Weakening air cargo demand and capacity additions continue to take their toll on Asian airlines
23 / 09 / 2015
Air cargo load factors at major Asian airlines declined in August as capacity additions and in many cases falls in demand conspired against the carriers.
The latest monthly statistics released by Air China, Cathay Pacific, China Southern, China Eastern, Eva Air, China Airlines and SIA Cargo showed that all seven airlines saw load factors decline last month.
The worst performing airline during the period was China Eastern, which for the first time since at least the start of 2013 has the worst load factor of the seven airlines monitored.
The Shanghai-headquartered company’s load factor now stands at 49.8%, compared with 60.1% a year earlier. The decline is largely the result of sudden double-digit year-on-year traffic declines over the last two months, although capacity additions have hardly helped its cause.
Source: companies. Notes: Eva/SIA = FTK; Air China/China Airlines/ Southern/Eastern = RFTK; Cathay = CMRTK
In August traffic declined by 11.6% compared with a year earlier to 375m revenue freight tonne km (RFTK), while capacity was up by 6%. It is the third month in a row the airline has recorded a year-on-year decline in traffic.
In terms of load factor, China Southern finished just ahead of China Airlines with a load factor of 50.9% compared with 53.2% a year earlier.
It is the first time since the start of 2013 that it has not finished bottom of the monthly load factor pile.
The reason for its decline in load factor is different to that of China Eastern as it recorded a market leading 17% year-on-year increase in traffic to 509m RFTK.
This, however, was not enough to outstrip a 22.1% increase in capacity.
Source: companies. Notes: Eva/SIA/Air China/China Airlines/Southern/Eastern = AFTK; Cathay = ACMTK
Air China also had another busy month with demand increasing by 16.7% compared with a year ago to 546m RFTK. While this is above market, it is the lowest year-on-year increase the airline has recorded since August last year.
Air China Cargo’s current freighter fleet consists of seven Boeing 777Fs, three Boeing 747-400Fs, and four Boeing 757-200SFs.
The last B777F ordered by Air China Cargo will be delivered this year, making it the largest cargo airline in China.
The busiest airline in Asia, Cathay Pacific, had a calmer month than some of its rivals as it saw August traffic increase by 0.5% to 861m cargo/mail revenue tonne km while supply was up by 3.5% resulting in its load factor slipping to 53.2% from 56.7% a year earlier.
Cathay Pacific General Manager Cargo Sales & Marketing Mark Sutch said: “August is traditionally one of the quieter months for our air cargo business and that proved to be the case last month.
“We operated more capacity than in August 2014 but the tonnage carried improved only marginally while the load factor fell, highlighting the overall weakness of demand. Looking ahead we expect to see a traditional winter peak.
“In those markets where we face stronger competition and capacity growth, we have the ability to leverage strong network feed over our hub to maintain good loads on our long-haul trunk routes at a sustained yield.”
The two non-Chinese/Hong Kong airlines in the list both recorded demand declines in August: Eva Air saw cargo traffic slip by 12.3% year on year to 299m freight tonne km (FTK) while capacity was down 6.6% on a year earlier and load factor dipped below the 80% mark at 78.6%.
Singapore Airlines saw traffic slip by 0.2% to 520m FTK while capacity was up by 2.9% and load factor down to 59.5% from 61.3% a year ago.
China Airlines also recorded an August dip in traffic as it slipped by 5%, while space declined by the lower amount of 2%. As a result, load factor was down to 68.6% from 70.8% a year earlier.
August was also a tough month for European carriers, although capacity additions were not quite as high for these airlines.