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Legacy loss as Integrators increase

PARIS/AMSTERDAM: Air France KLM reported a 17.7 percent drop in cargo traffic (revenue tonne-kilometres) in September and a 2.3 percent overall decline for the first nine months compared to the same respective periods last year.

The group estimates the net cost of the 14-day strike by Air France pilots was €320-€350 million and warns that signs of a decline in fourth quarter bookings "could have an impact of around €500 million on EBITDA for the 2014 financial year".

Boeing WAFNews of the continued fall in the group's freight business coincides with a new Boeing forecast that air cargo will grow at an annual rate of 4.7 percent over the next 20 years as global airfreight traffic more than doubles by 2033.

Boeing expects Asia-North America and Europe-Asia routes to have the most traffic volume while Intra-Asia, domestic China and Asia-North America will have the fastest rates of growth in the next two decades.

The manufacturer says freighter fleets will increase with the delivery of 840 new aircraft worth US$240 billion plus 1,330 passenger-to-freighter conversions. Over 52 percent of the total is expected to replace retiring airplanes and the remainder used for traffic growth. Boeing says it expects to sell 70 percent of all the new-builds by 2033.

However with the manufacturer forecasting 30 percent of all freighter deliveries to North American express operators in the next 20 years, the share of the total air cargo market by the Integrators seems set to expand at the expense of the legacy airline/forwarder sector.

Between 1992 and 2008, higher-than-average annual growth boosted the express share of international air cargo traffic from 4.1 percent to 13.4 percent. The share remained at around 13 percent during the Great Recession of 2008/2010 and then rose sharply to 14.7 percent the following year. Since then FedEx, UPS et al have continued to outpace the growth of global freight and mail by increased their share to 16.2 percent in 2012 and 17.0 percent in 2013.

Boeing says the distinction between express and general air cargo continues to blur as legacy providers expand their time-definite offerings and express carriers, freight airlines and postal authorities consolidate services. "Ultimately, the air cargo customer benefits from increased service options and lower prices as market pressure brings competing products into the market," it adds.

Last week, Airbus produced its cargo forecast for the next 20 years: Abu Dhabi now center of the world

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