African Airlines Face Challenges as Cargo Volumes Dip in August 2023

African Airlines: In August 2023, the International Air Transport Association (IATA) revealed some concerning trends in global air cargo markets. The data disclosed a significant setback for African airlines, as they experienced a 4.7 percent drop in cargo volumes compared to the same period in 2022. This decline was primarily attributed to reduced traffic on the Africa-Asia air routes, which play a crucial role in the global movement of goods.

African Airlines
African Airlines

This decline was a stark contrast to the positive performance seen in July when cargo volumes grew by 2.3 percent. Notably, the Africa-Asia routes saw a 1.1 percent dip in August, following an impressive 11.2 percent growth in July. It’s worth mentioning that capacity for cargo was 3.8 percent higher than August 2022 levels.

One bright spot in IATA’s data was the first year-on-year growth in air cargo demand in 19 months. Globally, demand, measured in cargo tonne-kilometers (CTKs), increased by 1.5 percent compared to August 2022 (1.2 percent for international operations). This growth was accompanied by a substantial rise in available cargo tonne-kilometers (ACTKs), which increased by 12.2 percent compared to August 2022, particularly due to the 30 percent increase in belly capacity as airlines geared up for the peak northern summer travel season.

In August, there was a slight improvement in the Purchasing Managers Index (PMI) for manufacturing output (49.4) and new export orders (47.0) compared to the previous month. However, both remained below the critical threshold of 50, indicating an ongoing, albeit slower, annual decline in global manufacturing production and exports. Furthermore, global cross-border trade contracted for the fourth consecutive month in July, declining by 3.2 percent year-over-year, reflecting weakening demand and general macroeconomic conditions.

In terms of inflation, August painted a mixed picture. The United States saw consumer prices rise for the second consecutive month, while Europe and Japan experienced declines in both consumer and producer prices. In China, which was combatting deflationary pressures, consumer prices saw an increase.

Willie Walsh, IATA’s Director General, commented on the situation, “Air cargo demand grew by 1.5 percent over the previous August. This is the first year-on-year growth in 19 months, so it is certainly welcome news. But it is off a low 2022 base, and market signals are mixed. Looking ahead, while many uncertainties remain, we can take some optimism from PMI data moving towards positive territory. This is particularly significant as we head into air cargo’s traditional peak year-end season.”

Meanwhile, in the Asia-Pacific region, airlines saw a 4.9 percent increase in air cargo volumes in August 2023 compared to the same month in 2022, showing an improvement over July’s growth of 2.3 percent. This growth was primarily driven by two major trade lanes: Europe-Asia and Middle East-Asia. Additionally, within-Asia trade also performed better in August, with international CTKs contracting by 4.7 percent compared to the 9.7 percent decline in July. The region’s airlines also benefited from a substantial 28.5 percent increase in available capacity compared to August 2022.

North American carriers experienced a 1.2 percent decrease in air cargo volumes in August, an improvement from July’s decline of 5.4 percent. Growth on two major trade lanes, North America-Europe and Asia-North America, contributed to this positive shift. Capacity also increased by 2.7 percent compared to the same period in 2022.

European carriers saw a marginal decline of 0.2 percent in air cargo volumes in August 2023, compared to the previous year. While this still represented a decrease, it marked an improvement over July’s 1.0 percent decline. The positive performance in the Europe-Asia route and a small increase in the Middle East-Europe markets contributed to this trend. Capacity increased by 3.6 percent in August 2023 compared to the same period in 2022.

In contrast, Middle Eastern carriers experienced a 1.4 percent year-on-year increase in cargo volumes in August 2023, signaling an improvement from the previous month’s performance, which had a slight decline of 0.1 percent. The Middle East-Asia market saw notable growth, expanding its year-on-year growth from 1.8 percent in June to 3.5 percent in August. Capacity increased significantly by 15.7 percent compared to August 2022.

Finally, Latin American carriers demonstrated the strongest performance in August 2023, with a remarkable 6.2 percent increase in cargo volumes compared to the previous year. This marked a significant improvement over the previous month’s growth of 0.5 percent. Capacity also saw a substantial increase of 13.7 percent compared to August 2022.

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