As carriers have placed a raft of new aircraft orders at recent airshows, IATA does see some threat of excess capacity, yet the association assures that current published schedules by air carriers suggest capacity growth will remain in line with demand.
The association calculates in its July-August financial monitor that deliveries of new aircraft remain at or above 100 per month, and since the beginning of 2010 the in-service fleet has grown by 2%.
However, IATA also explains that since passenger capacity on international markets has grown 5% accompanied by a 9% rise in freight capacity, "there must have been some improvements in aircraft utilisation, which is encouraging".
Even as orders for new aircraft rebound and some aircraft are being removed from storage, IATA does believe the current supply-demand balance is rational.
IATA explains capacity growth looks modest in 2010, but that is somewhat distorted since little capacity was added during the economic downturn in 2009.
But IATA concludes that since late last year both passenger and freight capacity has been returning to the market at a similar pace to an expansion in demand.
Between December and July of this year IATA estimates that air travel volumes increased by 8% on annualised basis while freight volumes rose roughly 17%. The association explains that is slower than the 12% rise in passenger volume and 28% jump in freight during the post-recession back half of 2009, but still above the 6% trend.
While traffic volumes remain encouraging average one-way economy fares are still 5% below early peaks of 2008, but 15% higher than a low of US$286 in 2009. Premium fares still remain 20% blow pre-recession highs, says IATA.
Carriers have seen some stabilisation in fuel prices as IATA estimates that jet fuel prices have averaged $87 per barrel for the last 12 months, and the crack spread remains "historically low" at 15%.
IATA explains forward curves and most forecasts suggest relatively little change in the next year, but the long-term trend "remains upward".
Airlines have seen a turnaround in share price during the last 12 months, as IATA states prices have risen 73% , and year to date prices are up 13%.
However, different regions are posting varying financial performances, according to IATA. North American and Asia-Pacific carriers have seen the greatest performance improvement. During the second quarter European airline net profits were bolstered by a $1.3 billion asset sale, "without which there would have been further losses", IATA states.
Source: Air Transport Intelligence news
