Despite the decrease in cargo demand, African airlines are expanding their capacity in comparison to 2022.
- European carriers and the Middle Eastern carriers experienced year-on-year decreases in cargo volumes in May 2023.
- On a global scale, there has been a decline of 5.2 percent in the demand for air cargo.
Cargo demand for African airlines has experienced a decline of 2.4 percent compared to May of the previous year due to weak demand stemming from rising inflation and the ongoing armed conflict in Sudan.
The International Air Transport Association (IATA) report for May 2023 on global air cargo markets indicates that despite the decrease in demand, African airlines have expanded their capacity in comparison to the previous year.
Furthermore, the report draws attention to a significant slowdown in the growth of the Africa to Asia trade route. The growth rate declined from 18.5 percent in April to 11 percent in May. The conflict in Sudan that has been ongoing since mid-April was partly contributing to the slowdown.
African airlines’ outlook
Recognizing the difficult trading circumstances faced by the air cargo industry, IATA Director General Willie Walsh acknowledges that the sector will experience improvement once the weak economic indicators have been rectified. However, capacity in May exhibited a notable increase of 9.2 percent when compared to the same month in 2022.
On a global scale, there has been a decline of 5.2 percent in the demand for air cargo, measured in cargo tonne-kilometers, in comparison to May 2022. Specifically, international operations have experienced a decline of 6 percent during the same period.
“Trading conditions for air cargo continue to be challenging with a 5.2 percent fall in demand and several economic indicators pointing towards weakness. The second half of the year, however, should bring some improvements. As inflation moderates in many markets, it is widely expected that central bank rate hikes will taper. This should help stimulate economic activity with a positive impact on demand for air cargo,” said Walsh.
In the meantime, there has been a 14.5 percent increase in available cargo tonne-kilometers (ACTKs) compared to May 2022. This growth can be attributed mainly to the rise in belly capacity as passenger demand recovers. Remarkably, the current capacity surpasses May 2019 (pre-pandemic) levels by 5.9 percent
Airlines on a recovery
Willie Walsh, the Director General of IATA, acknowledges the challenging trading conditions for air cargo, noting the 5.2 percent fall in demand and several weak economic indicators.
However, he expresses optimism for the second half of the year, expecting improvements as inflation moderates in many markets and central bank rate hikes taper.
This is anticipated to stimulate economic activity and have a positive impact on the demand for air cargo.
In the Asia-Pacific region, airlines have witnessed a 3.3 percent decrease in air cargo volumes compared to May 2022. The drop was attributed to a more significant annual contraction in international air cargo demand from -3.5 percent in April to -6.4 percent in May.
Available capacity in the region, on the other hand, increased by 38.3 percent compared to May 2022, with the addition of more belly capacity from the passenger business.
North American carriers post the weakest performance among all regions for the third consecutive month. Overall, they reported 8.1 percent decrease in cargo volumes in May 2023 compared to the same month in 2022. The industry, however, reported a slight 1.2 percent increase in capacity during that month.
European carriers and Middle Eastern carriers have both seen year-on-year decreases in cargo volumes in May 2023, with declines of 6.7percent and 3.1 percent respectively.
Only Latin American carriers have shown positive performance according to IATA. The companies post a 3.6 percent increase in cargo volumes in May compared to last year. In the month under focus, the capacity of Latin American carriers went up by 14.7 percent compared to May 2022.