The International Air Transport Association (IATA) released full-year traffic results for 2006 showing slower but more profitable growth. Global passenger growth slowed from the 7.6% recorded in 2005 to 5.9% in 2006. Average…
The International Air Transport Association (IATA) released full-year traffic results for 2006 showing slower but more profitable growth. Global passenger growth slowed from the 7.6% recorded in 2005 to 5.9% in 2006. Average passenger load factors in 2006 rose to a record high of 76.0%, up from 75.1% in 2005.
The lesson for 2006 is that pursuing profitable growth pays off. While passenger growth slowed, the bottom line improved. The industry showed an estimated operating profit of US$10.2 billion for 2006 while net losses were reduced to a projected US$500 million. Cost reduction, improved efficiencies and careful capacity management have positioned the industry to achieve a projected net profit of US$2.5 billion in 2007, said Giovanni Bisignani, IATA’s Director General and CEO.
The Middle East was the fastest growing region for passenger recording full-year growth of 15.4%.
All regions except the Middle East saw a decline in passenger traffic growth rates compared to 2005. The largest decline was in Latin America where 11.4% growth turned to a 2.4% contraction in 2006, primarily due to restructuring of the industry in the region. North America saw the second largest decline—from 8.9% to 5.7%—as carriers withdrew unprofitable capacity.
“Load factors—at a record high of 76.0%—were the good news story for 2006,” said Bisignani. North American carriers led the way with an 80.2% load factor, up from 79.5% in 2005. Load factors improved in all regions except the Middle East and Africa.
“The focus for 2007 is efficiency. Slower traffic growth rates and a less buoyant global economy will impact revenue growth. Industry-wide we expect revenue growth to slow from 8.0% in 2006 to 4.5% in 2007. While lower oil prices are a welcome relief, they remain around US$60/barrel—more than double the price in 2000. Bottom line improvement depends on achieving further efficiencies across the board. Airlines have reduced non-fuel unit costs by an average of 3.5% over the last five years. It is time for our industry partners across the value chain—including airports and air navigation service providers—to deliver similar results,” said Bisignani.
| December 2006 over December 2005 | RPK Growth | ASK Growth | PLF |
| Africa | 9.9% | 8.1% | 68.0 |
| Asia/Pacific | 6.5% | 3.7% | 74.9 |
| Europe | 5.8% | 4.5% | 74.5 |
| Latin America | -3.2% | -3.1% | 72.7 |
| Middle East | 18.1% | 20.2% | 74.4 |
| North America | 6.6% | 5.9% | 78.4 |
| Industry | 6.9% | 5.5% | 75.0 |
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales. She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
