Asia-Pacific Air Cargo Trends 2007

     International cargo across the Asia Pacific region is expected to lead global freight growth at an annual rate (AAGR) of 6.0 % during 2007 International Air Transport Association (IATA) predicts.
     Asian airlines are forecast to make $1.2 billion in aggregate profits in 2007, down from an estimated 1.7 delivered in 2006.
     Competition, more capacity and new entrants will impact bottom lines IATA said.
     IATA also reports seven of the top 10 freight markets fall within the Asia Pacific region with China's freight AAGR forecast at 11.6 pct from 2006 to 2010, followed by Pakistan at 8.8 %, Korea 8.2 %, India %, Sri Lanka 7.4, Thailand 6.3 % and Indonesia 5.8 %.
     For Australia, IATA puts freight traffic AAGR growth at about 4.4 percent.
     As to new carriers homing in on the already crowded skies above Asia, Andrew Pyne, CEO of newcomer Viva Macau, which launched services from Macau to Jakarta and the Maldives with two B767 aircraft, may have coined a new word to describe future carriers telling a CAPA conference audience last November that Viva Macau operates a “fusion airline” model.
     The carrier utilizes widebody aircraft allowing for operations to medium-to-long-haul routes (services to Europe, Australia and the Middle East are planned) because of their cargo capabilities.
     “We anticipate a predatory response from the immediate region’s established carriers,” Mr. Pyne said.
     “Cargo – which we ultimately anticipate accounting for 23% of revenues – provides a cushion to help us withstand that.”
     To be sure there is no lack of carriers wanting in on Asia/Pacific action.
     AirAsia, the budget carrier launched five years ago with two aircraft, now says it could be bigger than Singapore Airlines and Cathay Pacific by the end of 2007.
     Tony Fernandes, colorful self-assured founder of the Malaysia-based airline made the claim last year as he purchased 50 medium-range Airbus A320 jets with options on 50 more.
     "I'd imagine we'd be the largest airline in Asia by passenger size by 2013 or 2014, he told a reporter.
     "In fact by next year, we could be bigger than Singapore Airlines and Cathay Pacific in terms of passenger carriage."
     Whether or not Fernandes had to tell his investors the same thing to get an OK to buy the airplanes remains to be discovered.
     The point is, one way or another business as usual will be unusual from now on across the region.
Fernandes said AirAsia X would take off this July with flights to the UK at initial fares of 9.99 rgt, or less than $3USD.
     Elsewhere according to numbers crunchers Brian Clancy and David Hoppin, all Asian markets will enjoy steady and gently accelerating growth between 2006 and 2010.
     “The main driver of rising freight demand will be sustained economic growth in the main consuming countries of North America, Europe and Japan.
     “An additional demand driver will be the progressive “off-shoring” of increasingly sophisticated industrial goods production from North America and Europe to Asia.
     “Finally, persistent congestion and delay problems in the containerized ocean transport system will force planned and “emergency” upgrades from sea to air freight.
     “Consistent with historical patterns, the majority of new traffic (absolute growth in annual tonnage from 2007 to 2010) will be generated in intra-Asia and Asia export trades.
     “The geographic concentration of new traffic reflects the size of Asian air freight markets relative to other intercontinental air freight flows.
     “Asian producers are pushing into capital equipment, which will be the fastest-growing commodity type over the next five years,” Mr. Clancy said.
     Asian exports of capital equipment, both to other Asian countries as well as to North America and Europe, will account for more than half of forecast new traffic.
     China's gross domestic product grew 10.5 percent in 2006, after GDP growth of 10.2 percent in 2005.
     But government efforts to cool the economy are falling short, in part because out in the country, the trend is to ignore proclamations from Beijing.
     So as China adjusts to a unique form of capitalist/communism the world’s most populous country has more rich and poor and emerging markets than anyone.
     Hope springs eternal (at least in USA) that Vietnam gaining entrance into the World Trade Organization may mean less pirating of Hollywood movies, but no doubt WTO also will nudge the so-called “bread basket of Asia” Tiger, to play the world trade business game straighter.
     Busy buying Boeings and Airbuses, Vietnam Airlines just took delivery of the first of 10 new Airbus A321 passenger jets that arrived at Noi Bai International Airport on Thursday January 11, 2007.
     Having achieved normal-trade-relations with the United States, Vietnam will continue to emerge on the world airline and business stage having netted 8% growth last year.
     Japan having popped out from its post-bubble burst intact and on the upswing for the past few years, is still the world's second-largest economy.
     Projecting a 2 % growth rate in 2007, Japan wants to buy companies in China and elsewhere particularly in Korea and Asia.
     But memories run deep and people apparently will not forget the horror Japan inflicted on China and Korea during the 1940’s.
     Speaking of South Korea, with annual 4 percent to 5 percent GDP growth, and Hyundai probably even making toothpaste, South Korea will ink a pact for free-trade with Washington this year.
     But imagine what Korea might do finally striking some kind of accord toward a Greater Korea, by getting those grumpy North Koreans to come off the belligerent stuff that threatens the region and maybe the world?
(Geoffrey, Patrick Burnson contributed to this story)