Profitability in the airline industry remained “ever distant”, despite passenger and freight demand continuing to improve, the International Air Transport Association (Iata) director-general and CEO Giovanni Bisignani said on Tuesday.

Passenger demand for August was down 1,1% year-on-year, while freight demand dropped 9,6% year-on-year in August.

This was an improvement on the 2,9% year-on-year decline in passenger demand and the 11,3% year-on-year drop in freight demand recorded in July.

Passenger demand had declined by more than 10% year-on-year earlier this year, while freight demand had, at one stage, recorded declines in excess of 20% year-on-year.

Meanwhile, passenger load factors in August improved by 1,2% to 80,9%.

Airlines have continued to reduce the daily aircraft utilisation in recent months, which helped load factors, but led to increased unit costs if the fixed asset costs were spread over fewer hours in the air, the association stated.

The average airfares remained depressed, despite the “tighter” supply and demand conditions, the association highlighted. Premium airfares were down by 22% year-on-year, while economy airfares were down 18% compared with the previous year.

“Fares have stabilised, but at profitless levels. Meanwhile, cost pressures are mounting from reduced aircraft utilisation and rising oil prices. The industry is not out of the woods yet,” Bisignani said in a statement.

He added that there were “few bright spots” in the industry, which should point the industry towards realising that there was a need for some “fundamental rethinking”.

“At the top of the list for change are the industry’s antiquated rules of the game, which restrict access to markets and to international capital. This industry needs to operate as a normal business. Liberalisation of ownership rules could be a lifeline for airlines as we approach a difficult fourth quarter,” he said.

DEMAND IN AFRICA

Meanwhile, the seasonally adjusted international passenger demand in August had improved by 6% compared with the lows seen in March this year, but traffic levels remained 5% below the demand levels of May 2008, when the drop in demand started, said the association.

African airlines had recorded the weakest demand of all regions, with international passenger demand down 4,9% year-on-year. This was, however, an improvement on the 5,5% year-on-year decline recorded in July.

The industry’s overall freight demand in August had improved by 12% on the lows recorded in December 2008. This was, however, still 16% weaker than the demand levels in April 2008, when the drop in freight demand started.

Out of all the regions, African airlines had seen the biggest improvement in freight demand, down only 5,1% in August, compared with the drop of 25,9% recorded in July.

Iata forecast that the overall international passenger demand would be down 5% in 2009, but would grow by 4% in 2010, while the overall freight demand was expected to decline by 14,5% in 2009 and grow by 5,5% in 2010.

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