The Middle East was the fastest growing region for both passenger and cargo

"The lesson for 2006 is that pursuing profitable growth pays off. While passenger growth slowed, the bottom line improved. The industry showed an estimated operating profit of US$10.2 billion for 2006 while net losses were reduced to a projected US$500 million. Cost reduction, improved efficiencies and careful capacity management have positioned the industry to achieve a projected net profit of US$2.5 billion in 2007," said Giovanni Bisignani, IATA’s Director General and CEO.

The Middle East was the fastest growing region for both passenger and cargo recording full-year growth of 15.4% and 16.1% respectively.

Although the cargo growth rate improved marginally to 4.6%, the key markets of Europe and Asia were relatively subdued at 1.7% and 4.7% respectively. High fuel costs and strong competition from other transport modes (particularly in Europe) constrained growth in 2006. North America was the most improved market as freight growth increased from 0.4% to 6.0% as airlines switched capacity towards cargo.

All regions except the Middle East saw a decline in passenger traffic growth rates compared to 2005. The largest decline was in Latin America where 11.4% growth turned to a 2.4% contraction in 2006, primarily due to restructuring of the industry in the region. North America saw the second largest decline—from 8.9% to 5.7%—as carriers withdrew unprofitable capacity.

“Load factors—at a record high of 76.0%—were the good news story for 2006,” said Bisignani. North American carriers led the way with an 80.2% load factor, up from 79.5% in 2005. Load factors improved in all regions except the Middle East and Africa.

“The focus for 2007 is efficiency. Slower traffic growth rates and a less buoyant global economy will impact revenue growth. Industry-wide we expect revenue growth to slow from 8.0% in 2006 to 4.5% in 2007. While lower oil prices are a welcome relief, they remain around US$60/barrel—more than double the price in 2000. Bottom line improvement depends on achieving further efficiencies across the board. Airlines have reduced non-fuel unit costs by an average of 3.5% over the last five years. It is time for our industry partners across the value chain—including airports and air navigation service providers—to deliver similar results,” said Bisignani.