Asian carrier traffic fell steeply in February

Major carriers based in Asia are reporting steep declines in cargo demand for the month of February, compared to the same month in 2018. Although distortions can be expected when it comes to annual comparisons for the months of January or February due to the timing of the Lunar New Year holiday, this year’s declines are steeper. Based on combined January/February traffic which was unanimously negative for the carriers Cargo Facts follows on a monthly basis, carriers are clearly starting to see increasing trade headwinds translate into softer volumes. In other regions, carriers reported mixed February performance. In Europe, IAG Cargo and Air France KLM cargo saw mild growth of 0.8% and 1.3% y-o-y, respectively. Lufthansa Cargo meanwhile, saw traffic decline 3.5%. In the Americas, only Delta Air Lines and LATAM have reported February traffic. LATAM reported growth of 7.1%. It is too early to gauge whether LATAM’s growth is a one-off due to a stellar seasonal peak related to Valentine’s Day, or broader robust demand for air freight. When IATA report’s its monthly analysis for the month of February, Cargo Facts expects overall market demand to be down in the high single-digit-range of 7-9%. Turning to the individual results: Cathay Pacific Airways reported February cargo traffic down 9.3% y-o-y to 750 million RTKs. This is the fourth consecutive month in which Cathay has reported year-over-year drops in cargo activity. Cargo and mail tonnage was down 9.9% to 131,320 tonnes. Noting the “distortion” caused by this year’s early February, Ronald Lam, director of commercial and cargo, said that compared to last year, demand resumed at a slower pace – particularly on exports from China and Hong Kong. Lam added that freighter capacity was reduced in February to better match demand. Indicative of the reductions were AFTKs that were down 1.8% y-o-y even as passenger flights with belly capacity were added (RPKs rose 2.9%). Despite sluggish demand emanating from mainland China, Lam said that demand growth from Southeast Asia was at least “good.” Singapore Airlines reported February cargo traffic down 15.2% year-over-year to 520 million FTKs on cargo volumes that were down 11.3%, to 93,000 tonnes. Load factors dropped 6.8pp during the same period. The airline provided little commentary in its monthly traffic report but noted that “all route regions registered declines” in cargo load factors. Beijing-based Air China reported February cargo traffic down 8.7% y-o-y to 276 million RTKs, after reporting flat annual traffic comparisons in January. Total tonnage fell 10.6% y-o-y, to 79,000 tonnes. Domestic, international, and regional traffic fell 12.5%, 6.8%, and 14.7%, respectively. Year-to-date, Air China Cargo’s traffic is down 3.6% from 2018. Guangzhou-based China Southern Airlines reported cargo traffic down 14.8% year-over-year in February 2019, to 377 million RTKs, on weaker traffic across all three segments it reports for; domestic, international and regional. Tonnage for the month was down 19%, to 88,000 tonnes. Year-to-date, China Southern’s cargo traffic is down 2.8%, to 1.02 billion FTKs. Taiwan-based EVA Air reported a 5.2% y-o-y decline in traffic for February, to 251 million FTKs – only slightly improved from the previous month, which was the steepest drop in traffic for the carrier since 2016. Tonnage declined by 9.4% to roughly 44,000 tonnes. For the first two months of the year, EVA’s cargo traffic is 6.7% lower than traffic reported for the same period in 2018. Taiwan-based China Airlines was one of the few carriers in the Asia-Pacific region to report growth in January cargo traffic, only to experience very steep declines in February. Traffic fell 25.7% year-over-year to 281 million FTKs. Capacity was also reduced by 16.2%, which kept load factors from falling at the same pace. Year-to-date, China Airlines’ cargo traffic is 11.5% lower, at 721 million FTks. Europe & Middle East Air France-KLM reported total group cargo traffic rose slightly y-o-y in February (up 0.8%) to 643 million FTKs. Air France’s cargo traffic rose 7.8% y-o-y, to 287 million RTKs, while KLM’s cargo traffic slid 4.1%, to 356 million FTKs. Year-to-date, Air France-KLM cargo traffic is essentially flat compared to the first two months of 2018. International Airlines Group reported February cargo traffic up 1.3% y‑o‑y, to 433 million RTKs, on increasing cargo activity at the Group’s subsidiary carriers Aer Lingus and Iberia, which reported January traffic up 36.4% and 9.9%, respectively – albeit from low bases. British Airways saw traffic decline 2.1%, to 328 million RTKs. Year-to-date cargo traffic for IAG’s group airlines remains ahead of the first two months of 2018, up 2.7%, at 882 million RTKs. Lufthansa Cargo Group airlines reported February traffic down 3.5% y-o-y, to 802 million RTKs. On a regional basis, Group cargo traffic fell sharply for the region Asia/Pacific with an 11.4% decline in February traffic. Other regions fared better, with growth of 16.3%, to 68 million FTKs for the region Middle East/Africa. The regions Europe and Americas were nearly flat with annual changes of 0% and 0.5%, respectively. Year-to-date, traffic is down 4.2% y-o-y across for Lufthansa Group Airlines. Americas LATAM Airlines Group reported February cargo up 7.2% y-o-y, to 301 million RTKs, driven in part by robust demand for flowers ahead of Valentine’s Day 2018. Year-to-date, LATAM cargo traffic remains 1.8% higher, at 586 million FTKs. Delta Air Lines reported February cargo traffic had fallen 3.4% y-o-y to 225 million RTKs. Year-to-date, traffic was 1.8% at 451 million RTKs. Those interested in learning more about Asia Pacific’s leading cargo carriers are invited to join us at Cargo Facts Asia 2019, to be held 15-17 at the Langham Shanghai. For more information, or to register, visit www.cargofactsasia.com .

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