The 17.4% decline in international cargo demand is a relative improvement compared to the 21.7% drop in April. Since December 2008, cargo demand has been moving sideways in the -20% range. This is one of the first physical signs of the economic recovery being anticipated in equity markets.

International passenger demand weakened from the -3.1% recorded in April to -9.3% in May. But both of the past two months have been slightly stronger than the 11.1% decline reached in March, even after adjusting for the distortions caused by the timing of Easter. This indicates that a floor may now have been reached. However, the capacity adjustment of -5.0% in May did not keep pace with the fall in demand during the same month. Moreover, although the impact of the recession appears to be stabilizing, strong headwinds from debt and low asset prices are expected to weaken and delay any significant recovery.

"We may have hit bottom, but we are a long way from recovery," said Giovanni Bisignani, IATA’s Director General and CEO. "Capacity is not aligned with demand. Passenger load factors dropped 3.3 percentage points over the last 12 months. The impact on revenue is dramatic. After a 20% fall in international passenger revenue in the first quarter, we estimate that the drop accelerated to as much as -30% in May. This crisis is the worst we have ever seen," said Bisignani.

May was the first full month to feel the impact of the Influenza A(H1N1) on travel. Mexican carriers saw their traffic fall almost 40% in May. Latin American carriers saw their traffic decline by 9.2% in May compared to the previous year. Against a capacity increase of 0.2%, the load factor plummeted to 64.7%. That is a 6.7 percentage point drop compared to May 2008 and the lowest load factor among all the regions. We estimate that the global impact of Influenza A(H1N1) on global travel patterns in May was a 1% drop in passenger traffic.

In May, freight volumes rose by around 3% above April levels as manufacturers began to add to their product inventories in anticipation of an economic recovery. However, inventories remain 10-15% higher than normal in relation to sales levels, indicating that a significant recovery is not expected in the near term. Surveys of purchasing managers indicate we could experience a further improvement in air freight demand during June and July to levels that are 12-15% below last year’s levels.