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The principal forecast differences in this forecast set reside in the European and North American regions; forecast to forecast the Asia/Pacific passenger growth trend looks solid enough. The outlook for the USA is flattered by the capacity reduction exercises of 2006, the effects of which, according to the US Bureau of Transport Statistics, really started to hit passenger numbers in the third Quarter. In July alone domestic passengers were off by 2.9% which gives depth and context to the July 2007 projection of 2.0%. The picture in Europe is altogether different.

Growth Slows in Europe

When Michael O'Leary, Ryanair's chief executive, announced last week that profit growth by the end of this year could be zero and that the group had adopted a very conservative outlook for 2008, it is safe to assume he may have had sight of forward booking numbers for the world's largest international airline in passenger volume terms.
The 2007/2008 trend for Europe is becoming clearer. The results for the 200 or so European airports which have declared their passenger numbers since April show an increase, year on year, of just over 4% where an expected trend value for all European airports might have been closer to 7%. The May results for airlines in Europe are, as yet, too patchy to permit any analysis.
Already, the newly emerging trends are reflected in the latest forecasts with passenger growth for the region now projected at only 3.9% for the third quarter. The July outlook is a little healthier, but only just; international passengers are expected to rise by 4.4% and domestics by 4.3%.

Country and Regional Summaries

The forecast for the third Quarter is, at least superficially unexciting, but the recently announced May results by the leading airlines may indicate the possibility of some upside.

The UK is looking increasingly out of step with its European neighbours which is anecdotally confirmed by British Airways' recent announcement of 1% pax growth in May.

The July forecast for French airports is 3%; for the third Quarter it is 2.3% but with somewhat better prospects for internationals. Domestic travel demand is declining.

The total forecast for July is 3.3%. For 2007 as a whole it stands a little higher but the forecast for the next Quarter is somewhat subdued in scope and flatter than last time.

International passenger growth in the third Quarter will sparkle with a 9% uplift on last year. The domestic sector, which is the more important, cannot match the surge.

International Passenger Summary
The European influence is only just starting to be seen in the latest forecasts which are for a rise of 5.0% in the month of July and for 4.5% over the next Quarter.

Domestic Passenger Summary
Domestic passenger growth in July will be substantially helped by the USA input. The Q3 current projection is one of 4.6% growth. In July 3.8% year on year is expected.

Total Passenger Summary
The World passenger forecast looks like being 4.4% up in July. It is easing slightly; it is supported by technical factors in the USA and should produce 4.4% in the next Quarter.

The region powers on with 7.4% growth projected at the total passenger level for next month. An increase of 7.2% is highly looking probable for the next Quarter.

With international growth in the region now beginning, it seems, to decelerate quite markedly, the Q3 total pax forecast of just 3.9% may even look vulnerable.

North America
The dominant element of domestic travel demand in the USA skews the picture for the region in any year. Demand in Q3 will be “ahead" some 3% points; in July 2.2%.

Month to month growth fluctuations are not uncommon in the region; for July the total passenger outlook is one of 10.7% growth with 9.7% achievable in Q3.

Middle East
International passengers in July will be ahead by 8.5% with a forecast for the third Quarter which is slightly down on last month at 6.4% against 6.8% last month.

Latin America
The forecast for the region is on the up with the dominant domestic sector looking likely to produce growth of 4.9% in July, contributing to a Q3 total pax surge to 6.0%.

Please contact me if you need any further information.
David Walker

Rue du Rhone 14
1204 Geneva
Tel: + 41 22 819 18 18
Fax: + 41 22 819 94 84
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Rue du Rhone 14
1204 Geneva
Tel: + 41 22 819 18 18
Fax: + 41 22 819 94 84

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