IATA: Volumes forecast to strengthen in 2015

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Airfreight volumes are forecast to rise in the first quarter and for the remainder of 2015, compared last year, according to the International Air Transport Association’s (IATA) confidence index.

The association released its Airline Business Confidence Index April survey, on Friday 17 April. The survey gained responses from airline chief financial officers and cargo heads about traffic performance during the first three months and the rest of the year.

IATA explains that the survey results are consistent with first quarter data, which shows freight tonne kilometres (FTK) are increasingly robust, particularly for carriers, in the North America and Asia Pacific regions.

“The survey found that 50 per cent of respondents see an improvement in cargo volume over the last three months. But, over the next 12 months, the number seeing an improvement in cargo volume increases to 62.5 per cent,” IATA says. However, this figure of 62.5 per cent of respondents is lower than the proportion in January of 71 per cent, IATA states.

The report says key indicators suggest that world trade and business activity should continue to expand at moderate levels, which should in turn sustain growth in airfreight volumes.

Respondents in the survey also said that cargo yields likely declined in the first quarter. Fuel hedging has also meant some airlines are not yet benefiting fully from lower fuel prices. IATA says yields could further decline once airlines start buying fuel at the $60 barrel market prices that are lower than their previous hedged purchases. The association adds that results of the April survey also suggest that yields will fall during the year ahead. IATA also explains that the survey found, “airline profitability continues to improve,” after a period of no gain in financial performance during the middle of 2014.

In the survey, respondents also said they are seeing a decline in input costs in the first quarter, compared to the same period in 2014. This, IATA says, was due to lower crude oil prices and this trend is expected to continue during the year ahead. IATA explains: “Recent past financial performance shows improvement on a year ago, and the outlook remains positive, which suggest there will be further growth in profitability.”

The report says that falling airline input costs and growth in volumes, are responsible for the better financial performance by carriers as well the positive outlook. IATA says that profit expectations for the year ahead, “remain positive”.

The survey follows on from IATA’s February-March Airlines Financial Monitor published two weeks ago, which said airfreight volumes had increased strongly in February compared to January. The association sampled 66 airlines and February’s FTK had risen by 11.7 per cent, compared to the same month in 2014. This FTK growth was driven by Asia Pacific, which was up 20 per cent, the Middle East, up by 17.6 per cent and North America up by 8.7 per cent.

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