IATA’s air cargo forecast now less rosy

In its most recent report, IATA said profits will drop from $9.1 billion to $8.6 billion – a 46 percent reduction from the $16 billion of profit they estimated the industry generated last year.

By ·

As widely anticipated, the International Air Transport Association (IATA) announced a cut in its forecast for airline industry profits (net post-tax) in 2011.

Spokesmen for the association had told LM that such a reduction was likely, although specific numbers would not be shared until this week. In its most recent report, IATA said profits will drop from $9.1 billion to $8.6 billion – a 46 percent reduction from the $16 billion of profit they estimated the industry generated last year.

“This downgrade is due to the recent surge in oil and jet kerosene prices. In line with market forecasts we now assume an average crude oil price of $96 a barrel this year, significantly up on our previous forecast of $84 a barrel, the report stated.

IATA said that the reduction in profitability would have been much greater were it not for upward revisions to economic growth this year together with relatively stable and high load factors:

“When economies are strong higher yields make it possible for airlines to limit the profitability damage from high oil prices. Clearly the risk to this outlook is that should economies weaken, under pressure from commodity prices and debt, airline profits could weaken much faster than we portray here.”

One bright spot in all of this, however, continues to be on the Pacific rim. January freight carried by Asia-Pacific carriers showed a 6.4 percent year-on-year increase. While this growth is slightly lower than the 7.2 percent reported for December 2010, the volume of freight carried by airlines based in the region actually increased by 2 percent during January alone. The growth in January takes the volume of air freight carried to 6 percent above the pre-recession peak level and 48 percent higher than the recession trough.

Matt Buckley, senior director, cargo and charters for Southwest Airlines, told LM that this came as no surprise:

“Considering the tremendous amount of manufacturing being done throughout parts of Asia, and the volume of those goods being imported to the U.S., Asia will continue to be a strategic focus for many of our shippers for years to come.”

For more stories on Air Freight click here.

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
Efficiency improvements in Track/Trace Enhances Customer Loyalty
Consumer satisfaction with the quality of your products is clearly important, but the service you provide before and after the sale is equally important to any business, but often overlooked as benefiting the bottom line.
Download Today!
From the October 2016 Issue
Over the past decade we’ve seen a major trend in regards to safety regulations for freight transport within the United States as well as for import and export shippers—that trend is the “international­ization” of rules and regulations.
European Logistics Update: Post-Brexit U.K. moving ahead, but in which direction?
Badcock Home Furniture &more: Out with paper, in with Cloud TMS
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
How API Technology Connects the Transportation Economy
Dynamic decision making is made possible through accurate, actionable data. When combined with progress in data science and the Internet of Things, technology companies that add value to direct-to-carrier APIs and combine them with high-power data analytics will create new concepts for the information economy.
Register Today!
Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...

2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...