KUALA LUMPUR: The International Air Transport Association (IATA) says 2009 was the worst year in the airlines industry's history in terms of demand.

The Geneva-based association said on Wednesday, Jan 27 that December and full-year 2009 demand statistics for international scheduled air traffic that showed the industry ending 2009 with the largest ever post-war decline.

IATA’s director general and CEO Giovanni Bisignani said passenger demand for the full year was down 3.5% with an average load factor of 75.6%. Freight showed a full-year decline of 10.1% with an average load factor of 49.1%.

“In terms of demand, 2009 goes into the history books as the worst year the industry has ever seen. We have permanently lost 2.5 years of growth in passenger markets and 3.5 years of growth in the freight business,” he said.

International passenger capacity fell 0.7% in December 2009 while freight capacity grew 0.6% above December 2008 levels. Yields have started to improve with tighter supply-demand conditions in recent months, but they remained 5-10% down on 2008 levels.

“Revenue improvements will be at a much slower pace than the demand growth that we are starting to see. Profitability will be even slower to recover and airlines will lose an expected US$5.6 billion in 2010,” said Bisignani.

Seasonally adjusted demand figures for December compared to November 2009 indicate a 1.6% rise in passenger traffic while freight remained basically flat with a 0.2% decline.

In December, passenger demand rose 4.5% from a year ago, with a load factor of 77.6%. While this is an 8.4% demand improvement from the February 2009 low point, it is still 3.4% below the early 2008 peak.

Carriers in Asia-Pacific, Europe and North America recorded year-on-year declines in passenger demand of 5.6%, 5.0% and 5.6% respectively in 2009.

However, Asia-Pacific carriers benefitted most from the year-end upturn with an 8.0% year-on-year improvement in December. This reflects their 35% contribution to the year-end rise boosted by the significant economic upturn in the region.

By contrast, European carriers saw a 1.2% decline and North American carriers declined by 0.4%. While both North American and European carriers saw demand improvements in the first half of the year, the second half was basically flat.

Middle Eastern carriers generated the fastest growth in passenger traffic at the end of the year with a 19.1% increase in December (and 11.2% growth for the entire year). These gains result from Middle Eastern carriers taking a larger share of long-haul connecting traffic over their hubs.

Latin American carriers recorded 7.1% growth in December. Full-year traffic growth was constrained to 0.3% due to the impact of Influenza A(H1N1) fears during the second and third quarters.

Africa’s carriers experienced a sharp decline of 6.8% in 2009 primarily on an exceptionally weak first half. Their year ended with December demand at 3.1% above previous year levels.

As for international freight demand, last December showed a 24.4% improvement from December 2008 with a load factor of 54.1%. This improvement was due to the exceptionally weak performance in December 2008 which was the low point on the cycle.

Freight demand is still 9% lower than the peak in early 2008. Optimism is returning to the industry as purchasing managers survey indicators reached a 44-month high in December pointing towards increased freight volumes in the coming months.

As for security, Bisignani said governments and industry must cooperate to find more efficient ways to implement intelligence-driven and risk-based security measures.

“Governments and industry are aligned in the priority that we place on security. But the cost of security is also an issue. Globally, airlines spend US$5.9 billion a year on what are essentially measures concerned with national security. This is the responsibility of governments, and they should be picking up the bill,” he said.