Page 15 - AAA JANUARY - FEBRUARY 2015 Online Magazine

COVER FEATURE AIR CARGO MARKET

Compared to 1.5% growth in 2013, tight cost controls. The general outlook It estimated that “the second fastest-
the first half of 2014, averaged over 4%. for Asian airlines remains positive, but growing market, India, will experience a
However, challenges remain on both right now, I would say restoring margins compound annual growth rate ( CAGR) of
macro-economic and air freight industry is the key focus of management attention 6.8 per cent to add 622,000 extra tonnes.”
dimensions. across the industry,” he says. Apart from the uS and China, the
In the next 20 years, with GDP remaining eight largest international
Recovering Markets averaging 4.4 per cent growth annually freight markets would be the uAE
The u.S. seems to have recovered, but and income levels on the rise, Asia Pacific (4,974,000 tonnes), Germany (4,763,000),
several issues continue to plague Europe. is set to become the largest air travel Hong Kong (4,648,000), Republic of Korea
While Japan is yet to demonstrate the market in the world. (3,487,000), Japan (3,480,000), the united
effectiveness of the recent reforms, China In 2033, approximately 48 per cent of Kingdom (2,808,000), Chinese Taipei
is beginning its transformation, allocating global traffic will be to, from, or within the (2,350,000) and India (2,223,000).
more weight to its domestic market, Asia Pacific region, according to Boeing. Noting that global freight volumes
particularly in relation to package freight. The u.S.-based airframer predicts were expected to rise annually by 4.1 per
According to Airbus, “what is not more than 100 million new passengers cent over the next five years, it showed the
in doubt is that air freight is essential who are projected to enter the market largest air freight traffic share in 2013 was
to trade and without air services, time annually. By way of perspective, London within Asia Pacific (21.6 per cent), followed
sensitive or high value products would Heathrow handles 70 million passengers by Europe-Asia Pacific (12.3 per cent) and
not be as easily exchanged over oceans and Atlanta 95 million annually. North and Mid-Pacific (10 per cent).
and other geographical impediments. Its Boeing estimates that to accommodate IATA’s Tyler says more than uS$6.8
benefits mean that it transports 33 per growing demand, the region will need trillion worth of goods, equivalent to 35
cent of total trade in terms of value. 13,460 new airplanes, valued at $2,020 per cent of total world trade by value,
“Emerging region growth will boost billion. By 2033, the fleet will be three times would have transported around the world
new trade lines, especially “South to larger than it is today. Fast-growing LCCs by air in 2014.
South” trade flows which favour mid-size and rapid traffic growth within the Asia However, he warns that despite the
freighters thanks to their flexibility. High Pacific region drive a need for 9,540 single- positive picture, “the overall risks to the
fuel prices combined with belly capacity aisle airplanes. LCC market share in Asia economic outlook, and therefore to air
surge will redefine air freight networks,” is expected to grow from 15 percent today freight, remain towards the downside.
Airbus says. to 24 percent in 2033. Network carriers, Trade protectionism is a constant danger”.
According to the Association of Asia the mainstay of international long-haul air He quoted World Trade Organization
Pacific Airlines (AAPA), during the first transportation, will help drive demand for data to show that between November
seven months of the 2014, international 3,570 widebody airplanes. 2013 and May 2014 alone, 112 new trade-
airfreight demand for Asia Pacific airlines “Air cargo also plays a crucial role, restrictive measures were enacted by
grew by 4.9 per cent, “marking a long transporting goods over difficult terrain G-20 governments.
overdue recovery in trade volumes after and vast stretches of ocean. Many of the “Geopolitical concerns, volatility of
several years of weak global demand. world’s largest and most efficient cargo oil prices and competition from rail and
Andrew Herdman, AAPA director operators are located in Asia. The region’s sea could also affect this forecast. The air
general, says, “the sustained upward air cargo will grow 5.5 per cent per year. cargo industry certainly cannot afford to
trend in both international passenger Carriers in the region are expected to take be complacent,” Tyler says.
and cargo demand is very positive, and 360 new production freighters and 530
reflects continued growth in the emerging converted freighters,” Boeing says. Market in 2015
markets and a relatively stable global The air cargo industry will see a significant
economic outlook.” India Fastest Growing Market injection of additional capacity in 2015 as
Nevertheless, Asia Pacific airlines India has emerged as the second fastest new freighters and passenger planes are
are still facing very challenging business growing air cargo market after the delivered.
conditions, with additional capacity placing Middle East and is expected to grow at a The falling oil price will help carrier
further downward pressure on fares and compound annual rate of about seven per balance sheets, but it is also making air
yields. As a result, revenue growth has cent over the next five years, according to cargo cheaper. Yet the falling revenues
been lackluster, and profitability remains IATA forecast. appear to be arresting a steady loss of air
elusive for many of the region’s carriers. India would also be among the ten freight market share to ocean.
“Airlines are carefully reviewing their largest international freight markets by 2018 IATA says it is battling to transform the
existing fleet deployments and future led by the united States supplying 10,054,000 air cargo industry into a leaner, adaptive
capacity plans in the light of current tonnes and China with 5,639,000 tonnes, and innovative business as customers
market conditions, whilst maintaining IATA Industry Forecast 2014-2018 shows. become more sophisticated.
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