Decrease in air travel growth likely during Q4 - IATA

01 September 2011 13:48  [Source: ICIS news]

LONDON (ICIS)--Air travel growth is likely to decrease in the coming months because of lower business and consumer confidence, slowed world trade and high jet fuel prices, the International Air Transport Association (IATA) said on Thursday.

Although the latest IATA figures show that air travel growth expanded at a rate of 5.9% year-on-year in July, air freight markets were stagnant and showed a 0.4% decline.

“This increase was likely based on the much more optimistic economic outlook that marked the beginning of the year. With business and consumer confidence now tanking, sluggishness in international trade, and high fuel prices, the expectation is for a weaker end to the year,” said IATA’s Director General and CEO, Tony Tyler.

Despite tracking recent drops in crude oil, jet fuel prices remain high thus maintaining pressure on airline margins.

According to the latest ICIS data, jet fuel cargoes are trading at price levels of $1,041.50-1,043.50/tonne CIF (cost, insurance, freight) NWE (northwest Europe).

While airlines have the opportunity to partially absorb robust jet fuel values by hedging contracts and increasing passenger surcharges, these measures cannot compensate airlines fully for the high fuel costs, a source said.

($1 = €0.70)

By: Sarah Trinder
+44 20 8652 3214

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