Asian Airlines under pressure
Contributors are not employed, compensated or governed by TD, opinions and statements are from the contributor directly
The Asia Pacific is witnessing continued demand growth through 2014, however increased competition is placing pressure on margins and many carriers are struggling to turn a profit.
Data, released by the Association of Asia Pacific Airlines (AAPA), showed that Asia Pacific airlines carried 22.1 million international passengers in July. This represents an annual increase of 4.3% compared to the same month last year, boosted by strong regional demand. Supply increase outweighed demand growth however, resulting in a 1.2 point decline in the average international passenger load factor to 78.8% for the month.
In the cargo sector meanwhile, demand growth lagged behind capacity increases, driven by demand for exports from major regional manufacturing hubs. As a result, air freight growth accelerated in July with a 6.4% increase compared to the same month last year.
Commenting on the results, Andrew Herdman, AAPA director general, said: “Overall, during the first seven months of this year, Asia Pacific airlines carried a combined total of 145.3 million international passengers, an increase of 4.7% compared to the same period last year.
“International air freight demand grew by 4.9% during the same period, marking a long overdue recovery in trade volumes after several years of weak global demand.”
The positive results achieved so far this year are driven by rising demand in Asia’s emerging markets and a stable global economic outlook. However, the AAPA boss warned of challenges to Asian carriers.
“Asia Pacific airlines are still facing very challenging business conditions, with additional capacity placing further downward pressure on fares and yields,” said Mr. Herdman.
“As a result, revenue growth has been lacklustre, and profitability remains elusive for many of the region’s carriers. Airlines are carefully reviewing their existing fleet deployments and future capacity plans in the light of current market conditions, whilst maintaining tight cost controls.
“The general outlook for Asian airlines remains positive, but right now, I would say restoring margins is the key focus of management attention across the industry.”
Comments are closed.