Air transport passenger traffic in Sri Lanka seen growing

Annual average growth rate (AAGR) in Sri Lanka for international passenger and freight traffic this year is 6.9% and 7.4%, respectively, according to the International Air Transport Association (IATA).

International passenger traffic in Asia is projected to grow at an average annual rate of 5.7% between 2006 and 2010. International freight in Asia Pacific is expected to lead global freight growth with an AAGR of 6.0% over the same period. Globally, international passenger traffic will grow at an AAGR of 4.8%, while freight will grow at 5.3%. The forecast points to a more cautious approach to capacity deployment over the five-year forecast period, the IATA statement added.

The IATA said its traffic forecasts are based on a comprehensive survey of airline expectations for major route areas.

The international passenger traffic growth in Asia Pacific is boosted by strong GDP growth, along with significant new capacity and new routes. The AAGR reflects the strength of trade flows, economic growth and liberalisation particularly in China and India. Pakistan (8.2%), China (8.1%) and India (7.9%) will lead passenger growth in the region.

Asia Pacific will lead freight growth with an AAGR of 6.0% over the period. Seven of the top 10 freight markets fall within the region: China (11.6%), Pakistan (8.8%), Korea (8.2%), India (8.2%), Sri Lanka (7.4%), Thailand (6.3%) and Indonesia (5.8%).

Asian carriers are expected to make US$1.2 billion in profits in 2007, lower than the US$1.7 billion for 2006. The lower profits are due to the increased competition in the region as a result of liberalisation, aircraft deliveries and new entrants,

European carriers will make the most profits of US$1.5 billion, US carriers will make profits of US$200 million, while African carriers will lose US$500 million. All in all, the industry will make a US$2.5 billion profit in 2007. Nonetheless a profit margin of 0.5% on US$450 billion of revenues is still insufficient to cover the cost of capital of 7-8%, the statement added.

“Strong revenues resulting from the rapid growth of passenger traffic and high load factors have contributed to the improved profitability of the industry. However, the revenue growth has peaked and is expected to slowdown to 4.5% in 2007 from 8% in 2006. While Asian and European economies are still expanding at an increasing robust pace, the slowdown of the US economy will soften the demand for air travel and the pricing power,” the IATA noted.