January 9, 2015
IATA reports that weaker economies are affecting cross-border air travel
It is generally known that the Russian economy is suffering from a substantial drop in the price of crude oil and consequently their airlines are struggling with a loss in ticket sales. However while the Western world seems to be coming out of a longer than estimated recession, other economies, particularly in Africa and Asia, are failing to benefit from the advantages of falling oil prices. In all these regions cross border travel is not anticipated to flourish as it is in the Western economy region, including the UK and USA. IATA represents approximately 250 airlines, 84% of all international and national air traffic, and predicts that globally and combined, airline profits should be at their highest for the last five years. While cross border travel increased by 5.8% in November 2014, this figure was lower than the general 6% increase in passenger numbers thanks to an upturn in internal flight numbers within China. “While lower oil prices should be positive for economic activity, softening business confidence is having a dampening effect on international travel,” General Tony Tyler, IATA Director has stated. While growth in cross-border travel stabilized after August, strong internal flight demand in countries such as China and India has not been reflected in demand for international travel for these countries’ carriers, IATA said. The ‘Russian effect’ of lower oil prices has also hit November figures for African carriers, which watched the demand for international travel fall 2.5%. IATA indicated that the lack of demand was directly related to weakening economies in the region, and particularly Nigeria, whose economy relies heavily on oil revenue.