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Softer economies hitting cross-border air travel - IATA

Published 08/01/2015, 12:56
Updated 08/01/2015, 13:00
© Reuters. Passengers queue at check-in desks at Terminal 5 at Heathrow airport in London

BERLIN (Reuters) - Weakening economies in Asia and Africa could dampen demand for international air travel this year, taking the gloss off the positive effects of cheaper oil for the global airline industry, a leading industry body said on Thursday.

Demand for cross-border air travel rose 5.4 percent in November. That was slightly less than the 6 percent growth achieved for the entire market, which was strengthened by demand for domestic flights within China, the International Air Transport Association (IATA) said in its monthly statistics.

IATA, which represents about 250 airlines accounting for 84 percent of global air traffic, last month said it expects the global airline industry's 2015 profit margin to be its strongest in more than five years, partly thanks to lower oil prices.

Oil prices this week hit their lowest level since April 2009.

However, the association cautioned on Thursday that the picture is mixed, with strong economic growth in the United States set to boost business travel, while falling economic confidence elsewhere could continue to hamper growth for cross-border travel.

"While lower oil prices should be positive for economic activity, softening business confidence is having a dampening effect on international travel," IATA Director General Tony Tyler said in a statement.

Economists on Wednesday raised forecasts for fourth-quarter growth in the United States, but major economies in Europe and Asia are struggling with slowing growth.

Growth in cross-border travel has remained stable since August and strong domestic demand in countries such as China and India has not been translating into demand for international travel for the region's carriers, IATA said.

The negative effect of lower oil prices could also be seen in the November figures for African carriers, which saw demand for international travel fall 2.5 percent.

IATA said the weakness seemed to be because of weakening economies in the region, especially in Nigeria, which relies heavily on oil revenues.

© Reuters. Passengers queue at check-in desks at Terminal 5 at Heathrow airport in London

In Europe, however, demand for international services was up 5.6 percent, with low-cost carriers responsible for much of the growth and helping the region to combat continuing economic risks, IATA said.

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