Carriers appear to be cautious in adding capacity back into the system as the economy continues to strengthen, according to the latest analysis by IATA.
The association has concluded both passenger and freight capacity are now growing once more after the drastic cuts instituted in mid-2008.
IATA estimates freight capacity was up 3.7% in January year-over-year and believes passenger capacity grew 1.2%.
But despite those increases, passenger capacity on international markets remains 4% below early 2008 levels, while freight capacity is 8% smaller.
Airlines are still managing their capacity growth cautiously as positive gains from the nascent economic recovery are tough to quantify.
Even though capacity appears on the rise, some US carriers have opted to remain strict in their available seat mile growth. Recently Continental CEO Jeff Smisek said the carrier has seen and understands the importance of capacity discipline.
Continental has revised its 2010 capacity forecast downward, with consolidated growth of 1% to 2%. Its international capacity is growing 4% to 5%.
Record load factors coupled with tightened supply-demand conditions have created a rise in passenger fares and cargo rates since mid-2009. But IATA says the upturn in yields is much slower, and premium fares remain 20% below early 2008 levels.
Despite a fourth quarter net loss for airlines in 2009, IATA is encouraged it was "significantly down from the previous year". The association says US carriers posted the greatest improvement during the last year, and Asia-Pacific airlines also improved substantially.
"By contrast," says IATA. "European airlines saw much less progress."
The association also warns that economic recovery is likely to modestly tighten oil supply-demand conditions, "so future markets are pointing to oil prices rising slowly to US$80 by year-end".
IATA estimates an average of 100 aircraft deliveries to operators per month during the last year, translating into a 4% expansion of the global fleet during that time. A significant number of older passenger aircraft were taken out of service in late 2008 followed by a large number of freighters in early 2009.
"Since then the number of aircraft going in an out of storage has fluctuated to around zero," says IATA, and the number of aircraft being retired has averaged 20 per month.
Source: Air Transport Intelligence news
