Cargo is the bright spot in Cathay’s “disappointing” first half

At the end of the first quarter of 2017, Cathay Pacific CEO Rupert Hogg said he expected  the operating environment to remain challenging for the rest of the year. Three months later, looking at Cathay’s operating results through June, he summed things up by saying: “Our airlines’ performance in the first half of 2017 continued to be disappointing. In particular, strong competition from other airlines put intense and increasing pressure on passenger yield and revenue.”

But, while passenger traffic has hardly grown from 2016, cargo has become a bright spot for Cathay Pacific and sister carrier Cathay Dragon. After a year of no growth in 2016, Cathay reported cargo traffic for the first half of 2017 up 8.9% to 544 billion RTKs, with a particularly strong performance in June, when cargo traffic was up 11.3% y-o-y to 974 million RTKs – its second-best gain this year.

Discussing the results, Cathay’s General Manager Cargo Sales & Marketing Mark Sutch said: “Our cargo business remained robust throughout June and the overall tonnage was healthy. The new Tel Aviv service has built good air freight demand and we received an overall boost from shipments of fresh produce, specialty goods, toys and automobile parts between Asia and the United States. Furthermore, our two wet-leased freighters are now operating at full capacity and are generating good revenues on North American routes. Looking ahead, the airfreight market remains strong and this should continue through to the start of the traditional high demand season in September.”

It is true that demand for air freight has been growing strongly worldwide this year, so it would be surprising if Cathay were not doing well. But we point out that Cathay is outperforming all but one of its main Asian rivals so far this year. As can be seen in the chart at right, the only major Asia-based cargo carrier to report stronger cargo growth, for both June and the first half, has been Cathay’s Pearl River Delta neighbor, China Southern Airlines.

Looking ahead, it appears that the trend of strong demand for air freight will continue in the third quarter, but what about beyond that? If you are interested in hearing some of the most respected voices in the air freight industry discussing the subject of what comes next, join us at the Cargo Facts Symposium in Miami, 2 – 4 October.To register, or for more information, go to CargoFactsSymposium.com.