INTERNATIONAL AIR TRANSPORT

The prospects for international air transport are a bit uncertain at the present time, due to conflicting trends. While airline profits rose an average of 26 percent in the period 1973-1977, steep increases in the cost of fuel caused the annual rate of growth of world air transport to decline from over 10 percent before 1973 to less than 6 percent in 1974-75. There was a definite recovery in 1976 (10 percent) followed by a downturn in 1977 (8 percent) due to the slower growth of the world economy. A lot of the increase in air traffic can be attributed to the decreased fares triggered by the inauguration of Laker Airway's Skytrain service in 1977 and the IATA's decontrol of air transport rates (under pressure from the US government) in July 1978. Lower fares were probably why charter operations increased by 13% in 1977 (in contrast to 8 percent of the industry as a whole) after average annual growth rates of less than 4 percent in the period 1973-77. Charters greatly increased their share of the heavy used (26 percent of all air traffic) North Atlantic route in 1977. As a whole, however, the North Atlantic route has not been very expansive, with an average annual rate of growth of only 3 percent in the last five years. In contrast, the Europe-Middle East route was the most expansive, increasing 28 percent in 1977. While lowered fares have increased air traffic, airline profitability may be adversely affected by increasing operating costs. The current situation of Sabena is an example. Despite an annual average increase in traffic of 5.6 percent during 1973-77 the airline has been losing money. Its African routes are profitable, but its North Atlantic routes which account for a fifth of its traffic yield low revenues due to intense price competition. Sabena has recently inaugurated a five year plan entailing expansion of traffic and a reduction of expenses which it hopes will reverse the situation.

  • Corporate Authors:

    Kredietbank

    Opzichterstraat 41
    B-1020 Brussels,   Belgium 
  • Publication Date: 1979-3-9

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  • Accession Number: 00196328
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Aug 15 2003 12:00AM