Page 11 - AAA MARCH - APRIL 2016 Online Magazine

FEATURE IATA

“Cargo has Been Disappointingly Weak”

Brian Pearce, Chief Economist at IATA see growth of 20 per cent. On the other end
speaks on the 2015 passenger and cargo of the spectrum, there are also some very
traffic weak markets for example as well. Brazil has
barely grown at all in 2015 and the African
AAA: How did the industry perform in airlines have also been struggling, growing by
2015? a little more than 3 per cent. As many other
Pearce: We had a very strong end to markets were affected by not only conflict
2015 for air travel and cargo was up too and unrest but also the African airlines have
but nowhere near as strong. For the year been struggling to be competitive in many
as a whole we saw growth in air travel other markets.
markets if you measure it by passenger
kilometers flown of 6 and a half per cent Brian Pearce, Chief Economist at IATA AAA: What is the reason for the poor
which is a really strong year well above cargo performance, and what can we
the trend of 5 per cent. Cargo though travel than we’d expect given the relatively expect in 2016?
much weaker, we only saw a growth of 2.2 subdued economic backdrop. And that’s Pearce: Cargo has been disappointingly
per cent which is very disappointing after the key reason we are seeing such strong weak. It’s not that shippers are switching
a much stronger 2014. travel growth over the past year and the to other means of transport, air cargo has
beginning of 2016. managed to hold its share of world trade.
AAA: How has the fall in the oil prices The world trade itself has been very weak
affected travel costs? AAA: Has there been any regional and I think we are seeing a structural
Pearce: Well, the fall in jet fuel prices has variation in the demand for travel? change in the world here with much more
started to pass through in lower travel Pearce: The strongest areas of growth for weaker cross border trade given the
costs. Once hedging started to unroll it’s air travel have been in the Asia Pacific region economic growth we have got. We are
been delaying the impact of lower fuel and also the Middle East. Airlines from both seeing supply chains being shortened. I
prices. But that’s given an additional kick those regions have seen double figure or close think prospects are for a much slower
to air travel. It stimulated a lot of travel to double figure growth. The outstanding growth environment of air cargo. That’s
we are seeing much stronger growth in market has actually been India, where we the new normal for cargo.

forward with an e-freight transformation December, expanding just 0.1 per cent. For the declining by 6.2 per cent in December and
that will modernize processes and improve whole of 2015, the region grew 2.3 per cent. The by 6.0 per cent for 2015 as a whole. This was
the value proposition. The faster the industry FLF for 2015 was 53.9 per cent, the highest of the weakest performance of any region.
can make that happen, the better,” said Tyler. any region. Cargo expansion in the region has The average FLF for 2015 was 38.3 per cent.
been hampered by a shift in Chinese economic Economic and political conditions in Brazil
Regional Analysis in Detail policy to favour domestic consumption. A have worsened, and regional trade activity
The global freight growth rate in December mid-year fall of 8per cent in trade to/from has been volatile.
was 0.8 per cent compared to December emerging Asia also led to declines but this Middle Eastern carriers grew 4.0 per cent
2014. Within that range there were appears to have bottomed out, with a rebound in December and for 2015 in total the region
considerable regional fluctuations. in the second half of the year. expanded 11.3 per cent compared to 2014. The
African airlines FTKs declined by 8.4 per European airlines grew by 1.2 per cent FLF was 42.8 per cent for 2015. The region
cent in December although for 2015 as a whole in December but the performance for 2015 enjoyed a strong year as network expansion
the region grew by 1.2 per cent. The FLF in 2015 in total was a fall of 0.1 per cent compared into emerging markets was supported by
was 29.7 per cent, the lowest of any region. to 2014. The FLF in 2015 was 44.9 per cent. economic growth in local economies. Political
The underperformance of the Nigerian and Economic conditions in the Eurozone have instability and the fall in the oil price may
South African economies was a challenge been subdued, leading to suppressed impact on some economies in the region but
throughout the year, but trade growth to demand for air freight, but imports have growth as a whole remains robust enough to
and from the region was sufficient to drive a improved in recent months. support further expansion in 2016.
modest expansion in FTKs. Latin American carriers continued IATA represents some 260 airlines
Asia-Pacific carriers were basically flat in the weak performance of recent months, comprising 83 per cent of global air traffic.
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