Overcapacity puts the brakes on Asian cargo carriers growth
Asia-Pacific carriers, which have nearly 40pc of the global freight market, saw volumes drop 1pc
Top Asian airlines' profit margins are being eroded by a struggling air cargo business, even as they capitalise on increasing passenger demand, industry executives said over the weekend.
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 before the Singapore Airshow which opens today.
"The biggest worry of the airline industry right now is probably cargo," Tony Tyler, director general of the International Air Transport Association (Iata), said.
The biggest worry of the airline industry right now is probably cargo
"For the big airlines in this region, it is a very important component of their revenue mix."
Last week, Iata said air freight traffic rose 1.4 per cent last year from the previous year, supported by rising activity from Middle Eastern and Latin American carriers.
However, at Asia-Pacific carriers, which have nearly 40 per cent of the global freight market, volumes dropped 1 per cent, while capacity rose 0.8 per cent.
Passenger demand rose 5.2 per cent, while capacity rose 4.8 per cent. Bigger planes are catering for a growing number of passengers.
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.