revenues and yields. This quarter should see some of the highest revenue numbers the airline industry has ever seen. But we need to look underneath these figures to see some alarming trends.

If we look at selective markets world wide - we can see that the US market is at best stagnating. Capacity constraint is still the order of the day and the top carriers by pax are cutting back traffic again. This will lead to higher yields and yes make some people not take that discretionary trip because its too expensive.

Air4casts has done some evaluation of aircraft movements and they are seeing a decline in Asia. The study is based on a review of 35 Asian Airports representing about a third of all Asian Traffic.

In Europe the figures are more robust but we are seeing some of the impact from the trouble in the MENA region. The only standout country is Turkey. Absent the traffic surge from that country growth is not looking overly healthy.The European Air4Casts study here is missing Spain but we already know that traffic is stagnant.

This leaves us with only a few growth areas - Latam where the numbers are looking healthy. And of course also from a small base the GCC carriers. Stats can be found on the ALTA website.

This is beginning to make me feel a little less bullish. On the one hand its good for the airlines. On the other - I worry about the overall economic impact.

I have this theory that as air travel becomes more and more unpleasant the options such as teleconferencing become more and more relevant. If we believe Michio Kaku then things like time travel will make our industry obsolete in a few decades. I am of mixed opinion whether that is a good thing. I am passionate about travel. I think its the best business on the planet. It has been my life and I intend hanging on in it for a while.


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