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Asian cargo growth stalls

By control on October 28, 2011

Freight traffic in the Asia-Pacific region continues to level off from its 2010 peak. Weakened markets in North America and Europe, coupled with the March earthquake and tsunami in Japan, have led to lower-than-average cargo volumes in the Asia-Pacific — a fact highlighted by Air China’s third-quarter decline.

Air China, which reported a 1.63-percent drop in revenue freight-tonne kilometers from July to September, also saw a decline in cargo and mail load factor. Falling 1.95 percentage points from the third quarter of 2010, cargo and mail load factor totaled 59.8 percent during this period.

Compounding this loss was Air China’s increased cargo capacity, which surged to 2.05 billion tonnes in the third quarter, a 1.58 percent, year-over-year, gain. Air China Chairman Kong Dong said these numbers, combined with the gloomy economic outlook, have signaled difficultly for the carrier’s freight operations.

“The slowing down of global economic growth, high oil prices, tight aviation resources for flight slots and routes, and competition from high-speed railways have created immense pressure for the company,” he said in a statement.

Cathay Pacific and subsidiary Dragonair’s September figures further validate Kong’s remarks. The Chinese carriers, which experienced a combined 10.1 percent, year-over-year, decline in freight traffic, only transported 131,443 tonnes of freight and mail last month.

Still, Cathay Pacific and Dragonair didn’t share Air China’s problem of increased capacity; available freight tonne kilometers and load factor fell 0.8 percent and 5 percent, year-over-year, respectively, in September.

The Association of Asia Pacific Airlines Director General Andrew Herdman blames the decreased tonnage in the Asia-Pacific on a number of factors. “A slowdown in export demand, as a result of ongoing the European economic crisis and softening North American economies, contributed to the fall in overall cargo traffic,” he stated.

Not that all hope is lost. Kong, for one, believes that the steady growth of the Chinese economy and rise of the middle class should increase commerce and, in turn, airfreight volumes. In fact, he projects that the Chinese aviation market will lead the world in growth.

It seems that China is also aiming to lead in sustainability. Air China, in conjunction with the Civil Aviation Administration of China and other worldwide partners, completed its first biofuel-powered flight on October 28. The one-hour flight was performed on Boeing 747 aircraft and completed as part of the Energy Cooperation Program’s Sustainable Biofuel Program, which was announced by the Chinese and U.S. governments in 2009.

He Li, senior vice president of Air China, points to the significance of this flight. “As one of the largest and fasting growing aviation markets, China needs to grow its aviation industry in an environmentally friendly and economical way,” he stated. “This flight is an important milestone for Air China and the aviation industry, as it demonstrates that aviation biofuels are viable and sustainable.”

Air China’s first biofuel-powered flight is also a bright spot in a year plagued with decelerating freight markets and natural disasters. The AAPA’s Herdman said further progression, including fleet modernization programs, will continue to propel operations in the Asia-Pacific.

“Notwithstanding the current challenges and uncertainty about the global outlook, optimism about future growth opportunities remains positive for Asia-Pacific carriers,” Herdman said in a statement. “This sentiment is underpinning ambitious fleet expansion plans, as well as the establishment of a number of new carriers of varying business models, including international partnerships and joint ventures.”

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