Implications of the financial crisis could be worse than fuel
Published: 07 Oct 2008
Airports Council International (ACI) has warned that while the effect of high oil prices may begin to fade as we head into Winter, the implication of the international crisis in the financial markets for air traffic demand "could be worse".
The warning comes from ACI's director economics, Andreas Schimm.
The warning comes as the world's airports reported "resilient" international passenger traffic (with the exception of the Asia Pacific region) in the peak Summer month of Aug-08, but poor domestic throughput.
International passenger numbers in the Asia Pacific region slumped 6.2 percent, due to the Olympics-related slowdown in China, as well as slowing economies in China, Taiwan, Japan and Korea.
Other regions reported solid international traffic increases, led by Africa (+9 percent), Latin America-Caribbean (+9 percent) and the Middle East (+8.3 percent), while Europe (+1 percent) and North America (+2 percent) grew moderately. All regions are however showing definite signs of traffic weakness recently.
ACI noted that international traffic growth has slowed markedly in the Middle East where the dominant international airport, Dubai, only saw an increase of +2.8 percent in Aug-08, while Abu Dhabi, Bahrain, Sharjah and Beirut continued to experience double-digit expansion.
Domestic traffic with the exception of Latin America-Caribbean (+4 percent) has fallen considerably across the world leading to a decrease of total domestic traffic of -4 percent. India has been affected hardest with Delhi down -16 percent and Mumbai -18 percent. German, UK and Spanish airports suffered the greatest domestic reductions in Europe, while North America declined by 5 percent.
ACI stated demand for domestic travel has proven "very elastic and price sensitive", leading to significant declines in the wake of high oil prices during Summer.
International freight shrunk by 2.6 percent led by North America (-8 percent) and the Asia Pacific (-4.3 percent). Overall freight traffic was down a worrying 8 percent in Aug-08, reflecting the slowing world economy. If ACI's prediction is correct, the upcoming monthly airport figures could be much worse.
(By Centre for Asia Pacific Aviation)
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Jim said on 10 Oct 08:
This is a warning, very much like the canary in the coal mine. It is not enough for the governments of Europe and the USA to come to the rescue of investment bankers who have behaved like riverboat gamblers, selling worthless derivatives. As travel for business and pleasure decreases, there will be negative ramifications for nearly all other industries.
Instead of pumping more good money to solve stupid investment decisions, political leaders should be looking for ways to keep commerce and manufacturing flowing -- and that would include financial help for the airline industry.