LITTLE ROCK — Global airline traffic fell 1.1 percent in August, a slower drop than in previous months, as carriers cut ticket prices to win back passengers and Asian economies benefited from government stimulus packages.
Seat occupancy rose as airlines trimmed capacity by 2.5 percent, faster than the traffic decline, the International Air Transport Association said in a statement Tuesday. Average fares for first- and business class sections dropped 22 percent and economy-seat prices fell 18 percent.
"Demand continues to improve, but profitability remains ever distant," association Chief Executive Officer Giovanni Bisignani said in the statement. "Fares have stabilized, but at profitless levels."
Carriers are eliminating jobs, scaling back flights and parking planes to weather the recession, which has caused lucrative business travel in particular to decline.
Airlines may lose a combined $11 billion this year, the Geneva- and Montreal-based association said earlier this month, widening the lossforecast from an earlier $9 billion prediction.
August's decline in traffic, or the number of passengers multiplied by the distance flown, was less than the 2.9 percent drop in July and held the year-to-date decline to 6 percent, the association said Tuesday. The average seat occupancy, or load factor, rose 1.2 percentage points to 80.9 percent.
"That's step one toward getting back some pricing power," Penny Butcher, a London-based analyst at Morgan Stanley, said in a telephone interview.
"It's not yet significant enough an improvement to give airlines the confidence to really push on pricing."
Asian carriers' traffic fell 1.6 percent in August, decelerating from a 7.6 percent drop in July. The association attributed the shift to government and central bank stimulus packages, and fewer problems with consumer debt. The improvement was "somewhat exaggerated" given that August 2008 was the start of a steep decline in demand at the region's airlines, it said.
Traffic fell 2.8 percent at European carriers and 2.5 percent for North American airlines, the association said.
Business, Pages 26 on 09/30/2009