Air Transport World

Decade closes with slower traffic, financial growth. (World Airline Report 1989)

International airline traffic continues to outpace domestic; international freight was the biggest gainer for '89 and the entire 10 years.

For the airline industry, 1989 was not the best of times; nor was it the worst. After making it through the tumultuous decade, the industry seemed to pause in 1989, perhaps to regain its breath for the '90s.

The major trends that developed all through the '80s were seen last year but at a slowed pace as international passenger and freight business continued to outperform the domestic portions of the industry. There was much more freedom in world markets as U.S. deregulation entered its second decade and the European airline industry continued its march toward 1993.

The Pacific region's impressive growth continued, clearly establishing the region during the decade as one of the three main centers for airline business, with Europe and North America. In fact, our figures show that those three regions combined to produce 92.4% of all the RPKs and 91.8% of all the FTKs in the world last year.

On the down side, consolidation continued. And just to keep managements aware of the fragility of it all, fuel showed its ugly side again as prices took a sharp turn upward last year, especially in the fourth quarter. Industry observers cite the fuel expense as a major factor in depressed earnings for 1989, especially in the U.S.

Congestion, ATC posers

Not a direct cause of depressed earnings but a continuing problem nonetheless, airport congestion and ATC problems plagued the industry through most of the decade. They improved little in 1989.

Preliminary data from ICAO show that when the final tallies are made for 1989, the airlines of the 162 member states will show an operating profit of $8.5 billion from operating revenues of $182.5 billion. The revenues are an all-time high, up 9.8% from 1988's, but the operating profit is down from the record $10.2 billion that the industry reported in 1988. Despite the slip in earnings, the $8.5 billion for 1989 will be the second highest ever, if it stands up through ICAO's procedures until final results are published later this year.

World airline traffic, however, did not hold up as well as the financial returns. The total scheduled traffic in tonne-km for all of the airlines of ICAO's 162 member states rose to 224.1 billion RTKs, according to ICAO's preliminary data, 5.7% more than the adjusted amount for 1988. This is a significant drop in growth from the 8% enjoyed in 1988 and the 10% of 1987. In fact, the 1989 growth is the fourth-smallest in the decade but it is just under the 5.9% average annual growth since 1979.

The trend toward internationalization continued strongly in 1989. International scheduled tonne-km grew to 54.9% of the total in 1989, up from 1988's 53.4%. International traffic pulled even with domestic in 1981, when it comprised 50.5% of total airline traffic. It held steady at just over 50% for six years before jumping to nearly 52% in 1987.

Broken down further, ICAO data show that the total airline scheduled passenger boardings increased only 3% in 1989, with 1.116 billion passengers carried. RPKs showed a bit better growth, increasing 4.9% in 1989, with the airlines producing 1.789 trillion RPKs of scheduled passenger traffic, the lowest growth since 1983.

Freight traffic continued the tremendous growth that it has shown all through the '80s. ICAO's preliminary data show that the world's airlines generated 57.64 billion FTKs, an 8% increase over 1988 freight. Even this was down from the double-digit growth of the preceding two years, however. …

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