Aviation business is at a turning point right now as aircraft manufacturers are burning the midnight oil at an overwhelming speed, building new airplanes at tremendous rates. Surely the tumbling economy in some parts of the U.S. and European industrial infrastructure will take a toll on sales, but probably not as much as most people at first believed and definitely contrary to expert forecasts, what with the travel and tourism taking a sudden high rise. People are demanding and receiving the travel solutions they want with aviation business and the trend won’t be slowing anytime soon.
Airlines have been making unexpectedly good profit in 2011, as demand rebounded ahead of supply, pushing load factors and yields up. But 2011 is looking less buoyant. About 2.5 billion passengers will take to the skies this year and 50 million tones of freight will be carried by the world’s airlines. However, combined passenger and cargo demand is expected to overcome the expected increase in capacity by a slight shade, thereby increasing demand for the capacity increase. In the past 10 months, the international air transport passenger demand grew by 8.5%, passenger capacity increased by 4%; freight demand grew by 24%, cargo capacity increased by 9.2%. IATA believes that the latest data analysis shows that this trend will continue. Supply and demand of booming international aviation capacity is going to increase 7.5% in the next six months. The likely outcome: Lower Load Factors.
Airline shares rose more than 10%, more or less in line with market trends, the current increase of 21% compared with the year, ahead of stock market performance. Aviation business is expected to benefit from the economic leverage of the year will be a substantial increase in profits.
The Middle East, Asia Pacific, Latin America and Africa, however, are projected to grow their share of worldwide aviation again in 2011, as North America and Europe trail the global average. A key ingredient in determining global profitability will be what happens to yields. If a projected 0.5% increase in passenger yield and steady cargo yields is achieved, it will result in higher total revenues. Average passenger revenues are expected to edge up to USD180 per passenger. If this growth trend continues for next 6 months, 2011 is going to be the party season for Airliners.