International air cargo FTKs down 5%, the steepest fall since the global financial crisis, as cargo revenue declined 14.5%
Asia Pacific airlines recorded $3.8bn in combined net earnings in 2019, a 25% decline compared with 2018 according to preliminary financial performance figures released by the Association of Asia Pacific Airlines (AAPA).
Profitability was impacted by intense competition adding downward pressure on yields, whilst air cargo demand was significantly affected by the escalation of trade disputes, including tit-for-tat trade tariffs between the US and China.
Overall, against the backdrop of a slowing global economy, Asia Pacific airlines saw international passenger traffic as measured in revenue passenger kilometres (RPK) moderate to a 4.2% increase in 2019, following a strong 7.2% growth in 2018.
International air cargo traffic as measured in freight tonne kilometres (FTK) declined by 5% for the year, marking the steepest fall since the global financial crisis.
AAPA said that air cargo markets were “adversely affected” by a combination of lower demand and corresponding downward pressure on freight rates.
“As a result, cargo revenue fell significantly, by 14.5% to a combined total of $18.4bn in 2019, reversing the double-digit gains achieved in the preceding year. Asian airlines bore the brunt of the escalation in trade tensions, as they collectively account for over one-third of global air cargo traffic.”
Commenting on the 2019 financial results, AAPA director general Subhas Menon said: “International passenger traffic on Asia Pacific airlines set new records in 2019, but the operating environment became increasingly challenging. The average profit was just $4 per passenger flown, slimming net margin to a meagre 2%.”
Menon reflected: “Given the current crisis, it is sobering to look back on a time when we all took safe and affordable air travel for granted, and Asian airlines were carrying over four million passengers a day. Since the end of January 2020, that number has plunged dramatically as almost all countries introduced lockdowns and severe restrictions on international travel.
“Airlines have been forced to ground thousands of aircraft and are currently operating only skeletal networks to meet demand for repatriation flights as well as for shipments of medical supplies and essential goods.”
Menon concluded: “Airlines worldwide are fighting for their very survival, given the collapse of demand. Hopes of a V-shaped recovery have waned. It may take years for the industry to recover to pre-COVID levels. Nevertheless, the early restart of aviation will spur global recovery from the current crisis.
“To this end, the Asia Pacific aviation community is committed to working closely with governments, public health authorities, and other international bodies in charting a course for a timely and measured restoration of air services.”
