African airlines, others witness drop in business
The International Air Transport Association (IATA) has released demand growth data for global airfreight markets for March 2016, showing a two per cent drop in volumes measured in freight tonne kilometers (FTKs) compared to the same period last year.
In contrast, freight capacity (measured in available freight tonne kilometers or AFTKs) rose by 6.9 per cent, putting increased pressure on already struggling yields.
The weak results reflect subdued growth in world trade, exaggerated by the comparison to a particularly strong start to 2015 when airfreight volumes were boosted by the effects of the US West Coast seaports strike.
The most significant fall in demand was reported by carriers in Asia-Pacific and North America. Combined, they account for around 60 per cent of global freight traffic and reported declines of 5.2 per cent, and 1.8 per cent, respectively.
Director-General and Chief Executive Officer of IATA, Tony Tyler, said it is shaping up to be another tough year for air cargo, adding that February 2016 world trade volumes were only 0.4 per cent higher than at the end of 2014.
Tyler added that the expectations of purchasing managers gives little optimism for an early uptick, stressing that the combination of fierce competition, capacity increases and stagnant demand makes this a very difficult environment in which to generate profits.
On region-to-region analysis, African airlines witnessed a 3.1 per cent drop in demand in March 2016 compared to the same period last year. A more modest decline of 1.6 per cent was seen in year-on-year Q1 performance.
Notably, on the back of long-haul expansion, the AFTKs for African airlines surged by 22.6 per cent year-on-year over the first quarter of 2016. This is more than double the pace of any other region in recent months.
European airlines saw demand for air cargo grow by a modest 1.3 per cent in March 2016, compared to the same period in 2015, while capacity increased by 7.9 per cent. Weak cargo demand is a continuing story for European carriers for whom cargo volumes stand at just 1 per cent above early 2008 levels.
Middle Eastern carriers reported a 2.4 per cent increase in demand over March last year—the slowest since July 2009. This reflects both a slowdown in network expansion by the region’s main carriers over the past six months and weak trading conditions.
North American airlines saw demand fall by 1.8 per cent in March 2016 versus March 2015, partially due to the rollover effect of the US port strike in 2015, which gave airfreight in the region a boost. Additionally, the region’s carriers are negatively impacted by the drop in global trade while the strong US dollar is keeping exports under pressure.
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