Airlines to hit headwinds

Cape Town - The International Air Transport Association (Iata) said on Monday that while global airlines are bracing for tough times, carriers in Africa are adding more seats than demand justifies.

This means flights are getting emptier and ticket prices are unsustainably low, adding pressure on airlines' already thin margins.

Tony Tyler, Iata director general and CEO, said economic uncertainty owing to the European sovereign debt crisis and the growing likelihood of a protracted period of slow growth in developed economies mean the industry will be even more focused on reducing costs and improving efficiency.

“To ensure that airlines can continue to catalyse economic activity, we need governments to review the often onerous tax burdens that they place on aviation,” said Tyler.

Passenger demand was up 4.5% over the previous August - a significant drop from the 6.0% recorded in July. Freight market decline accelerated even further. The 3.8% contraction in freight markets recorded in August was more than double the pace of July’s 1.8% fall.

“The industry has shifted gears downward. The pace of growth in passenger markets has dipped and the freight business is now shrinking at a faster pace.

"With business and consumer confidence continuing to slump globally, there is not a lot of optimism for improved conditions anytime soon.”

Global passenger load factors were at 81.4%, almost as high as in July while international passenger demand was up 6.2% in August compared to the previous year.

However, compared to July demand contracted by 1.8%. African carriers - which include South African Airways and Comair - reported a 5.2% demand growth against a capacity expansion of 6.3%.

This means there was 6.3% more seats available on African carriers than in August 2010, but demand only grew by 5.2%.

This overcapacity increases the tight margins carriers have to cope with and also means that African carriers reported the lowest load factors at 70.0% for August.
We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
ZAR/USD
15.21
(-0.63)
ZAR/GBP
20.31
(-0.42)
ZAR/EUR
18.12
(-0.59)
ZAR/AUD
11.20
(-0.62)
ZAR/JPY
0.15
(-0.79)
Gold
1809.20
(+0.11)
Silver
23.31
(-0.07)
Platinum
962.00
(+0.30)
Brent Crude
48.73
(+1.57)
Palladium
2379.00
(+2.41)
All Share
57923.69
(+0.31)
Top 40
53084.13
(+0.27)
Financial 15
11645.28
(+0.04)
Industrial 25
79993.34
(+0.20)
Resource 10
52790.93
(+0.35)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
22% - 340 votes
No, I did not.
51% - 803 votes
My landlord refused
28% - 435 votes
Vote