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IATA says business travel demand holds up

Singapore, June 7, 2011

Airlines pieced together encouraging news for the global economy on Tuesday, spurred by a pick-up in business confidence and cargo, at a conference overshadowed by profit fears and growing trade tensions.

Airlines representing 93 per cent of world traffic were given a respite from strikes, oil prices and profit warnings with a prediction from their main trade association that world trade would pick up and that Japan's crisis would ease by end-year.

'Business travel is still solid. There has been a dip due to the Japanese earthquake but we don't expect that to be permanent,' Brian Pearce, chief economist of the International Air Transport Association (IATA), said.

After flattening out from a big recovery seen last year, when factories scrambled to ship components to get producton lines moving again after the financial crisis, air cargo movements should resume growth in the second half, he said.

About 35 per cent of global trade by value moves through airports and the forecast represents increasing confidence in demand for capital goods and high-value components, while premium travel is closely tied to business confidence.

IATA, which groups 230 carriers, halved its forecast for industry profits in 2011 to $4 billion this week fron $8.6 billion. Profits are down over three quarters from last year, due mainly to higher oil prices and setbacks in the economy.

The geographical story remains mixed, Pearce said. 'You are seeing the Asian, South American and many African economies actually doing extremely well at the moment. They are certainly not being held back by any of the debt problems that we currently see many European economies being held back by.'-Reuters




Tags: Iata | tourism | Flights | travel | aviation | Air travel |

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