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Old June 12th, 2005, 10:20 PM   #1
hkskyline
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Air Cargo Conditions Souring in Some Markets - CAPA

Air cargo conditions souring in some markets, yields declining - CAPA
10 June 2005

SYDNEY (AFX) - Air cargo conditions are souring in some markets, the Center for Asia Pacific Aviation (CAPA) reported, citing a series of warnings from key carriers.

The Sydney-based aviation consultancy said difficult trading conditions in Europe and Australia are resulting in cargo overcapacity, causing sharp declines in yields, citing Cathay Pacific Airways.

Nevertheless, it said, the airline reported satisfactory cargo volumes in May despite the deterioration in trading conditions.

CAPA said the carrier has consistently warned in recent months that high fuel prices continue to erode margins and 'remain a concern' going forward.

It said Hong Kong Air Cargo Terminals Ltd continued to show strong growth in overall volume in May, with trans-shipment volumes rising a strong 30.4 pct year-on-year and reasonable export growth, up 6.7 pct in the same period, but import volumes were weaker, falling 7.9 pct year-on-year.

Meanwhile, CAPA said Thai Airways has scrapped plans to establish an air freight joint venture, originally scheduled to be operational by the end of June 2005, due to a pre-existing agreement with its labor union.

The agreement prohibits the airline from conducting business that its employees might have been able to perform.

The carrier will seek other ways to expand its freight and logistics operation, including leasing additional cargo capacity.
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Old April 7th, 2014, 02:39 PM   #2
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Asia's Full Service Airlines Continue to Struggle With Freight Overcapacity
2 April 2014
Dow Jones



HONG KONG--A strong start to the year for the world's air cargo market isn't helping Asia's full service airlines--many with large cargo operations--as they continue to struggle with overcapacity that weighs on freight rates.

Growth in global airfreight shipments accelerated to 3.6% in January and February from a year earlier, as broad economic recovery lifted demand, according to data issued Wednesday by the International Air Transport Association. That's compared with growth of just 1.4% for all of 2013, and a 1.5% contraction in 2012.

"There is good cause for measured optimism for the cargo industry's prospects in 2014," said Tony Tyler, chief executive at the airline industry's primary international trade group.

The latest data comes just weeks after IATA nearly doubled its 2014 air cargo growth forecast this year to 4% from 2.1%, signaling a turnaround after the industry lingered in the doldrums for nearly three years.

Nonetheless, air cargo shipments carried by airlines in the Asian-Pacific region, which account for nearly 40% of the global airfreight market, saw just 0.1% growth in February, slowing from the 3.8% on-year growth rate the previous month.

Though it expects stronger freight growth out of the region in the months ahead, IATA said that China's slowing economic growth could restrict expansion in trade demand.

Analysts say that cargo yields, a key measure of profitability, will remain under pressure for key full-service carriers in Asia as freight rates stay weak. Air cargo accounts for as much as a third of total revenues at some Asian airlines, significantly higher than those of their counterparts elsewhere in the world.

Five of the world's 10 biggest cargo airlines by shipments are units of Asian full-service carriers, including Hong Kong's Cathay Pacific Airways Ltd., Korean Air Lines Co., and Singapore Airlines Ltd.

Credit Suisse analyst Timothy Ross says he expects to see some recovery in Asia air cargo volumes this year, "but, that said, we're not looking for anything that resembles a V-shape recovery."

He does however expect cargo operations at the region's airlines to generally break even this year as many remained unprofitable in 2013. "But I won't be popping any champagne corks." He says Asia cargo demand growth will likely reach 2% to 3% this year, but that will be outpaced by capacity growth.

The pressure on yields is particularly acute as the region's airlines continue to boost capacity with new passenger planes as well as dedicated freighters. IATA estimates capacity grew at 3.9% in February for airlines in the Asian-Pacific region, even while demand grew at just 0.1%. That comes even as some airlines took some freighters out of service when demand was weaker.

The boost in cargo capacity is made more acute as new widebody aircraft, particularly the Boeing 777-300 extended range jets, have much more belly space below their passenger cabins for cargo. The 777-300 has nearly double the cargo space of the Boeing 747, even though its passenger count is lower.

Robert Kunen, director for Hong Kong and Southern China at Air France-KLM-Martinair Cargo, said the airline group this week cut one of its six weekly all-cargo flights between Hong Kong and Europe because of earnings pressure. He says freight rates remain under pressure because of overcapacity.

"We have lots of capacity to fill before we can really see [freight rates] go up," Mr. Kunen said. "We're opportunistic...if there's no demand we don't fly."
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