In the latest sign that the real economy remains very weak and that recovery is tepid at best, the Air Transportation Association of America reported their 13th consecutive month of declines in air cargo. Airline cargo was down 12% year over year for the month of September. ATA CEO James May notes, that while many other industries are seeing signs of recovery, the airline industry in general remains very weak and is showing few signs of recovery. The ATA reports:
WASHINGTON, Oct. 20, 2009 – The Air Transport Association of America (ATA), the industry trade organization for the leading U.S. airlines, today reported that passenger revenue, based on a sample group of carriers, fell 19 percent in September 2009 versus the same month in 2008. This marks the 11th consecutive month in which passenger revenue has declined from the prior year, fueled primarily by the 10th consecutive month of ticket price declines.
Just 2 percent fewer passengers traveled on U.S. airlines[1] in September, in contrast to the 5 percent decline in August. The average price to fly one mile fell 18 percent, slightly more than the 17 percent year-over-year decline in August. Passenger revenue declines extended beyond the domestic United States to the trans-Atlantic, trans-Pacific and Latin markets.
“The demand for air travel remains weak, as evidenced by the untenable pricing environment. While other sectors may be seeing signs that the economy is getting back on track, the airline industry has faced challenges in its effort to generate revenue,” said ATA President and CEO James C. May.
Also reflecting a weak global economy is the continued decline in cargo traffic. U.S. airlines[2] saw cargo revenue ton miles decline 12 percent year over year (11 percent domestically and 12 percent internationally) in August 2009, the 13th consecutive month of declining volumes. September 2009 cargo data is not yet available.
Source: ATA
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.