IATA: Air freight up 22.7pc in July, but growth slowing

GLOBAL air freight volume increased 22.7 per cent in July year on year, and was four per cent better than pre-recession levels - but it still fell short of June's record 26.6 per cent jump, reported the International Air Transport Association (IATA).

"Recovery in demand has been faster than anticipated. But as we look towards the end of the year, the pace of the recovery will likely slow," said IATA director general and CEO Giovanni Bisignani:

July numbers were lower because air volumes had already started to recover by July 2009. "Improvement in demand was faster month to month in July than it was in June," the statement said.

Annualised growth rate for the July year to date was down to 17 per cent for air cargo compared to 28 per cent in the second half of 2009. But it was still higher than the traditional six per cent growth, the IATA said.

While European carriers saw a 12.1 per cent year-on-year increase in July freight demand, Asia-Pacific carriers witnessed a 25.3 per cent increase over July 2009 and North American carriers recorded a 27.1 per cent uptick.

Cargo traffic is forecast to slow down in the second half of this year, as inventory restocking that brought "extraordinary" growth in late 2009 and early 2010 is complete. Although consumer spending and business capital are expected to be new drivers of air freight demand, "the jobless economic recovery is keeping consumer confidence fragile, particularly in North America and Europe. This is affecting leisure markets and cargo traffic."

But the silver lining is improved profits that promote capital expenditure and thus freight growth, said the IATA release.

Said Mr Bisignani: "Improving demand is an important component of the recovery. But it must translate to the bottom line. The anticipated 2010 profit of $2.5 billion is only a 0.5 per cent return on revenues. Hence, the financial situation of the industry remains fragile. We must go beyond recovery to secure sustainable profitability at levels exceeding the seven to eight per cent cost of capital. For this, we need a change in the industry's structure."

He also stressed that "costs are a critical" and regulatory structures that enable consolidation across political borders are required. "The crisis has seen consolidation in Europe and the US. But we remain an industry of over a thousand players with only very limited opportunities to consolidate as a result of the antiquated bilateral system's restrictions on ownership.

"The business realities of the industry are changing. It is critical that governments find a modern regulatory structure that is free of outdated ownership restrictions and able to facilitate opportunities for consolidation globally - something that other industries take for granted," he said.
(Source:www.schednet.com)