Credit crunch nibbles on cargo volumes

Malaysia – Airliners should brace themselves for an even tougher time in the next few months as September cargo traffic volumes plummet, said the Association of Asia Pacific Airlines.

AAPA said the aviation industry is being hit by repercussions from the global economic slowdown, as international air cargo traffic in September fell 9% in FTK (freight ton kilometre) terms.

The average cargo load factor also fell 1.6 percentage points to 66.4%, despite a 7% reduction in capacity.

Commenting on the results, Andrew Herdman, director general of AAPA said, "We have seen a sharp deterioration in the operating environment in the past few months. Air cargo demand slumped in the summer and is still falling, even though this is normally the peak shipping season."

Airlines are expected to take all possible steps to stay afloat, including reviewing capacity adjustments and making sure that fares remain competitive.

However, Herdman believes players in the industry should brace themselves for a very rough ride over the next few months as the global economic slump hits home hard.

"The global financial crisis is now being felt in the real economy, with rapidly weakening consumer confidence affecting markets across the world. Lower oil prices are certainly welcome, but will not compensate for the expected revenue shortfall," said Herdman.