Geneva: Airlines need to tackle a “dramatic” plunge in revenues in the industry’s “worst” crisis ever, the International Air Transport Association (IATA) said Thursday as international air travel continued to drop in May partly due to swine flu.
Despite signs that the slump in passenger traffic since late last year may be tailing off, IATA said there was still significant excess capacity in the airline industry.
“We may have hit bottom but we are a long way from recovery,” IATA director general Giovanni Bisignani said in a statement.
Passenger traffic fell 9.3% last month following a year-on-year decline of 3.1 % in April, a month traditionally buoyed by holiday travel over the Easter period.
Swine flu probably depressed air travel by about 1% globally in May, the first full month to feel the impact of the pandemic, IATA said.
However, the decline in air passenger traffic slowed in April and May compared to March, indicating “that a floor may now have been reached.”
Nonetheless, average passeenger loads per flight continued to decline as the industry failed to cut capacity as quickly as demand slumped, while air freight fell by 17.5% in May.
“Capacity is not aligned with demand. Passenger load factors dropped 3.3 percentage points over the last 12 months. The impact on revenue is dramatic,” said Bisignani.
“After a 20% fall in international passenger revenue in the first quarter, we estimate that the drop accelerated to as much as minus 30% in May. This crisis is the worst we have ever seen.
“Airlines are in survival mode. Cutting costs and conserving cash are the priorities,” the IATA chief added.
Carriers in Mexico, where the swine flu outbreak emerged, experienced a 40 % drop in demand in May, IATA said.
The association groups some 230 carriers accounting for more than 90% of scheduled international air traffic. It does not include exclusively low-cost airlines such as Ryanair and EasyJet whose own figures have similarly shown sharp falls.