The International Air Transport Association (IATA) said global traffic continued to rise in January showing a 5.7 per cent jump in passenger demand, but air freight demand fell 8 per cent over last year.

The occurrence of Chinese New Year in January (rather than in February as in 2011) exaggerated the increase in passenger demand and the fall in air freight, the avaitaion body said in a statement.

Stripping this out, the underlying trend was for stronger passenger growth, while stabilized weakness in cargo markets continues, it added.

'It appears that freight markets have stabilized, albeit at weak levels. And this is having a positive impact on business-related travel,' remarked IATA's director general and CEO Tony Tyler.

'However, airlines face two big risks: rising oil prices and Europe's sovereign debt crisis. Both are hanging over the industry's fortunes like the sword of Damocles,' he added.

The euro zone faces the prospect of a recession this year due to its sovereign debt crisis.

Ongoing fears about a confrontation between Iran and the West leading to supply disruption pushed the price of crude oil higher.

“The year started with some hopeful news on business confidence. It appears that freight markets have stabilized, albeit at weak levels. And this is having a positive impact on business-related travel,' said Tyler.

On the Middle East growth, IATA said the regional airlines enjoyed a 9.4 per cent rise in demand, the healthiest performance among the regions.

These carriers recorded double-digit traffic growth in January, posting a 14.5 per cent increase. This was by far the largest rate of growth for any region and represents a return to the rates experienced in 2010, the association said.

The capacity rose 10.6 per cent, while the load factor climbed 2.7 points to 78.5 per cent, among the highest of the regions, it added.

North American airlines’ demand dropped 4 per cent, while Latin American carriers’ traffic registered a meagre 2.2 per cent growth.

However, the African carriers registered a 3.7 per cent decline compared to the year-ago period, he stated.

Total January passenger demand rose 5.7 per cent compared to January 2011 a slight acceleration from the 5.6 per cent year over year increase recorded for December 2011.

With January passenger capacity up 4.2 per cent, average load factor rose 1.1 percentage points to 76.6 per cent compared to the same month a year ago.

Freight markets stood at 8 per cent below January 2011 levels. The decline in air freight stabilized in the fourth quarter of 2011, at levels 4 per cent below the 2008 pre-crisis peak.

There was a 2.5 per cent fall in global freight markets from December to January, but this is almost totally attributable to the impact of factory closures due to the Chinese New Year, the IATA said.

Freight capacity contracted by 0.6 per cent year over year, and freight load factor fell to 41 per cent (from 44.3 per cent in January 2011) as deliveries of new widebody passenger aircraft offset measures to reduce freight capacity, it added.

“Running an airline in today’s uncertain economic climate is a tough job. Some well-known names—Spanair and Malev—disappeared in January. At the same time, we know that demand for air travel will grow as the global economy recovers and requires even greater connectivit,' said Tyler.

'The billions of dollars in commercial orders placed at the recent Singapore Airshow demonstrate that airlines are strategically investing to meet that demand with ever-more fuel efficient and environmentally-sustainable aircraft,' he added.

“The aviation industry is a catalyst for economic growth. Governments should keep this in mind in their policy initiatives,' said the official.

'Measures to boost competitiveness—not taxes or restrictions—are immediately needed, along with a long-term vision to support sustainable economic growth through much needed infrastructure investments,' he added.-TradeArabia News Service