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European airlines' Ocobter volumes rise while forwarders face Asian capacity shortage

EUROPEAN airlines have seen a strong peak-season pick-up in demand in October, while forwarders are reporting a shortage of capacity from Asia and bans on ad-hoc charter flights.

The latest statistics from Lufthansa, Air France-KLM, IAG Cargo and Finnair show that three of the airlines saw a sharper increase in volumes in October than they have over recent years.

Cargo demand across the Lufthansa group was up 9.6 per cent month on month in October, compared with a 5.7 per cent increase in 2014.

IAG Cargo recorded a 12.3 per cent increase in October on a month earlier, versus a 9.3 per cent uplift last year, and Finnair saw demand jump by 12.9 per cent against a 1.7 per cent increase in 2014.

The 2015 October month-on-month surge in demand experienced by Lufthansa, IAG and Finnair is the largest reported by the airlines in the last five years.

The only airline to see growth weaken month on month this October compared with last year was Air France-KLM, but the Franco-Dutch airline group's volumes in 2014 were affected by strike action.

This year, it witnessed demand growth of 5.4 per cent in October compared with September.

Forwarders have also noted a spike in demand over recent weeks.

In a customer circular, Expeditors warned that the rush was creating a shortage of capacity, exacerbated by a ban on ad-hoc charter flights in China.

"Some backlogs have also formed as shippers accelerate orders by converting ocean shipments to airfreight to fulfill pre-holiday orders.

"As cargo accrues at Asian airports, only marginal additional airfreight capacity was added to the market in October and during the first week of November.

While the airlines did benefit from a spike in demand in October over September, the year-on-year supply and demand comparisons told a familiar tale: load factors decline as a supply increase outstrip demand growth.

Lufthansa, for instance recorded a 1.8 per cent year on year decrease in demand in October while its capacity was up 2 per cent on last year. As a result, its load factor slipped to 65.6 per cent compared with 70 per cent a year ago.

Air France-KLM recorded a 10.1 per cent year on year decline in volumes as it adjusts its freighter strategy, while capacity was down by the lower amount 7.5 per cent and its load factor slipped from 64 per cent to 62.2 per cent.

For Finnair, which has also adjusted its freighter strategy, its demand in October was down 6.2 per cent while capacity was down by 1.9 per cent and as a result its load factor slid to 61.6 per cent from 65.9 per cent a year earlier.