Business World

Friday 27 April 2018

Air transport chief warns on infrastructure as traffic rises

A British Airways jet passes over Feltham near Heathrow
A British Airways jet passes over Feltham near Heathrow
John Mulligan

John Mulligan

February saw a rebound in international air passenger growth, with a strong economic backdrop and business confidence underpinning a rise in seat capacity and traffic, according to the International Air Transport Association (IATA).

But IATA's director general and CEO, former Air France-KLM boss Alexandre de Juniac, said that for aviation to deliver even greater economic benefits in the future, "affordable infrastructure is a must".

He pointed to aviation growth in Latin America, where the IATA said the sector accounts for about $170bn (€138bn) in annual gross domestic product. "The potential for aviation to do far more exists, but without concerted action by governments to address capacity shortfalls, the region could face an infrastructure crisis in the future," he said, pointing to Mexico City as having the biggest bottleneck in the region.

Dublin-based Irelandia Aviation, the investment vehicle controlled by Declan Ryan, is among the major players in Latin America's aviation market.

In 2017, it finalised the sale of its 49pc stake in Mexican low-cost carrier Viva Aerobus.

As part of the same deal, Irelandia took control of the VivaColombia airline.

Last year, Viva Air, the group of which VivaColombia is a part, signed a memorandum of understanding with Airbus to buy 50 A320 jets. Last year, Viva Air launched Viva Air Peru.

According to IATA, Latin American airlines posted the fastest year-on-year growth of any global region for a second consecutive month, as February passenger traffic rose 9.8pc.

IATA said demand had continued to recover from what was a highly active 2017 hurricane season. Capacity in the region was 8.9pc higher in February, while the load factor, or percentage of available seats filled, was 0.6 percentage points higher, at 81.5pc.

Despite the robust performance globally last month, Mr de Juniac warned that rising costs could hit the sector.

"Increases in fuel prices - and labour costs in some countries - will likely temper the amount of traffic stimulation from lower airfares this year," he said.

In Europe, carriers saw passenger demand rise 6.8pc year-on-year. Capacity in the region was 5pc higher, while load factors were up 1.4 percentage points at 82.2pc.

A slower pace of growth in global passenger traffic during January was put down to the late timing of the Lunar New Year, which depressed travel demand in Asia.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business