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IATA: Global cargo demand to rise in 2014

3/13/2014 8:46:34 AM

   Global air cargo demand growth is projected to hit 4 percent this year, a significant increase over the previously forecast 2.1-percent growth rate for 2014, according to the International Air Transport Association.

   That increase and improved passenger demand will offset increased fuel prices as the aviation industry works toward its second consecutive year of improved profitability, IATA said. Industry profit expectations for 2014, however, have fallen to $18.7 billion from the previous estimate of $19.7 billion because of the cost of fuel. Higher jet fuel costs will add $3 billion to the industry’s bill, according to the agency.

   “In general, the outlook is positive,” Tony Tyler, IATA’s director general and chief executive officer, said in a statement. “The cyclical economic upturn is supporting a strong demand environment. And that is compensating for the challenges of higher fuel costs related to geo-political instability. Overall industry returns, however, remain at an unsatisfactory level with a net profit margin of just 2.5 percent.”

   Despite the rosy outlook for the cargo business, there are still some obstacles, according to IATA. Cargo growth has slowed down relative to its current stage in the economic cycle, the agency said, and protectionist regulations from governments are harming cargo demand.

   At a regional level, North American airlines will contribute the biggest share to industry profits, making $8.6 billion in 2014, the agency said. The last peak profits for U.S. airlines occurred in 2010, when they banked $4.2 billion in profits.


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