APAA reports downward figures during March 2019

Preliminary traffic figures for the month of March released today by the Association of Asia Pacific Airlines (AAPA) showed growth in international air passenger markets, whilst air cargo markets contracted for the fifth consecutive month, against a backdrop of continued weakness in trade activity.

The region’s airlines carried an aggregate total of 31.7 million international passengers in March, a 3.4% year-on-year increase on top of the double-digit growth recorded in the same month last year. In revenue passenger kilometre (RPK) terms, demand grew by 2.4% whilst available seat capacity expanded by 4.2%, leading to a 1.4 percentage point decline in the average international passenger load factor to 80.0% for the month.

Cargo capacity sees 1.1% increase

Air cargo demand as measured in freight tonne kilometres (FTK) declined by 3.2% in March compared to the same month last year, with the ongoing weakness in demand for intermediate goods and corresponding fall in new business orders affecting air cargo shipments. Offered freight capacity increased by 1.1%, resulting in a 2.8 percentage point decline in the average international freight load factor to 62.4% for the month.

Commenting on the results, Mr. Andrew Herdman, AAPA Director General said, “During the first quarter of the year, the number of international passengers carried by the region’s airlines grew by 5.3% to a combined total of 93 million. Intra-regional and inter-regional markets remained relatively robust, supported by continued growth in both business and leisure travel markets.”

Asia Pacific airlines continue to face squeezed margins

“On the other hand, air cargo demand fell by 5.6% during the same period, reflecting cautious market sentiment linked to unresolved trade tensions, particularly between the United States and China.” Looking ahead, Mr. Herdman said, “Prospects for air travel markets remain positive, on expectations of continued moderate growth in the global economy. The ongoing shift towards air cargo for e-commerce shipments of consumer goods should provide some level of support to air cargo demand, although prevailing conditions remain weak.”

Mr. Herdman added, “Having faced increasing headwinds to operating conditions, many of the region’s carriers saw a deterioration in earnings performance last year. Higher fuel and labour costs led to a squeeze in margins, despite continued growth in demand and some improvements to airline yields. Overall, Asia Pacific carriers continue to respond to an intensely competitive marketplace, actively implementing strategic initiatives and pursuing avenues for growth to sustain profitability.”