Cost cutting continues at Asian airlines despite traffic growth

25 / 05 / 2017

Airlines based in the Asia Pacific region enjoyed cargo traffic growth of 9% in April as export orders from the region continued to surge, but carriers continue to cut costs to meet rising costs.

The latest figures from the Association of Asia Pacific Airlines (AAPA) (see table at end of article) showed that traffic in freight tonne km terms continued to improve in April as strong international demand caused business conditions to continue to improve across economies in the region.

While traffic improved by 9%, capacity grew by the more modest amount of 2.8% and as a result the average international cargo load factor improved by 3.7 percentage points on last year to hit 65.1%.

AAPA director general Andrew Herdman said: “[Over the first four months] Asian airlines recorded a solid 9.5% increase in air cargo demand, supported by a pick-up in export orders across the region’s economies.

“Business and consumer confidence indicators remain positive and underpin expectations of continued growth in air passenger and cargo markets in the coming months.

“However, the impact of rising fuel and staff costs are a concern, particularly as airfares have remained low in an intensely competitive environment.

“Nevertheless, Asian airlines remain proactive in reviewing their operations, implementing cost-cutting measures and streamlining business processes, with the aim of improving efficiency and sustaining profitability.”

The level of cost cutting amongst Asian airlines was evident earlier this week when the region’s biggest carrier Cathay Pacific announced plans to axe 600 headquarter jobs. It has also cut the cargo director role.

Meanwhile, Singapore airlines announced last week that SIA Cargo would be rolled back into the parent company to improve efficiency through greater synergy with the wider group

And rumours continue to circulate that some of China’s major airlines could be merged, with their cargo units spun-off as separate entities.