IATA predicts stagnant air cargo and lower yields this year

IATA today sharply downscaled its outlook for the world air cargo business this year predictingvirtually flat volumes and lower yields for the world’s airlines but raised its overall profit

In its latest quarterly global outlook for airlines, the association said: “The cargo businesscontinues to suffer the brunt of the impact of the weak outlook in developed economies. Freightvolumes are expected to be basically stagnant at 52.1 million tonnes. Effectively, there has beenno significant growth since 2010 when freight volumes were 50.7 million tonnes. After a 6.3% fallin yields in 2012, we expect a further contraction of 2.0% in 2013 as capacity conditions remainmuch more challenging than in passenger markets.”

The forecast for a very low 1.5% rise in tonnage and a negative yield trend is a significantscaling back of how the airline association saw the cargo market in March. At that time, IATA saidthat this year “cargo demand is expected to grow by 2.7%, reversing the declining trend of the lasttwo years, while cargo yields are expected to be flat”.

But the air cargo market has remained weak in recent months and there is little sign ofimprovement in the coming months. In March worldwide air freight dropped 2.6% year on year whilethere was a 1.4% rise in April. In 2012, world air cargo demand dropped 1.1% and yields slumped by6.3%.

Brian Pearce, IATA’s chief economist, said at the organisation’s annual conference in Cape Town,South Africa, that cargo “is going nowhere” with an overall decline in freight-tonne-kilometressince 2010. Slight upturns had proved to be “false dawns” and both freight load factors andfreighter utilisation levels had dropped steadily over the last three years.

However, the overall picture is looking better for the world’s airlines thanks to strongerpassenger demand and lower oil prices. IATA has now upgraded its global financial outlook for 2013to a $12.7 billion profit. This is $2.1 billion better than the $10.6 billion profit projected inMarch of this year and an improvement on the $7.6 billion profit generated in 2012.

At a regional level, Asia-Pacific airlines are expected to post a combined profit of $4.6billion in 2013 thanks to passenger demand from China, Japan and other markets, more thanoutweighing weaker cargo demand. Airlines in North America, Europe, the Middle East, Latin Americaand Africa are also expected to improve profits this year.