Asia Pacific gets stronger

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Rising freight tonne kilometres (FTK) for the Asia Pacific airlines in July could be indicating a return to stronger growth for the region which has seen a slow down in the first six months due to China.

According to the Association of Asia Pacific Airlines’ (AAPA) latest traffic figures, July saw 5,392 million FTK compared to 5,278 million last month and the July figure is 6.4 per cent higher than the same month in 2013.

June had seen a 4.7 per cent increase over the same month in 2013 and a rise of just 71 million FTK, compared to May this year. June saw 5,278 million FTK and May this year 5,207 million. 

About the July results, AAPA says: “International air freight demand grew by 4.9% during the same period, marking a long overdue recovery in trade volumes after several years of weak global demand.”

The association adds that July is the third month when demand growth was greater than capacity increases. The load factor went up two percentage points to 65.3 per cent, comparing July 2013 with this year. The available freight tonne kilometres (AFTK) rose 3.2 per cent. 

AAPA concludes that increasing demand for exports from regional manufactuirng hubs is driving what it sees as accelearted freight growth. Despite the more positive picture, AAPA director general Andrew Herdman warns: “Asia Pacific airlines are still facing very challenging business conditions, with additional capacity placing further downward pressure on fares and yields. As a result, revenue growth has been lacklustre, and profitability remains elusive for many of the region’s carriers.”

Last month, the International Air Transport Association (IATA) pointed to an expansion in Chinese manufacturing since December as a reason for what it saw as volume growth of 4.9 per cent for Asia Pacific. Just as AAPA warned last week about lacklustre revenue growth and profitability remaining elusive, earlier in August IATA referred to Chinese carriers burdened by a weak currency in the renminbi and fuel prices remainng stubbornly high.

In June, AAPA reported on May growth that occure despite high fuel costs. Cargo demand grew 4.4 per cent, compared to the same month in 2013, according to AAPA back in June. At the time Herdman said that, “the recent jump in oil prices abov the $110 mark is another cause for concern. Asian carriers continue to carefully manage capacity…keeping a tight rein on costs to maintain profitability.” Compared to the first half of 2013, carriers saw a 55 per cent fall in profits to $2.5 billion this year with Air China being one example of worsening finances (see page six). While growth comparisons have jumped from 4.7 per cent between this June and June 2013 to 6.4 per cent between July 2014 and the same month last year; April to May this year saw just five FTK more, according to IATA.

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