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To represent, lead and serve the airline industry
Industry Outlook – December 2012
Brian Pearce
Chief Economist www.iata.org/economics
11
12
13
14
15
16
17
270
290
310
330
350
370
390
410
430
450
2007 2008 2009 2010 2011 2012
FT
Ks p
er
month
, bill
ion
RP
Ks p
er
month
, bill
ion
Total air travel and air freight volumesSeasonally adjusted
FTKs
RPKs
Source: IATA
Robust air travel but shrinking freight
China, 35%
India, 12%
Latin America, 9%
US, 9%
MENA, 6%
Euro-zone, 4%
CE Europe, 3%SS Africa, 3%
Share of world GDP growth 2008-2011
Source of economic growth has shifted
110
120
130
140
150
160
170
9
10
11
12
13
14
Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12
index o
f w
orld t
rade,
2000=
100
Bill
ion F
TK
s
World trade in goods and air FTKs
International FTKs(left scale)
World goods trade volumes(right scale)
Freight has shifted transport modes
Source: IATA, Netherlands CPB
-15%
-10%
-5%
0%
5%
10%
15%
25
30
35
40
45
50
55
60
65
2007 2008 2009 2010 2011 2012
% c
ha
ng
e o
ve
r ye
ar
Ind
ex
of
bu
sin
es
s c
on
fid
en
ce
Worldwide growth in air travel and business confidence
Growth in RPKs
Business
confidence
Business travel is still expanding
Source: IATA
60
80
100
120
140
160
180
2008 2009 2010 2011 2012
RP
Ks b
illio
n
Domestic air travel
China
India
US
Japan
Domestic markets show wide variation
70
90
110
130
150
170
2008 2009 2010 2011 2012
RP
Ks b
illio
n
International RPKs by airline region
Middle East
Latin America
Africa
Europe
AsiaPacific
NorthAmerica
Int’l. traffic also varies by region
World economy close to ‘stall’ speed
Source: IATA
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
-6%
-5%
-4%
-3%
-2%
-1%
1%
2%
3%
4%
5%
6%
1970 1975 1980 1985 1990 1995 2000 2005 2010
World G
DP
gro
wth
Net
post-
tax p
rofits
as %
revenues
World economic growth and airline profit margins
Net post-tax
profit margin
World GDP
growth
2012-
2013
-5%
0%
5%
10%
15%
20%
2006 2007 2008 2009 2010 2011 2012
Largest 8 airlines, EBITDA as % revenues seasonally adjusted
Asia-Pacific
US
Europe
Large airlines are performing relatively well
Source: Bloomberg
38%
40%
42%
44%
46%
48%
50%
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
Nov/07 Nov/08 Nov/09 Nov/10 Nov/11 Nov/12
% a
vaila
ble
fre
igh
t to
nn
e c
apac
ity
Ave
rag
e d
aily
ho
urs
flo
wn
Freight Load Factor
Freighter aircraft utilization
Freight load factor and freighter aircraft utilization
The cargo business remains weak
Source: IATA, Boeing
Utilization high in passenger business
Source: IATA, Boeing
73%
74%
75%
76%
77%
78%
79%
80%
10.2
10.4
10.6
10.8
11.0
11.2
11.4
11.6
2007 2008 2009 2010 2011 2012
% A
SK
s
Ave
rag
e d
aily
ho
urs
flo
wn
Passenger load factor and aircraft utilization
seasonally adjusted
Passenger
load factor
Twin-aisle aircraft
utilization
Few new airlines are being set up
Source: Ascend
0
20
40
60
80
100
120
140
160
1995 2000 2005 2010
Number of new airlines formed
85
87
89
91
93
95
97
99
101
103
2005 2006 2007 2008 2009 2010 2011 2012
bill
ion A
SK
s
Capacity on US domestic passenger market
-10%
Delta/NWUnited/ Continental
SW/Air Tran
US domestic ASKs
Domestic consolidation
Source: IATA
60
70
80
90
100
110
120
-12.0
-7.0
-2.0
3.0
8.0
13.0
18.0
2007 2008 2009 2010 2011 2012 2013
World trade growth and Brent oil prices
Oil price, $/barrel
World trade growth, %
Difficult conditions ease a little in 2013
Source: IATA
1,600
1,800
2,000
2,200
2,400
2,600
2,800
3,000
3,200
32.0
34.0
36.0
38.0
40.0
42.0
44.0
46.0
48.0
50.0
mill
ion s
chedule
d p
assengers
mill
ion t
onnes f
reig
ht
Outlook for travel and cargo volumes
Air freight (left scale)
Scheduled passengers
2013 growth in both travel and cargo
Source: IATA
Moderately better profits in 2013
Source: IATA
Big downside if things go wrong
Source: IATA
-6%
-4%
-2%
0%
2%
-5%
-3%
-1%
1%
3%
4%
5%
-6% -4% -2% 0% 2% 4% 6%
Imp
ac
t o
n o
pe
rati
ng
pro
fit
ma
rgin
Impact on RPKs
Size of shock relative to baseline 2013 forecast
Euro-zone breakup (full)
Iran crisis
China hard landing
US hits fiscal cliff
Baseline
Euro-zone resolved
US consumer resurgence
Euro-zone breakup (partial)
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