x Abu Dhabi, UAETuesday 25 July 2017

Middle East carriers help carry load for global air cargo traffic

Middle East carriers helped global air cargo traffic pick up in August, continuing the sector’s “modest improvement” this year.

Middle East carriers helped global air cargo traffic to pick up in August, continuing the sector’s “modest improvement” this year, the International Air Transport Association (Iata) said on Tuesday.

August air freight demand was up 3.6 per cent on the previous year compared to a year-to-date performance of 0.7 per cent growth.

Last month, Iata lowered its cargo growth forecast to 0.9 per cent from its earlier projection of 1.5 per cent. In contrast, revenues from carrying passengers are expected to reach US$565 billion this year, an increase of $68bn over last year.

The bulk of the August cargo growth came from the Middle East and Europe, while Asia-Pacific volumes were stagnant and African volumes fell significantly, Iata said. In August year-on-year freight volumes in the Middle East were up 23.8 per cent, helped by the impact of Ramadan.

“Year-to-date growth stands at 12.7 per cent. It appears Middle Eastern freight growth has accelerated in recent months (even when neutralising for the impact of Ramadan). This has been supported by improving demand in developed economies. Their strategic location and efficient hub connections are making them a growing competitor for air freight between Asia’s manufacturing centers and European consumers, for example,” Iata said.

Middle East carriers have expanded their cargo business at the expense of carriers from other regions, particularly Asia, Iata said.

Global demand for air freight began increasing slowly from April, in line with strengthening business confidence, as economic performance in Europe and the US showed signs of improvement.

“There are some signs of improvement in demand, but the air freight business remains very tough. Freight volumes are only now reaching the levels of 2011 when the cargo business peaked with revenues of $67 billion. This year we expect $59 billion of revenues from air cargo globally. That takes the top line back to 2007 levels. But to earn that revenue, we will be moving nearly 17 per cent more cargo and dealing with a 40 per cent hike in jet fuel. The road ahead will be challenging,” said Tony Tyler, Iata’s director general and chief executive.

A strong upswing, however, would require a significant improvement in the cargo performance of airlines in the Asia-Pacific region, according to Iata.

They are the largest players in global air cargo with a collective 38 per cent market share. However, their year-on-year performance for August was basically flat, down 0.2 per cent.

But that is still an improvement on the year-to-date performance which showed a 1.9 per cent decline.

“The flatline performance of the region’s carriers can be largely attributed to a slowdown in emerging markets and a deceleration of China’s growth over the first half of the year. A rebound in trade growth from July (in response to the strength of developed markets) could be an encouraging sign,” Iata said.

African carriers experienced another decline in freight volumes, down 9.7 per cent year on year in August, despite a positive start to 2013.

“African air freight growth has slowed and is now up by just 0.7 per cent for the year to date. Despite healthy trade volumes and strong growth in many African countries, African airlines face intense competition on key trade routes,” Iata said.

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