Slide in air cargo eases

IATA    AIR FREIGHT VOLUMES    AIR CARGO

Global - The decline in air cargo volumes eased in August,but profitability remains distant, said the International Air Transport Association (IATA).

According to the association's August figures, there was a 9.6% decline in freight volume. This is a 1.7% improvement compared to the 11.3% drop registered in July this year.

According to IATA, airlines have reduced daily aircraft utilisation in recent months to match capacity with demand. However, while lower utilisation was positive for load factors, spreading fixed asset costs over fewer hours in the air increases operational costs.

Giovanni Bisignani, director general and CEO of IATA said demand for air freight continues to improve, although profitability remains distant.

"Fares have stabilised, but at profitless levels. Meanwhile cost pressures are mounting from reduced aircraft utilisation and rising oil prices. The industry is not out of the woods yet," said Bisignani.

Compared to the low point of December 2008, seasonally adjusted freight demand has improved by 12%, but remains exceptionally weak at 16% below April 2008 levels when the fall in demand began, said IATA.

For the month of August, Asia Pacific carriers, representing 44% of the global freight market, witnessed year-on-year demand improve marginally from -9.5% to -9.0% compared to July.

"Even with improving demand, there are few bright spots in the industry. This must point us to the need for some fundamental re-thinking. At the top of the list for change are the industry's antiquated rules of the game which restrict access to markets and to international capital. Liberalisation of ownership rules could be a lifeline for airlines as we approach a difficult fourth quarter," said Bisignani.

For 2010 IATA predicts that international freight will grow 5.5% on average compared to an expected full-year decline in 2009 of 14.5%.

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