Asia-Pacific airlines grow cargo revenue, yields in 2018

Despite slower growth in air cargo demand, airlines in the Asia-Pacific region generated US$21.2 billion in cargo revenue in 2018, 11.5% higher than 2017, and increased their yields by 8.9%, year-over-year, to US$0.27 per freight tonne kilometer (FTK), according to preliminary financial performance figures released by the Association of Asia Pacific Airlines (AAPA).

The association’s data also showed that growth in international air cargo traffic from its member airlines, measured in FTKs, fell to 2.2% for 2018, compared to the previous year. This was due to uncertainties related to unresolved international trade disputes adversely affecting business confidence and export activity, AAPA said.

While overall operating revenues rose by 10.4% to $204.7 billion, operating expenses also increased by 12.5% to $194.6 billion for the year. Aggregated net earnings for the region’s airlines halved to a total of $4.7 billion in 2018, AAPA reported, mainly because of challenges including a 27.5% jump in fuel prices, foreign currency movements and non-fuel cost items.

“Asian airlines are operating in highly competitive markets and were not able to pass on the full cost impact of significantly higher fuel prices we saw in 2018,” said Andrew Herman, director general of AAPA. “Consequently, overall operating margins narrowed to 4.9% for the year, from 6.7% in 2017.”

He added that Asia-Pacific airlines will continue to face significant headwinds in the form of persistent cost pressures and stiff competition, as well as further volatility in oil and currency markets. “Whilst air passenger markets remain relatively resilient, the weak sentiment surrounding air cargo markets is a warning signal that trade disputes are doing real damage to the economy and could further undermine global growth prospects going forward.”