Overcapacity puts the brakes on Asian air cargo growth
February 27, 2014 Category Airlines and airports, Logistics
Top Asian airlines’ profit margins are being eroded by a struggling air cargo business, even as they capitalize on increasing passenger demand, industry executives said. Weak global economic growth and freight capacity oversupply brought on by new deep-bellied planes is hurting carriers with dedicated cargo businesses, the insiders said ahead of the six-day Singapore Airshow this month. “The biggest worry of the airline industry right now is probably cargo,” Tony Tyler, Director General of the International Air Transport Association (IATA), said. “For the big airlines in this region, it is a very important component of their revenue mix.” IATA said air freight traffic rose 1.4% last year from the previous year, supported by rising activity from Middle Eastern and Latin American carriers. At Asia-Pacific carriers, which have nearly 40% of the global freight market, volumes dropped 1%, while capacity rose 0.8%. Andrew Herdman, Director General of the Association of Asia-Pacific Airlines, said major regional airlines with separate cargo businesses are bearing the brunt of the slump in the industry since the 2008 global financial crisis. “The people who are really suffering in the cargo business are the ones operating big fleets of dedicated freighters, and that includes Singapore Airlines, Cathay Pacific, Korean Air, among others,” Herdman said. Singapore Airlines’ freight arm operates nine Boeing B747-400 freighters. Cathay Pacific has a fleet of 25 freighters, while Korean Air has 26, according to the carriers’ websites.
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