Global passenger demand fell 9.3 percent in May

The International Air Transport Association’s latest monthly traffic report hints at some signs of optimism, but warns that “we are a long way from recovery.” The worldwide organization of airlines said that during May, international passenger demand was down 9.3 percent from the same month a year ago. That’s not as good as the 3.1 percent drop in April, “but both of the past two months have been slightly stronger than the 11 percent decline reached in March,” IATA said. “This indicates that a floor may now have been reached.” But airlines are still not reducing their capacity as fast as demand is falling, IATA noted, with average international load factors down 3.3 percentage points over the past 12 months – and this is having a devastating impact on revenues, as airlines cut fares to keep passengers traveling. “After a 20 percent fall in international passenger revenue in the first quarter, we estimate that the drop accelerated to as much as -30 percent in May. This crisis is the worst we have ever seen,” said IATA CEO Giovanni Bisignani.

What’s more, May was the month when airlines felt the brunt of the H1N1 virus scare. Passenger traffic on Mexican carriers plunged by almost 40 percent in May year-over-year, IATA said. Passenger demand was down 14.3 percent for Asia/Pacific airlines, while North American carriers posted a 10.9 percent decline for May – vs. a 4.2 percent drop in April. International cargo demand was down 17.4 percent for the month, vs. a 21.7 percent drop in April. “This is one of the first physical signs of the economic recovery,” said IATA. But it added: “Although the impact of the recession appears to be stabilizing, strong headwinds from debt and low asset prices are expected to weaken and delay any significant recovery. We may have hit bottom, but we are along way from recovery.”

In the U.S., meanwhile, the Air Transport Association reported that airline passenger revenues for the month of May were down 26 percent from the same month a year ago – the seventh consecutive month of falling revenues. The passenger count for May posted a 9.5 percent decline, and the average cost of one mile of air travel per passenger dropped by 17.6 percent. “Revenue declines extended beyond the mainland United States to the transatlantic, transpacific and Latin markets,” ATA said.