Sustained air passenger demand but air cargo weakness persists: AAPA

Preliminary traffic figures for the month of July released today by the Association of Asia Pacific Airlines (AAPA) showed that international air passenger demand continued to grow moderately, supported by business and leisure-related travel.

However, falling exports and a worsening trade outlook led to further weakness in air cargo markets.

The number of international passengers carried by the region's airlines climbed 3.4 per cent higher year-on-year to a combined 32.5 million, even as business sentiment continued to deteriorate in the face of rising headwinds to global growth.

Demand in revenue passenger kilometres (RPK) rose by 2.7 per cent year-on-year, underscoring the relative strength of regional travel markets. A matching 2.7 per cent expansion in available seat capacity led to an average international passenger load factor of 82.4 per cent for the month, unchanged compared to the same month last year.

Mounting trade tensions, alongside deteriorating business confidence levels, contributed to further decline in orders for goods. Against this backdrop, the region's airlines registered a 7.7 per cent fall in air cargo demand as measured in freight tonne-kilometres (FTK) in July.

The markedly lower demand coupled with almost flat expansion in offered freight capacity by 0.4 per cent led to a 5.2 percentage point decline in the average international freight load factor to 58.9 per cent for the month.

"During the first seven months of the year, the number of international passengers carried by Asian airlines grew by 4.6 per cent to a combined 219 million supported by the availability of competitive airfares and expanding networks," said AAPA Director General Andrew Herdman.

"In addition, sustained expansion in major Asian emerging and developing economies fueled the appetite for international travel," he said in a statement. By contrast, however, global trade conditions deteriorated further as higher tariffs disrupted global supply chains and Asian airlines saw international air cargo demand fall by 6.2 per cent during the first seven months of the year.

"The weakness in air cargo markets is likely to extend into the coming months, unless we see some meaningful progress in trade negotiations," said Herdman.

Looking ahead, he said the outlook for air passenger travel demand is still broadly positive. "But with growth slowing, the region's airlines are facing an increasingly challenging operating environment.