Posted February 12, 2009 11:15 AM
By Jake Reppert
Air Freight the Bellwether for Passenger Numbers
Air freight has long acted as a bellwether for passenger traffic, with trends generally appearing in the freight sector around a year before they’re seen in the passenger sector. Although not an exact science, the freight sector acted as an early warning that the current downturn was around the corner. As we go through the current cycle its likely that air freight, which is so closely tied to the business cycle, will signal further declines, and eventually an upturn in global trade.
The most recent numbers signal the air freight sector is still in decline, with a year on year drop in traffic of over 22% reported for December 2008. With percentage decreases in the low 20s, there’s likely still a ways to go before the current downturn, and its effects on the commercial aviation industry subside. A step further, the Baltic Dry Index, which measures shipping prices and also acts as an indicator of global trade but more importantly for all modes of freight transport, is off of its lows, which were down around 90% from its previous highs.
On the passenger side we can see further cause for concern (in addition to a continued decline in air cargo traffic), as layoffs in the United States alone are now over 500,000 per month, and The Association of Corporate Travel Executives is reporting that over 70% of its member companies will be spending less on travel in 2009 as compared to 2008. These are the types of trends that point to a continued downward movement in passenger movements, which were down 5.7% over the same period that cargo was down by more than 20%.
While Ascend does not forecast passenger numbers, and we’re not going to point to passenger traffic to necessarily reach year on year declines of over 20%, the numbers and previous couplings of passenger and freight traffic trends suggest that passenger numbers have not yet reached their lows, and may have a ways to go.
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