AAPA: cargo boosts Asia Pacific airlines net earnings in 2017

The Association of Asia Pacific Airlines (AAPA) has reported that in 2017 Asia Pacific airlines achieved $8.8 billion in combined net earnings for the full year and air cargo growth boosted the figures.

AAPA said the global economy saw broadly based growth in advanced and emerging markets, and air cargo markets were lifted by an acceleration in global trade activity.

Asian airlines were boosted by major manufacturing economies located in the region benefitting from increased trade activity, the region’s airlines recorded an impressive 9.6 per cent jump in international air cargo traffic as measured in freight tonne kilometres (FTK) for the year.

Underpinned by the firm increases in both air passenger and cargo markets, Asia Pacific airlines achieved a 6.7 per cent growth in combined operating revenue to $176.6 billion in 2017.

Cargo revenue increased significantly, by 14.6 per cent to $18.6 billion. Following several years of contraction, cargo yields rebounded with a six per cent growth to 25 US cents per FTK.

Combined operating expenses climbed 8.7 per cent higher to $165 billion for the year. Fuel costs rose significantly, by 19.6 per cent to $40.6 billion, as global jet fuel prices climbed 24.5 per cent to average $65.4 per barrel. The share of fuel expenditure as a percentage of total operating expenses rose by 2.2 percentage points to 24.6 per cent. Non-fuel expenditure increased by 5.6 per cent to $124.4 billion, in line with higher traffic volumes.

AAPA director general, Andrew Herdman said: “Overall, Asia Pacific carriers as a group achieved commendable earnings performance in 2017, with the solid 31.6 per cent increase in net earnings to $8.8 billion underpinned by strong growth in both air passenger and cargo volumes, and higher average load factors.”

Herdman added: “Nevertheless, the region’s airlines continued to face some significant headwinds in the form of stiff competition, and increased cost pressures from markedly higher fuel prices and rising labour costs. Reflecting the highly competitive business environment, the average operating margin was 6.6% for the year, with net profits of just over US$6 per passenger.”

Herdman continued: “The ongoing expansion in the global economy bodes well for Asian airlines. Business activity is expected to remain relatively robust whilst increased consumer spending should underpin further growth in passenger travel and continue to support air cargo demand in the coming months.

“Overall, Asian airlines continue to evolve in the face of changing market dynamics, implementing measures to increase efficiency and carefully control operating costs whilst seeking opportunities to maximise revenue. In addition, the region’s airlines remain focused on enhancing business performance through increased investments in new technologies and modern fuel efficient aircraft.”