Asia Pacific airlines saw continued cargo decline as orders waned and supply chain problems mounted, although the general outlook for regional carriers remains positive.
The Kuala Lumpur-based Association of Asia Pacific Airlines (AAPA) said Asia Pacific airlines saw international air cargo demand — measured in freight tonne-kilometres (FTK) — decline by 4.4% in the first nine months of the year, after recording a 10.4% drop year-on-year in September alone.
Since March, APAC airlines have recorded declines in cargo volumes after 14 consecutive months of growth prior.
"Air cargo markets, often an indicator of the state of the global economy, saw demand as measured in international freight tonne kilometres (FTK) fall by 4.4% during the first nine months of 2022 as export orders waned and supply chain problems mounted. The macroeconomic outlook has weakened, with rising inflation rates in many countries, stubbornly high energy prices and a strengthening US Dollar," said Subhas Menon, director general, of AAPA.
"Nevertheless, prospects for the region’s airlines remain promising as long as pent-up demand continues to hold up and cargo yields remain healthy despite the easing of demand," the AAPA chief added.
The cargo performance in the first nine months of 2022 is in contrast with the recovery seen in passenger numbers in the region.
AAPA said in its report that during the period, Asia Pacific airlines recorded a robust increase in the number of international passengers — or more than five-fold growth to 62 million compared to the same period in 2021.
Consequently, with capacity expanded by 125% over the same period, as international passenger load factor also jumped by 40 percentage points to an average of 70%.
"The region's recovery still lags behind the rest of the world and is expected to reach only 75% of 2019 levels by year-end. Except for mainland China, the gradual re-opening of borders in many economies in Asia and strong recovery in air services only serve to underscore the magnitude of pent-up travel demand," Menon said.
Apart from consolidating the lessons learned from managing the pandemic, the AAPA chief noted that the industry is also bracing to navigate the multiple headwinds that appear ahead as a result of a moderation in the outlook for the global economy.
"Overall, airline margins remain under pressure," he added.
Outlook for APAC airlines "remain positive"
Despite the ongoing market challenges, Menon said the general outlook for air travel in the Asia Pacific in 2023 remains positive.
However, the AAPA chief warned of "some significant downside risks."
"The business environment for airlines is challenging and ongoing geo-political tensions could undermine recovery. Despite the softening of the global economic outlook, Asia Pacific airlines are well-placed to see traffic volumes recover closer to pre-pandemic levels if demand continues to stay strong," Menon said.
As Asia Pacific airline leaders gathered at the AAPA 66th Assembly of Presidents in Bangkok, Thailand, last week, Menon also noted the critical role it is playing in addressing key policy issues that affect all carriers in the Asia Pacific region, including safety, security, infrastructure, environment, passenger facilitation, and taxation.
The AAPA chief also signalled that airlines remain firmly committed to their sustainability goals including the commitments and resolutions by member states at the ICAO Assembly in October, particularly in the adoption of a long-term aspirational goal of net zero carbon emissions by 2050 and the commitment to the Carbon Offsetting and Reduction Scheme in Aviation (CORSIA) as the only market-based offsetting scheme for international aviation.
"Government support in the form of policy, investment and subsidies, particularly for sustainable aviation fuels and CORSIA, will be key to the industry achieving its goal of net zero emissions by 2050," Menon said.
"All stakeholders, including fuel suppliers, whose investment and commitment to supporting the energy transition, will need to work closely together in order to achieve this ambitious goal," the AAPA chief added.
