The Middle East air freight market is starting to show signs of improvement after eight years of stagnation, according to the head of the global aviation body.
“Cargo is coming from tough times everywhere because you had a sharp decline in international trade and secondly you have additional capacity coming on to the market very quickly,” said Alexandre de Juniac, the head of the International Air Transport Association (Iata).
“The recovery is coming and it has been true for six, seven months now. The third and the fourth quarter of 2016 were good and the first months of 2017, January is good in terms of demand. That’s good news because it’s happened after eight years of stagnation.”
He was talking on the sidelines of the Iata World Cargo Symposium being held in Abu Dhabi, where Etihad Aviation Group chief executive James Hogan was also a main speaker.
Meanwhile, Middle East passenger growth and airline profitability has been stymied by lower oil prices, Mr de Juniac said.
And the profitability of regional airlines is also likely to be affected this year as a slowdown in economic growth has a direct impact on the growth of the airline business, he said.
Figures released by Iata in December showed that passenger growth rates in the region fell to 7 per cent, its slowest pace in 18 months. This meant that average load factors, a measure of how efficiently airlines can fill seats and generate revenue, fell by 2 percentage points to 70.1 per cent, their lowest level for October since 2006.
Meanwhile, the profitability of commercial airlines in the region dropped to US$900 million in 2016 from $1.1 billion in 2015, according to Iata, and is expected to fall to $300m in 2017 as overcapacity, price pressures, exchange volatility, security threats and political uncertainties are likely to affect all airlines in the Middle East this year.
While global passenger numbers grew by 9.6 per cent in January year-on-year, the fastest growth rate since 2011, Mr de Juniac expressed concern that the global economy was showing some signs of weakness and that could have an effect on the growth of the industry if things take a turn for the worse and more countries start to look inwards.
mkassem@thenational.ae
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