Sweet September

16 October note: We have added Cathay Pacific’s September cargo stats to both the chart and the detailed descriptions.

With data now coming in from many of the world’s major cargo carriers, handlers, and airports, it looks safe to say that September was another good month for the air freight industry. We will add results from the few remaining players as they come in, so check back over the next few days to see reports from Cathay Pacific, SIA, and the Hong Kong and Singapore airports.

Summary reports for August from IATA, WorldACD, and the Airports Council International will not be published for another two weeks, but the chart at right shows that earlier anecdotal evidence of strong demand in September was correct.

The wealth was not spread equally, though, as the big three Western European carriers continue to struggle (although in the case of Air France much of the blame lies with a strike by pilots). However, since Europe’s big airports show significant year-over-year increases, we believe that the three carriers are losing market share, not that the market is shrinking. And we expect that once the carriers in the Avianca group report their September results it will be clear that the region is seeing overall growth, with Avianca taking market share from LATAM.

Now for the details…

Asia-Pacific

Cathay Pacific Airways reported September cargo traffic up 16.3% y-o-y to 839 million RTKs. This is the seventh consecutive month in which Cathay has reported monthly year-over-year jumps of between 16% and 21% (after a flat January and February), and the carrier’s cargo traffic for the first three quarters of 2014 was up 14.5% to 7.18 billion RTKs. Commenting on the September performance, Cathay Pacific General Manager Cargo Sales & Marketing Mark Sutch said: “Demand out of Hong Kong and the key manufacturing regions in Mainland China and Southeast Asia continued to be strong in September, with traffic spurred by the launch of new consumer IT products in the market. Demand on the North American lanes remained strong and the Americas will remain the key focus of our cargo business as we move deeper into the peak season for airfreight. Demand to and from Europe continued to fall short of expectations.”

Beijing-based Air China reported September cargo traffic up 21.6% y-o-y to 544 million RTKs. The carrier has been reporting steady growth all year, but this a bigger-than-usual jump was driven by a 30.6% jump in international traffic to 401 million RTKs. Domestic traffic was almost flat with September 2013 (up just 0.2%) at 133 million RTKs. For the first three quarters of 2014, Air China’s cargo traffic was up 9.7% to 4.03 billion RTKs.

Guangzhou-based China Southern Airlines reported another month of strong air freight demand growth, with September cargo traffic up 21.7% y-o-y to 468 million RTKs. International traffic jumped 30.4% to 305 million RTKs, while domestic traffic was up 8.0% to 1162 million RTKs. For the year through September, China Southern’s cargo traffic was up 17.4% to 3.65 billion RTKs. While other Chinese carriers took advantage of increasing ex-China demand,

Shanghai-based China Eastern Airlines continued to miss the boat (so to speak), reporting September cargo traffic down 6.4%% y-o-y to 404 million RTKs. International traffic was down 5.2% to 310 million RTKs, and domestic traffic fell 11.1% to 84 million RTKs. For the first three quarters of 2014, China Eastern’s cargo traffic was down 0.5% to 3.54 billion RTKs.

Shanghai Pudong International Airport Cargo Terminals Co. Ltd (Pactl, the biggest cargo handler at PVG) reported its September handle up 20.3% to 134,000 tonnes. This continues the Pactl’s pattern of strong growth in 2014, but we point out that some of the increase may have come through the addition of new customers rather than through organic growth. For September, Pactl’s international volume was up 22.1% to 125,000 tonnes, while the much smaller domestic volume was up 0.8% to 9,000 tonnes (most of Shanghai’s domestic cargo moves through nearby Hongqiao Airport). For the year through September, Pactl’s handle was up 16.6% to 1.08 million tonnes.

Europe & Middle East

Lufthansa Cargoreported September traffic down 1.9% y-o-y to 726 million RTKs. For the Lufthansa Group as a whole, September cargo traffic was down 1.1% to 861 million RTKs. On a regional basis, Group cargo traffic was up slightly (0.3%) to 368 million RTKs on the trans-Atlantic lane, down 1.8% to 386 million RTKs on the Asia-Pacific lane, and down 3.9% to 73 million RTKs on the Middle East/Africa lane. For the first three quarters of 2014, Lufthansa Cargo’s traffic was down 1.5% to 6.34 billion RTKs, while Group cargo traffic was down 0.5% to 7.55 billion RTKs. Lufthansa said its total cargo capacity in September was down 2.2%, and cargo load factor rose 0.8 percentage points to 67.8%.

Air France-KLM reported September cargo traffic down 17.7%% y-o-y to 690 million RTKs. The big decline was the result of a two week strike by Air France pilots which forced the carrier to cancel almost 60% of its flights. For the first nine months of 2014, AF-KLM’s cargo traffic was down 2.3% to 7.30 billion RTKs.

International Airlines Group reported September cargo traffic down 6.0% y‑o‑y to 439 million RTKs. Subsidiary carrier British Airways reported its traffic for the month down 8.7% to 358 million RTKs. We point out that BA terminated the leases of three 747-8Fs in April of this year, cutting its capacity substantially. IAG’s other subsidiary carrier, Iberia, reported its September cargo traffic up 8.0% to 81 million RTKs, For the year through September, IAG’s cargo traffic was down 3.1% to 4.02 billion RTKs.

Turkish Airlines reported September cargo volume up 17.2% y-o-y to 58,000 tonnes – a similar gain to the 17.6% reported in August, but not at the 25% to 35% level Turkish reported in the first half of the year. For the first nine months of 2014, Turkish’s cargo volume was up 20.4% to 490,000 tonnes.

Etihad Airways reported third-quarter cargo volume up 9.1% y-o-y to 144,000 tonnes. This is a considerably smaller increase than the 25% increases the carrier reported in the first and second quarters of the year. Whether this means that Etihad’s cargo business has become big enough that huge gains are no longer possible, or whether the third quarter was, for whatever reason, an unusual one for the carrier remains to be seen. We suspect it is a mix of both factors, but that the rate of growth will likely slow going forward, just as it did for Etihad’s neighbor Emirates. Worth noting is that the gains in volume do not appear to be coming at the expense of yield, as Etihad reported its third-quarter cargo revenue up 16%, considerably more than the 9% growth in volume

Frankfurt Airport (FRA) reported its September cargo handle flat y-o-y at 179,000 tonnes. For the first nine months of 2014, FRA’s handle was up 2.0% to 1.60 million tonnes.

London’s Heathrow Airport (LHR) reported its September handle up 7.8% y-o-y to 125,000 tonnes. For the year through September, LHR’s handle was up 5.3% to 1.10 million tonnes.

Amsterdam’s Schiphol Airport continues to report solid gains, with its September handle up 4.2% to 136,000 tonnes. For the first nine months of the year, AMS’ handle was up 8.1% to 1.2 million tonnes.

Americas

LATAM Airlines Group reported September cargo traffic down 3.2% y-o-y to 349 million RTKs, continuing a year-long trend of declining cargo traffic. Commenting on the result, the company said the cargo traffic decrease was driven by weaker imports into Latin America. LATAM also noted that cargo capacity was down 3.6%, “a result of a reduced freighter operation in addition to decreased availability in the bellies of passenger aircraft..” For the first nine months of the year, LATAM’s cargo traffic was down 3.5% to 3.16 billion RTKs.

United Airlines reported August cargo traffic up 23.2% to 303 million RTKs. This marks the eleventh month of a turnaround that started in November 2013. Prior to that point, United had for some time been reporting what may have been the worst results for any major cargo carrier in the world. Its cargo traffic for the first ten months of 2013 was down over 12% from 2012, and 2012 itself was a terrible year. Until July, the carrier’s cargo traffic growth during the turnaround was in the mid-single-digit range, but July saw a jump of almost 30%, and clearly, whatever fueled that jump carried on through August (up 25.8%) and September. For the first three quarters of 2014, United’s cargo traffic was up 12.3% to 2.65 billion RTKs

Delta Air Lines reported September cargo traffic up 3.1% y-o-y to 304 million RTKs. For the first nine months of 2014, Delta’s cargo traffic was up 1.4% to 2.58 billion RTKs.

American Airlines Group reported September cargo traffic up 2.2% to 271 million RTKs. As is the case with United, this is a continuation of a trend of growth, although for American the growth began earlier and was, until two months ago, stronger. The August gain of 1.7% and September’s 2.2% are well below the average gain American has been reporting over the previous eighteen months. For the year through September, American’s cargo traffic was up 7.5% to 2.51 billion RTKs.