African airlines, others witness drop in demand in March 2016

International Air Transport Association (IATA) has released demand growth data for March 2016, showing a 3.1 percent drop in demand in March 2016 compared with the same period last year. A more modest decline of 1.6 percent was seen in year-on-year Q1 performance.

Notably, on the back of long-haul expansion, the African freight ton kilometres (AFTKs) for African airlines surged by 22.6 percent year-on-year over the first quarter of 2016. This is more than double the pace of any other region in recent months.

The global airfreight markets for March 2016 show a 2 percent drop in volumes measured in freight ton kilometres (FTKs) compared with the same period last year.

In contrast, freight capacity (measured in available freight ton kilometres or AFTKs) rose by 6.9 percent, putting increased pressure on already struggling yields.

The weak results reflect subdued growth in world trade, exaggerated by the comparison to a particularly strong start to 2015, when airfreight volumes were boosted by the effects of the US West Coast seaports strike.

The most significant fall in demand was reported by carriers in Asia-Pacific and North America, and combined they account for around 60 percent of global freight traffic and reported declines of 5.2 percent, and 1.8 percent, respectively.

Tony Tyler, director-general/CEO, IATA, said “it is shaping up to be another tough year for air cargo,” adding that February 2016 world trade volumes were only 0.4 percent higher than at the end of 2014.

Tyler added that the expectations of purchasing managers gives little optimism for an early uptick, stressing that the combination of fierce competition, capacity increases and stagnant demand makes this a very difficult environment in which to generate profits.

European airlines saw demand for air cargo grow by a modest 1.3 per cent in March 2016, compared to the same period in 2015, while capacity increased by 7.9 percent. Weak cargo demand is a continuing story for European carriers for whom cargo volumes stand at just 1 per cent above early 2008 levels.

Middle Eastern carriers reported a 2.4 per cent increase in demand over March last year—the slowest since July 2009. This reflects both a slowdown in network expansion by the region’s main carriers over the past six months and weak trading conditions.

North American airlines saw demand fall by 1.8 percent in March 2016 versus March 2015, partially due to the rollover effect of the US port strike in 2015, which gave air freight in the region a boost. Additionally, the drop in global trade negatively impacts the region’s carriers, while the strong US dollar is keeping exports under pressure.