Asia-Pacific carriers experience robust cargo growth, higher yields, in 2017

With major manufacturing economies in the Asia-Pacific region benefitting from increased trade activity, the area’ airlines reported a robust 9.6 percent jump in international air cargo traffic as measured in freight tonne kilometers (FTK) for the year, according to preliminary aggregated financial performance figures released over the weekend by the Association of Asia Pacific Airlines (AAPA).

Total cargo revenue increased significantly, by 14.6 percent, to US$18.6 billion, compared to 2016, AAPA said. After several years of contraction cargo yields, that figure rebounded in 2017, with 6 percent growth last year to 25 cents per FTK.

Costs also rose sharply in 2017, AAPA reported. Combined operating expenses rose by 8.7 percent to US$165.0 billion for the year, compared to 2016, led by fuel costs, which ballooned by 19.6 percent to an aggregate of $40.6 billion. Jet fuel prices climbed 24.5 percent throughout 2017 to average $65.4 per barrel today. Non-fuel expenditures also increased by 5.6 percent to $124.4 billion, which corresponded to higher traffic volumes.

Andrew Herdman, AAPA’s director general said, “Overall, Asia Pacific carriers, as a group, achieved commendable earnings performance in 2017.” However, Herdman added, “Nevertheless, the region’s airlines continued to face some significant headwinds in the form of stiff competition, and increased cost pressures from markedly higher fuel prices and rising labor costs.”

For the full year, AAPA found that Asia-Pacific carriers earned US$8.8 billion in combined net earnings, including both passenger and cargo business, thanks to a strengthened global economy saw that boosted travel demand and global trade activity. Meanwhile, capacity additions were modest, which raised airline yields. The carriers reporting to AAPA achieved an average of 6.7 percent growth in combined operating revenue to $176.6 billion in 2017.

Herdman remained positive about the long-term outlook of Asia-Pacific carriers: “The ongoing expansion in the global economy bodes well for Asian airlines. Business activity is expected to remain relatively robust whilst increased consumer spending should underpin further growth in passenger travel and continue to support air cargo demand in the coming months.”