Air travel up 9% but sequestration could hurt, IATA says

Feeling squished in that middle seat these days?

You’re right if you think the airlines have been busier.

October 2012 seems to have been a turning point for air travel, reports a new survey from the International Air Transport Association (IATA). Since then, passenger demand has been growing at an annualized rate of 9%, almost double the growth rate in the first nine months of 2012.

Demand was up 3.7% in February 2013 compared to last year, with growth fueled by business confidence, particularly in emerging regions. The industry load factor was a healthy 77.1%.

Even as it reported the numbers, though, IATA took the opportunity to take a jab at the federal budget cuts in the US.

"The industry’s fortunes appear to be moving in the right direction. But the margins are wafer thin. And any shock—the continuing Eurozone crisis or budget sequestration in the US—could negatively impact the outlook," said IATA director general and CEO Tony Tyler.

"It’s unfair that air travelers should suffer the impact of sequestration given that airlines and passengers already pay around $4.5 billion a year in fees and taxes for the essential services of border control and airport security."

It is unlikely that the savings from sequestration will offset the damage to the economy if air travel is discouraged, Tyler said. "The government’s priority should be on extracting the greatest economic benefit possible from aviation—not making it more difficult to do business."

Indeed, North American airlines’ international traffic rose just 0.3% in February compared to February 2012, though IATA noted this number "does not reflect the significant underlying growth trend over recent months."

In international flights, the Middle East carriers did best, up 10.6%; Asia-Pacific was also strong, with an increase of 4.5%.

European carriers recorded just 0.8% growth in international travel, but declines in capacity kept the load factor up to 76.5%.

International traavel from North America was up 3% in February compared to October. The load factor rose to 76%, reflecting a 4.6% reduction in capacity year-on-year.

Latin American airlines were up 7.0%; Africa rose 7.7%.

Domestic growth was driven primarily by demand in China, up 0.2%, and Australia; all other markets declined slightly. The US market was flat in February, but has been growing at an annualized rate of 9% since the fourth quarter of 2012.

Total domestic capacity was up 0.8% compared to February 2012 and the load factor rose 2.3% points to 78.8%.

View full February passenger traffic results (pdf)

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