Cathay Pacific, HKIA saw large cargo volume decreases in February

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Cathay PacificHong Kong-based Cathay Pacific Airways reported a double-digit drop in the volume of cargo and mail it uplifted in February 2016. This follows an earlier announcement that its cargo revenue declined 9% for full-year 2015.

The group said its two airlines Cathay Pacific and Dragonair carried 117,299 tonnes of cargo and mail in February, a 10.1% decrease compared to the same month last year.

The cargo and mail load factor fell by 7.5 percentage points to 58%. Capacity, measured in available cargo/mail tonne kilometers, was up by 1.1%, while cargo and mail revenue tonne kilometers (RTKs) flown decreased by 10.4%.

In the first two months of 2016, tonnage carried fell by 4.6% against a 1.8% increase in capacity and a 5.2% drop in RTKs.

“Airfreight demand dropped away sharply in the early part of the month as factories in Mainland China closed down for the Chinese New Year holiday,” said Cathay Pacific general manager for cargo sales & marketing Mark Sutch.

He noted that compared to the holiday period last year, demand was much slower in picking up after factories reopened, which led to a higher concentration of lower-yield cargo from Southeast Asia and India being uplifted onto its transpacific freighter flights.

“The sustained drop in fuel prices has led to older aircraft (becoming) more economically viable. The resulting overcapacity continues to put downward pressure on cargo yields,” he added.

Full-year revenue down

Meantime, the group’s cargo revenue in 2015 amounted to HK$23.122 billion (US$2.980 billion), a decrease of 9% compared to the previous year.

This mainly reflected a reduction in fuel surcharges due to lower fuel prices, said a company statement.

Demand was strong in the first quarter of 2015, assisted by industrial action at ports on the west coast of the United States, it added. But overall demand was weak for the rest of the year, particularly on European routes.

Capacity for Cathay Pacific and Dragonair increased by 5.4%, while the load factor decreased by 0.1 percentage points to 64.2%.

Strong competition, overcapacity, unfavorable foreign currency movements, and the reduction in fuel surcharges put pressure on yield, which decreased by 13.2%, to HK$1.90.

On the outlook for the freighter Industry, Cathay Pacific chairman John Slosar said: “The operating environment was better in 2015 than in 2014, but we faced some significant challenges, which we expect to continue in 2016. Cargo demand will be adversely affected by industry overcapacity.”

Including its passenger and other services, the Cathay Pacific group reported an attributable profit of HK$6 billion for 2015 compared to a profit of HK$3.15 billion in 2014.

HKIA cargo traffic contracts

In related developments, Hong Kong International Airport (HKIA) recorded a drop in cargo throughput of 14.9% to 258,000 tonnes in February compared to the same month last year.

The decline was mainly traced to a 23% year-on-year drop in exports. Imports and transshipments decreased by 9% and 6%, respectively, compared to the same month last year.

Cargo throughput to and from key trading regions in North America registered the most significant drop, said airport authorities.

The decrease in cargo volume in February this year was partly due to the labor conflict at ports on the U.S. west coast in the first quarter of 2015, which had pushed up air cargo numbers in February of last year.

In the first two months of 2016, cargo traffic dropped 6% year-on-year to 619,000 tonnes. On a rolling 12-month basis, HKIA saw cargo throughput decrease by 2.2% to 4.34 million tonnes.

Photo: allen watkin from London, UK