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Global air freight continues decline in Oct

Geneva, November 28, 2011

Global cargo demand for October was 4.7 per cent below the same month in 2010 while passenger traffic showed a 3.6 per cent rise over previous year levels, said a report from the International Air Transport Association (Iata).

“Cargo is the story of the month. Since mid-year the market has shrunk by almost 5 per cent and this is far greater than the 1 per cent fall in world trade. Air freight is among the first sectors to suffer when businesses confidence declines,” said Tony Tyler, IATA’s director general and CEO.

While business confidence has declined considerably in recent months, industrial output has not. But in anticipation of weaker economic activity, there is a shift to cheaper and slower modes of transport.

In stark contrast to the decline in air freight, the trend for air travel remains upwards, but with very strong regional differences. Despite the deepening euro-zone crisis European carriers have showed above trend demand growth of 6.4 per cent.

“With Europe accounting for 29.2 per cent of global air travel, this suggests that the current overall strength in air travel is based on fragile foundations,” said Tyler.

International passenger markets

International air travel showed 4.6 per cent growth over October 2010. This is in line with an overall upward trend, albeit at a slowing pace. International passenger load factors stood at 77.6 per cent, down from the 79.5 per cent recorded at the same time last year.

Middle East airlines reported the strongest growth in demand (7.7 per cent) against a capacity increase of 9.5 per cent. Load factors stood at 74.8 per cent.

African airlines reported a 4.2 per cent increase in demand, below the 5.9 per cent growth in capacity. Load factors were the weakest among the regions at 68.2 per cent.

Asia-Pacific carriers reported a 3.8 per cent increase in demand against a 7.5 per cent capacity expansion resulting in a load factor of 75.2 per cent. While Asia-Pacific airlines benefitted from the fast growth of Asian exports in the immediate post-recession recovery, in the past year, European exporters took the lead in export growth on the back of a weak Euro, the report said.

North American carriers saw international passenger traffic decline by 1.9 per cent while capacity was almost the same levels compared to the previous October, while European carriers reported a 6.4 per cent increase in international passenger traffic, below the 8.1 per cent increase in capacity.

Latin American airlines showed the strongest capacity growth (10.4 per cent) with a growth in demand of 6.7 per cent. Load factors were 76.8 per cent.

Domestic passenger markets

Domestic passenger markets grew by 2.0 per cent compared to October 2010. Capacity growth in domestic markets outstripped this rise, showing a 2.4 per cent increase over the previous year. This is in line with the long-term growth trend for domestic markets of 2.0 per cent; however it is well below the 8.0 per cent growth experienced during the post-recession recovery.

US airlines cut capacity on domestic markets by 1.1 per cent. Weak consumer confidence saw demand decline by 0.9 per cent. US airlines reported the strong load factors of 83.6 per cent, while India recorded the strongest demand growth (11.0 per cent).

Brazilian domestic growth has slowed to 6.4 per cent, below the 15.1 per cent year-to-date growth. Load factors were the weakest at 66.9 per cent. Chinese domestic traffic grew by 8.4 per cent over previous year levels, slightly below the capacity expansion of 8.8 per cent. Load factors stood at 83.1 per cent. This is an increase of 8 percentage point in the utilization levels achieved only three years ago.

Air freight (domestic + international)

The confidence of purchasing managers in the manufacturing sector has fallen to its lowest level since 2009. This loss of confidence appears to have caused shippers to switch some transport needs to slower and cheaper sea options to the detriment of air freight which showed a 4.7 per cent decline in October compared to the previous year.

Airlines have responded to weaker demand by cutting their freighter fleet. But this has not stopped a steady and substantial five percentage point fall in freight load factors compared to their early 2010 peak owing to capacity entering the market via wide-bodied passenger aircraft.

Asia-Pacific carriers account for about 40 per cent of global freight markets and while they are the most exposed to the volatility of freight volumes, they are still benefiting from the dominance of trade flows to Asia.

In October they posted the highest freight load factor (58.8 per cent), a full 12.3 percentage points above the global average of 46.5 per cent. This is a result of strong outward flows of freight from Asia which dominates the air cargo business.

The bottom line

“As we enter the year-end period, we are reminded of the vital role that aviation plays in our globalized world. Families and friends will reunite. Holiday gifts will be exchanged across countries and continents. Valuable tourism dollars will be spent in every corner of the planet. And critical climate change discussions will be held in Durban. Much of this is facilitated by efficient air links that have turned our planet into a global community,” said Tyler.

Tyler urged policy makers to reflect on aviation’s significant social and economic benefits. Aviation supports 33 million jobs. And trillions of dollars of economic activity are supported by air transport’s connectivity. This year more than 2.8 billion people and 46 million tonnes of cargo are expected to be transported by safe and efficient air links.

“The economic prospects for 2012 are uncertain, but the track record of aviation’s ability to act as a catalyst for economic activity is rock-solid. Now is the time for governments to use aviation strategically in their efforts to put economies back on track,” Tyler said.

“Implementing a Single European Sky, delivering NextGen air traffic management in the US and supporting the commercialization of sustainable biofuels for aviation are examples of government action that would generate jobs, improve environmental performance and help secure the industry’s long-term success and economic benefits,” concluded Tyler. – TradeArabia News Service




Tags: Iata | cargo | freight | October | Global passengers |

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