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IATA optimistic after 2012 market decline

By control on February 1, 2013

IATA says the global air cargo market shrank by 1.5 percent in 2012, a second successive year of decline following a 0.6 percent contraction in 2011. Freight capacity was almost unchanged, growing by 0.2 percent over the year, but the load factor was just 45.2 percent.

The disappointing figures were in sharp contrast to a 5.3 percent year-over-year increase in passenger demand.
“Passenger growth and high aircraft utilization combined to help airlines deliver an estimated $6.7 billion profit in 2012 despite high fuel prices. But with a net profit margin of just 1.0 percent, the industry is only just keeping its head above water,” commented Tony Tyler, IATA director general and CEO.

“The air cargo industry suffered a one-two punch. World trade declined sharply. And the goods that were traded shifted towards bulk commodities more suited for sea shipping. The outstanding bright spot was the development of trade between Asia and Africa, which supported strong growth for airlines based in the Middle East (14.7 percent) and Africa (7.1 percent).”

The IATA data shows that Asia-Pacific airlines, the largest airfreight players, saw traffic fall by 5.5 percent as a result of the slowdown in demand from Western markets, and cut capacity by 2.4 percent.
European and North American carriers reported falls in freight demand of 2.9 percent and 0.5 percent respectively.

“We are entering 2013 with some guarded optimism. Business confidence is up. The Eurozone situation is more stable than it was a year ago and the U.S. avoided the fiscal cliff,” Tyler said. “Significant headwinds remain. There is no end in sight for high fuel prices and GDP growth is projected at just 2.3 percent. But improved business confidence should help cargo markets to recover the lost ground from 2012.”

In its outlook for 2013 released in December, IATA projected that 2013 would see 4.5 percent growth in passenger markets and 1.4 percent growth for cargo demand. If realized, these figures would bring an estimated improvement in airlines’ net profit margin to 1.3 percent this year.

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