Middle East Unrest Holds Back Airline Industry Growth

IATAAccording to the International Air Transport Association (IATA), the air travel industry has been adversely affected by the widespread unrest throughout the Middle East and North Africa during the month of February.

Negative Reaction to Unrest and Earthquake

The Director General of the IATA, Giovanni Bisignani pointed out on Tuesday that the industry showed only a 6% growth during the month of February, as compared to an 8.4% increase in growth during the previous month of January. Compounding the problems of February will be the expected negative reaction of the industry to the Japanese nuclear disaster, which will most likely place further pressure on the ability of the airline industry to recover from the recession.

Bisignani pointed out that, “As the unrest in Egypt and Tunisia spreads across the Middle East and North Africa, demand growth across the region is taking a step back.”

He added that, “The tragic earthquake and its aftermath in Japan will most certainly see a further dampening of demand from March.

” The estimate which the IATA made for the overall effect that the ongoing crises, which began in Tunisia, Egypt, Libya, and other countries has had on the industry is at least a 1% across-the-board total reduction in air travel.

Fundamentals are Good

“The industry fundamentals are good. But extraordinary circumstances have made the first quarter of 2011 very difficult,” explained Bisignani.

An additional factor in the slowing down of the airline sector comes from the celebration of the Chinese New Year. Shutdowns of Chinese factories over this holiday are partly to blame for the 2.3% growth of air freight as compared to the 8.7% growth rate seen in January, according to the IATA.

IATA is an international organization which represents about 230 airline carriers which make up about 90% of scheduled air traffic internationally, however they do not include some of the major, big budget airlines.