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Global slowdown, excess capacity to hit Mideast air cargo carriers

MIDDLE East airlines saw their international freight volumes growth slow to 6.5 per cent in the first half, down from 14.3 per cent in 2015, says the International Air Transport Association (IATA).

"Cargo volume growth this year will slow due to excess capacity as well as slower international commerce," said London's StrategicAero Research analyst Saj Ahmad, reported The National of Abu Dhabi.

"The low cost of fuel has seen a return to the market of less fuel efficient aircraft," said Etihad Cargo vice president David Kerr.

"This additional capacity, combined with a slowing global economy, has put pressure on everyone's yield," he said.

But the region's airline freight tonne kilometres (FTKs) were up eight per cent year on year, compared to the global average increase of 4.3 per cent.

Emirates SkyCargo, which moves more freight than with other Mideast carriers, has already reported a nine per cent year-on-year decline in cargo revenues to AED11.1 billion (US$3.02 billion) in the 2015/16 financial year. Yet cargo volume rose 5.6 per cent year on year to 2.5 million tonnes.

The slowdown in cargo volume growth is expected to have a bigger effect on the smaller regional players. "In the wider Arabian Gulf, the slowdown will force smaller players like Saudia, Royal Jordanian [and] Kuwait Airways to reel in their available capacity because they can't effectively compete," said Mr Ahmad.

Cargo volumes for the UAE airports also declined during the first half. At Abu Dhabi International Airport, cargo volumes fell by six per cent, while in Sharjah Airport cargo volumes plummeted by 15 per cent on the year earlier.