Singapore (Platts)--30May2008

The impact of skyrocketing oil prices and weaker economies has reduced
international air traffic growth for the first four months of this year, the
International Air Transport Association said in a statement Thursday.
Year-on-year international passenger demand grew by only 3% in April,
although adjusting for some distortions in April and the leap year,
underlying passenger traffic demand increased 4% in April and the three
previous months.
The distortions included the impact of an early Easter holiday, which
would have reduced comparative year-on-year traffic growth by about 2% in
April. At the same time, the 10% trans-Atlantic capacity increase, with the
commencement of the US-EU Open Skies agreement, is estimated to have boosted
global traffic by about 1%.
"Combine slowing growth with skyrocketing oil prices and the industry
outlook is grim at best," said Giovanni Bisignani, IATA's director general
and CEO, in the statement, ahead of the 3-day IATA annual general meeting and
World Air Transport Summit starting June 1 in Istanbul, Turkey.
"At this time last year we were talking about 6.7% growth for the first
four months of the year. This year, it's 4%. There has been a step change
downwards," Bisignani said.
International cargo demand growth in April remained sluggish at 3.7%,
weaker than the 4.4% average increase recorded during the first quarter,
reflecting the impact of the economic slowdown, IATA said.
In light of the recent dramatic increases in fuel costs, market watchers
fear bleak times ahead for many airlines this year, with some reporting fuel
costs now take up 40% of their operating costs, compared with 30% last year.
"The price of fuel has doubled since last year and has risen by 55% this
year alone. At current prices, it costs us $360,000 in fuel alone to fly a
747-400 (aircraft) to London and back," said Tony Tyler, Cathay Pacific chief
executive, in a press release Monday announcing a hike in fuel surcharges as
part of his airline's bid to tackle increased costs.
---Weilyn Loo, weilyn_loo@platts.com