Taxes and regulations thwart air cargo growth

With the air cargo market continuing its decline, shippers are demanding that global governing bodies reassess their positions on taxes and new regulations

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With the air cargo market continuing its decline, shippers are demanding that global governing bodies reassess their positions on taxes and new regulations.

Freight markets, which reflect economic sentiment more quickly than passenger markets, showed a decline of 0.4 percent in July compared to the previous year. The nature of the weakness has changed. In 2010, airlines were losing market share to other modes of transport as world trade expanded. The earthquake and tsunami in Japan, coupled with the general economic gloom are now the main driving factors of continued weakness.

Asia-Pacific carriers continue to show the weakest freight performance with a 3.6 percent decline compared to July 2010. Middle East and Latin American carriers showed the strongest performance with gains of 8.4 percent and 8.2 percent respectively.

Freight load factors have declined significantly (1.8 percentage points) to the pre-recession level of 45.0 percent. Asia-Pacific carriers, the largest in the market, have seen load factors slip to 58.1 percent (from 60.2 percent in July 2010). While the region suffers from a major imbalance with strong outward flows of manufactured goods and weak inbound traffic, the scale of their home carrier operations allows for better capacity utilization.

According to the International Air Transport Association (IATA), some of the challenges have a high percentage of government-made content.

“The recent downsizing of Air Berlin is a clear reminder of the high cost of the German departure tax on the economy, jobs and communities. Governments should not compromise aviation’s role as an economic catalyst for the short-term revenue gain of gratuitous taxation—particularly when economies remain weak,” IATA noted in a recent report.

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]

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Article Topics

Air Cargo · Air Freight · Global Trade · All Topics
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