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· European carriers, in additional to weak long-haul markets, saw some loss of market share to European low cost carriers whose traffic grew by 2.1 percent, while the network carriers reported a 9.4 percent decline.

· African carriers saw a slight improvement of a 6 percent fall in demand in May, compared to a 7.1 percent decline in April.

· Middle Eastern carriers bucked the declining trend with 9.5 percent growth in demand and a 14.5 percent expansion of capacity.

International Air Freight

· In May, freight volumes rose by around 3 percent above April levels as manufacturers began to add to their product inventories in anticipation of an economic recovery. However, inventories remain 10-15 percent 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 percent below last year’s levels.

· Most regions were relatively aligned in the severity of the freight declines. Latin American carriers were the worst performers with a 21.0 percent fall, followed by Africa (-20.0 percent), Europe (-19.2 percent), North America (-18.8 percent), and Asia Pacific (-18.1 percent). Middle East carriers were the exception with a 3.7 percent fall.

· Capacity adjustments in freight markets have been catching up to demand declines. Freight load factors are 3.6 percentage points lower than a year ago. Freight yields fell by 17 percent in the first quarter, reducing revenues by 35 percent. Given the continuing downward pressure on yields, even the improvement in volumes in May will likely come without a corresponding improvement in revenues.

“We have lost several years of growth and yields are under severe pressure. Airlines are in survival mode. Cutting costs and conserving cash are the priorities,” said Bisignani.