IATA: overcapacity on the up, yields declining

IATA has warned that air cargo’s financial performance “remains poor and does not deliver adequate returns for investors”.
The airline association’s 2015 first quarter Cargo eChartbook, while seeing continued positive demand for airfreight commodities, states that overcapacity has resulted in lower load factors and placed downward pressure on yields.
Lower jet fuel prices may provide “temporary relief” to some carriers but are not expected to have a lasting impact on cargo business profitability as jet fuel price reductions will be passed on to consumers.
“If lower jet fuel prices persist, it will help boost demand for air cargo services but a favorable impact on financial performance on the cargo business will only be achieved if coupled with capacity discipline.”
IATA adds: “Underlying economic demand drivers remain positive and business confidence continues to signal expansion in manufacturing activity but with dampened expectations.
“Risks remain high as deepening of the Russian-Ukraine crisis, uncertainty in oil price, turmoil in the Middle East and continued concerns around sovereign debt of European Union member states weigh on confidence.
“However, continued positive demand for airfreight commodities, as indicated by expansion in semi-conductor shipments, are a potential source of optimism for the year ahead.”