June – an odd month

We have now passed the halfway point of 2015, and while we feel reasonably confident in predicting that, when the final numbers are in, worldwide air freight demand growth in June will be quite low, the results vary wildly from region to region, and even within regions.

Consider Asia. When we reported Pactl’s 7.2% y-o-y increase earlier this month we wondered if it was an indicator of any general trend. But with results varying from a 24% gain at Air China Cargo to an 18% loss at EVA Air, it is clear that there is no trend.

Or Europe and the Middle East. The big three European combination carriers continued to struggle, but Turkish Airlines posted a double-digit volume increase, and we expect the region’s two big all-cargo carriers, AirBridgeCargo and Cargolux, will continue their recent pattern of double-digit gains. And while the Middle East-based carriers haven’t published their results yet, we note that Qatar Airways just announced that it had acquired a 747-400 freighter to allow it to keep up with soaring charter demand. More detail on the struggles of the big three combination carriers is available here.

Likewise, in the Americas, LATAM and Delta Air Lines reported steep year-over-year declines, while American Airlines and United Airlines saw solid, if unspectacular, gains.

Now for the details…

Asia Pacific

Cathay Pacific Airways reported June cargo traffic up 2.2% y-o-y to 836 million RTKs. This is a smaller year-over-year increase than last month’s 9.5%, but continues Cathay’s mixed pattern of very strong growth in some months, and much more modest growth in others. For the first half of 2015, Cathay’s cargo traffic was up 10.5% to 5.11 billion RTKs. Commenting on the June results, Cathay Pacific General Manager Cargo Sales & Marketing Mark Sutch said: “Growth in the cargo markets has been softening as the year has progressed and we saw a continuation of this trend in June. Last month’s tonnage growth was almost flat year on year and fell well short of the increase in capacity in percentage terms. Traffic out of the home market was generally steady but demand out of Mainland China was more sporadic, and was again affected by strong competition. Leveraging our strong network in Southeast Asia helped maintain traffic flows on our trans-Pacific services and we did not trim capacity on these lanes. Conversely, demand from Asia to Europe remained weak and we pared back freighter services on these routes, relying instead on our extensive passenger aircraft belly lift.

Beijing-based Air China reported June cargo traffic up strongly – 23.7% y-o-y to 560 million RTKs. This is the carrier’s eleventh consecutive month of double-digit cargo traffic growth, and cements Air China’s position as the undisputed leader, in terms of cargo traffic growth, among the big Asian carriers. The June growth was driven by a 29.4% increase in international traffic to 431 million RTKs, while domestic traffic rose 9.3% to 120 million RTKs. For the first half of 2015, Air China’s cargo traffic was up 23.5% to 3.17 billion RTKs.

Guangzhou-based China Southern Airlines reported June cargo traffic down 0.9% y-o-y, to 453 million RTKs. International traffic was up 1.2% to 321 million RTKs, but this was not enough to overcome a 5.7% decline in domestic traffic to 130 million RTKs. For the first half of 2015, China Southern’s cargo traffic was up 10.5% to 2.57 billion RTKs.

Shanghai-based China Eastern Airlines reported June cargo traffic down 5.7% y-o-y to 373 million RTKs, China Eastern’s international cargo traffic in May was down 12.0% to 282 million RTKs, while domestic traffic jumped 25.6% to 81 million RTKs. This June performance was not at all in line with the carrier’s first five months, which mostly saw solid gains. For the first half of the year, China Eastern’s cargo traffic was up 5.3% to 2.42 billion RTKs.

Taiwan-based EVA Air reported June cargo traffic down 18.1% y-o-y to 295 million RTKs. When looking at this decline, remember that EVA is in the process of downsizing its freighter fleet, and cargo capacity was down over 16% from May 2014, and therefore cargo load factor fell just 1.4 percentage points to 84.0%. For the first half of 2015, EVA’s cargo traffic was down 6.4% to 1.826 billion RTKs.

Shanghai Pudong International Airport Cargo Terminals Co. Ltd (Pactl, the biggest cargo handler at PVG): reported its June handle up 7.2% y-o-y to 130,000 tonnes. International volume was up 6.2% to 121,000 tonnes, while the much smaller domestic volume jumped 24.3% to 9,000 tonnes. For the first half of 2015, Pactl’s handle was up 10.9% to 762,000 tonnes.

Europe & Middle East

Lufthansa Cargo reported June traffic down 0.9% y-o-y to 715 million RTKs. For the Lufthansa Group as a whole, May cargo traffic was down 1.3% to 844 million RTKs. The decline came as a modest 2.1% gain on the trans-Atlantic lane could not compensate for a 3.3% decline on the Asia-Pacific lane. The June decline continues a trend of slight year-over-year declines that began 18 months ago, and leaves Lufthansa Cargo’s traffic for the first half of 2015 down 0.4% from 1H14 at 4.14 billion RTKs. For the Lufthansa Group, cargo traffic through June was down 0.6% to 4.93 billion RTKs.

Cargo woes continue at Air France-KLM, which reported June cargo traffic down 6.6% y-o-y to 749 million RTKs. While not a strong result, the June decline was at least not as bad as the double-digit declines of the previious two months, but nonetheless leaves the carrier’s cargo traffic down 9.7% for the first half of 2015..

International Airlines Group reported June cargo traffic down 6.1% y-o-y to 416 million RTKs. A strong performance at subsidiary carrier Iberia, which saw cargo traffic increase 11.1% to 80 million RTKs, was not enough to compensate for a 9.4% drop at IAG’s larger British Airways subsidiary to 336 million RTKs. For the first half of 2015, IAG Cargo’s traffic was down 3.2% to 2.61 billion RTKs.

Turkish Airlines reported June cargo volume up 11.3% y-o-y to 63,000 tonnes. This is the second month of double-digit growth after the carrier started the year with four months of low-single-digit gains, and leaves Turkish’s first-half volume up 7.1% to 347,000 tonnes.

Frankfurt Airport (FRA) reported its June cargo handle down 2.5% y-o-y to 174,000 tonnes. For 2015 through June, FRA’s handle was down 1.8% to 1.04 million tonnes.

London’s Heathrow Airport (LHR) reported its June handle down 1.9% y-o-y to 123,000 tonnes. For the first six months of 2015, LHR’s handle was up 2.1% to 619,000 tonnes.

Americas

Cargo traffic continued to decline at Chile-headquartered LATAM Airlines Group, which reported June traffic down 9.9% y-o-y to 294 million RTKs. The company said cargo traffic was particularly weak in the Brazil domestic and international markets. For the first half of 2015, LATAM’s cargo traffic was down 11.0% to 1.89 billion RTKs.

United Airlines reported June cargo traffic up 3.4% to 306 million RTKs, continuing a period of growth growth that began in late 2013. For the first half, United’s cargo traffic was up 9.0% to 1.89 billion RTKs.

American Airlines Group reported June cargo traffic up 4.7% to 296 million RTKs. For the first six months of 2015, American’s cargo traffic was down 0.7% to 1.68 billion RTKs.

Delta Air Lines reported May cargo traffic down 9.9% y-o-y to 272 million RTKs. For the first half of 2015, Delta’s cargo traffic was down 1.9& to 1.60 billion RTKs.