Global scheduled traffic volumes for August, 2009 have perked up, with passenger demand down 1.1%, versus the 2.9% decline in July, and freight demand fell by 9.6% versus the 11.3% drop in the preceding month, the International Air Transport Association (IATA) reported Wednesday.

Compared to August 2008, passenger load factors improved by 1.2 percentage points to 80.9%. Despite the tighter supply and demand conditions average fares continue to be depressed, posting -22% for premium seats and -18% for economy.

To match capacity with demand, airlines reduced daily aircraft utilization in recent months. For example, average daily hours for the global Boeing 777 fleet dropped by 2.7% to 11.1 hours per day through the first eight months of the year. Lower utilization helps load factors, but spreading fixed asset costs over fewer hours in the air pushes up unit costs.

“Demand continues to improve, but profitability remains ever distant,” observed Giovanni Bisignani, IATA’s Director General and CEO.

“Fares have stabilized, but at profitless levels. Meanwhile cost pressures are mounting from reduced aircraft utilization and rising oil prices. The industry is not out of the woods yet,” he pointed out.

Compared to the low point of March 2009, seasonally adjusted passenger demand has improved by 6%, but traffic levels remain 5% below May 2008 when the fall in demand began. All regions, except the Middle East, saw improved demand conditions in August compared to July.

Asia-Pacific carriers recorded the most significant improvement moving from a -7.6% drop in July to -1.6% in August. This improvement is somewhat exaggerated as August 2008 was the start of the steep decline in passenger demand for the region’s airlines.

Significantly, Asia Pacific is the site of the strongest second and third quarter growth, boosted by massive government and central bank stimulus packages and fewer problems with consumer debt and bank balance sheets.

European and North American carriers saw smaller improvements driven by exposure to more robust long-haul markets, rather than local economies.
European carriers saw demand fall 2.8% compared to August 2008, up from the -3.1% recorded for July. For North American carriers, the improvement was to -2.5% in August compared to -3.2% in July.

Middle Eastern carriers were the only region to show year-on-year growth with demand expanding by 10.8%. This is below the 13.2% recorded in July due to a distortion resulting from the earlier start of Ramadan compared with last year.

Middle East carriers continue to win market share on long-haul travel via their expanding hubs.

Latin American carriers saw demand improve to -2.3% in August (from -3.5% in July). Passenger confidence, dampened by Influenza A(H1N1) is returning with the end of flu season in the southern hemisphere.

African carriers showed the weakest demand at -4.9% in August. This was a slight improvement on the -5.5% recorded in July.

For 2010 IATA’s latest industry outlook anticipates average international passenger growth of just over 4.0%, compared to an expected full-year decline in 2009 of almost 5.0%.

Compared to the low point of December 2008, seasonally adjusted freight demand has improved by 12%, but remains exceptionally weak at 16% below April 2008 levels when the fall in demand began.

All regions saw improved demand conditions in August compared to July.

Latin American and the Middle Eastern carriers were the only regions to report growth of 3.9% and 3.0% respectively.

Asia Pacific carriers, representing 44% of the global freight market, saw year-on-year demand improve marginally from -9.5% to -9.0% in August compared to July.

North American carriers saw a slightly larger improvement from -14.6% in July to -12.1% in August. This is similar to the -16.2% to -14.5% improvement registered by European carriers.

African carriers saw the largest improvement - from -25.9% in July to -5.1% in August. The region’s small market size exaggerates any shifts.