Asia-Pacific cargo lift rises in 2016, but revenue, yields plummet

Cargo volume growth in the Asia-Pacific region gave some carriers optimism in 2016, but the increase in tonnage did not translate into higher revenues or yields, according to the preliminary assessment of the year by the Association of Asia Pacific Airlines (AAPA).

International air cargo traffic, expressed in freight tonne kilometers (FTK), grew by 1.3 percent in 2016, thanks to an increase in export activity in the second half of the year. Despite this volume growth, cargo revenue fell by 9.8 percent to US$16.2 billion, as air cargo yields plummeted by 11 percent to 22.9 cents per FTK.

Collectively, the 24 Asia-Pacific airlines represented by AAPA reported operating revenues of $165.3 billion in 2016, a slight 0.3 percent dip, compared to the $165.8 billion figure from 2015. Combined operating 2016 expenses for the carriers totaled $151.8 billion, which was about even with 2015. This left Asia-Pacific airlines with $6.9 billion in aggregate net earnings for the full year – excluding exceptional items – which were virtually identical to the 2015 figure.

AAPA said the operating expense results reflected the 17.7 percent drop in global jet fuel prices to an average of $52.60 per barrel. This lowered the share of fuel expenditure as a percentage of total operating costs by 4.5 percentage points to 22.2 percent. However, these savings were offset by non-fuel expenditures, which rose by 6.1 percent to $118 billion.

“Asia Pacific carriers achieved another year of respectable earnings in 2016,” said an upbeat Andrew Herdman, director general of AAPA. “Continued growth in passenger demand and the pickup in air cargo markets, with significantly higher load factors during the first quarter, give some cause for optimism for the remainder of this year.”

Herdman added, however, that “the operating environment remains challenging” and noted that “the strengthening of the U.S. dollar against many Asian currencies affected revenue performance and increased the burden of dollar obligations for a number of carriers.”