HONG KONG: Cargo decline continues for Cathay, intra-Asia steady

Cathay Pacific Airways, the world’s largest air cargo carrier, has said its cargo throughput fell in September, the sixth consecutive drop, with passenger volumes also beginning to look more uncertain. Stagnating economies in Europe and the US are damping demand for highvalue exports from manufacturers in Asia, especially China, pushing Cathay’s September cargo and mail volume down by 10.1 per cent from a year earlier.


Cathay Dragonair


HONG KONG: Cargo decline continues for Cathay, intra-Asia steady

Cathay Pacific Airways, the world’s largest air cargo carrier, has said its cargo throughput fell in September, the sixth consecutive drop, with passenger volumes also beginning to look more uncertain. Stagnating economies in Europe and the US are damping demand for highvalue exports from manufacturers in Asia, especially China, pushing Cathay’s September cargo and mail volume down by 10.1 per cent from a year earlier. Cathay and subsidiary Dragonair moved a total of 131,443 tonnes of cargo and mail in September with a load factor of 64.8 per cent, down 5 percentage points, Cathay said. In the first nine months from January to September, tonnage dropped by 6.4 per cent, compared with a capacity increase of 9.8 per cent. “On the cargo side, there was no significant change from the situation in August, with the key Hong Kong and China markets both remaining soft, and demand to long-haul destinations, particularly Europe, below expectations,” said James Woodrow, Cathay’s general manager for cargo sales & marketing. “There is no sign yet of the traditional year-end peak beginning,” he added. The one bright spot according to Woodrow was the intra-Asia trade where traffic is holding up well and flights from most destinations into Hong Kong have been relatively full, he said. Separately, CX chief executive John Slosar said the airline would be keeping a very close eye on what happens to its business in October and November – “traditionally the biggest revenue weeks for our airline”. He said that Cathay Pacific needs to be prepared for any significant downturn, which will hit aviation “hard and fast”. However, Slosar stressed that CX is in a better position than most due to its strong balance sheet and factors such as its position in Asia. On the cargo side the airline is responding to the airfreight slump by seeking out new markets, launching new freighter services to two Western China cities – Chongqing and Chengdu – that are rapidly developing as high-tech manufacturing centres. “Right now we are giving our cargo business a boost by tapping into new markets such as Chongqing and Chengdu and bringing superefficient Boeing 747- 8Fs into the fleet,” Slosar said. Woodrow noted that an extremely strong 2010 for cargo was always going to be difficult to beat, but a downturn in the two key markets of Hong Kong and Mainland China has turned 2011 into a challenging year. “Both these markets have been weaker than hoped from April and particularly disappointing for the first half of September. Traditionally this is when the peak season starts to build momentum,” said Woodrow. The sovereign debt crisis in Europe and the loss of consumer confidence in North America has severely affected demand for air freight from Asia leading to buyers in Europe and US being careful to keep inventories under control, he added. “Any improvement for the rest of the year is dependent on improved macro-economic news and a consequent improvement in consumer confidence,” Woodrow said. “Overall it is not as bad as 2008. However, there is still currently more supply than demand on the major long-haul routes ex-Asia to Europe and Transpacific. The better news for CX is that revenues from the remaining ports remain encouraging. “In general, exports from Europe and the Americas into Asia have been good on the back of strong demand in Mainland China for luxury goods, fashion, machine tools, pharmaceuticals and automobile-related traffic. Intra- Asia traffic has also generally been stronger than the longhaul routes,” Woodrow added. New route launches in India and Mainland China are also showing promise, he said highlighting CX’s Bangalore service which launched on 1 August which has produced volumes into and out of Bangalore that exceeded the cargo carrier’s forecasts. “Likewise the twice-weekly Chongqing charters are also going well and likely to increase in November,” he added. A scheduled Chengdu freighter route launched on 12 October to take advantage of the city’s growing role as an important manufacturing base for the high-tech industry. “The government’s ‘go west’ policy is really bearing fruit and we expect to carry shipments for major international brands such as Apple, Dell, Intel and Texas Instruments. Business to and from both Chongqing and Chegndu will grow strongly over the months and years to come,” Woodrow said. Expectations for the fourth quarter are dependent on the stabilisation of the European and US economies, he noted. “If both economies are seen to be back on a path to growth then consumer confidence will start to return. But if things remain gridlocked then we can expect a quiet and subdued last quarter,” he said.