International air transport: signs of recovery in the sector
IATA presented data on the air transport market. According to the report, demand for international air travel is growing. A key factor was the Red Sea crisis. Operators have had to restructure their supply chains and switch from sea to air.
The association also notes increased consumer demand outside the US in early 2024. Traditionally, the market experiences seasonal declines in January and February, but not this year. Analysts noted an increase in activity in Africa and the Middle East, which provided a significant boost to the sector.
Overall, the situation at the beginning of the period was as follows:
- total air travel demand grew by 11.9% in February;
- this was the third consecutive month of double-digit growth;
- international demand grew by 12.4%, indicating a revival in the market.
Europe led the way in terms of growth. International air traffic grew by 15%. APAC and North America were in second place. In the latter case, the region’s global sector is growing slower than domestic traffic.
Which indicates the sector recovery
According to IATA director Willie Walsh, the air cargo industry remains relatively resilient. This is crucial in a volatile global geopolitical and economic situation. Key market indices also point to a recovery, albeit a slow one. Increased manufacturing and export activity is fuelling demand. In addition, analysts note the trade growth, which positively impacts the aviation sector.
Consumer demand is strong (except in the US). Companies are trying to replenish their inventories and are opting for aircraft as a more reliable means of transport. The latter is due to the tense situation in the Red Sea, which is still a cause for concern.
As far as air fares are concerned, in addition to growing demand, the increase in capacity is also impacting costs. In the first months of 2024, available freight tonne-kilometres increased by 13.4%. This is largely due to an increase in passenger aircraft capacity, while freighter capacity increased by only 3.2%.
Forecasts for 2024
The analyst consensus is that this year will be a transition for the industry. After several years of decline, air freight demand will recover in 2024. However, tangible results will not be in sight until 2025.
The improving economic situation in the US suggests good prospects:
- increased warehousing activity;
- highest monthly import growth in 7 years;
- rising domestic freight rates.
Retailers are returning to the just-in-time replenishment model they used before the pandemic. This approach provides more sustainable freight demand.
