Rising fuel prices threaten air cargo in Africa

High-flying fuel prices are putting pressure on airlines offering cargo services in Africa. Asia Pacific carriers, the biggest players in the air freight market with a 40.5% market share, also recorded the largest year-on-year decline (-5.8%). This is mainly attributable to disrupted supply chains for the electronics and auto industries in the wake of the Japanese tsunami and earthquake, and slower economic growth in China. The strength of the region, however, is shown in the maintenance of the highest load factors (58.6%), well ahead of the 45.7% industry average for the month. European carriers posted a 1,3% decline and North American carriers recorded a drop of 3.0% compared to June 2010 levels. Carriers in the Middle East (3,7%), Latin America (2,8%) and Africa (0,3%) showed year-onyear growth for June, according to the Tony Tyler, director general of the International Air Transport Association (IATA). African passenger volumes were, however, down by 29% compared to June 2010. The continued political unrest in North Africa is the primary driver of the poor performance, which is also reflected in load factors that stood at 64.7%, which is 3,9% below the previous year’s levels, according to Tyler. Reduced demand coupled with higher operating costs could see more direct flights between Europe and African destinations suspended. “What is clear is that the rising jet fuel price is putting pressure on the bottom line. The average price for the second quarter was $133/barrel, which is an increase of $10 over the first quarter. “With an expected profit margin of only 0.7%, the ability of airlines to recoup this cost is critical to staying in the black for the year. Slower economic growth makes these challenges all the more difficult,” said Tyler.