Top Asian airlines' profit margins are being eroded by a struggling air cargo business, even as they capitalise on increasing passenger demand, industry executives say.
Languid global economic growth and freight capacity oversupply brought on by new deep-bellied planes is hammering carriers with dedicated cargo businesses, the insiders said on Sunday ahead of the Singapore Airshow.
"The biggest worry of the airlines industry right now is probably cargo," Tony Tyler, director-general of the International Air Transport Association (IATA), told reporters in the city-state.
"For the big airlines in this region (Asia) it is a very important component of their revenue mix."
Last week IATA said air freight traffic rose by 1.4 per cent in 2013 compared to the previous year, supported by rising activity from Middle Eastern and Latin American carriers.
Asia-Pacific carriers, which have nearly 40 per cent of the global freight market, however, saw volumes drop 1.0 per cent, while capacity rose 0.8 per cent.
Passenger demand rose 5.2 per cent compared to 2013 while capacity rose 4.8 per cent.
Andrew Herdman, the director-general of the Association of Asia Pacific Airlines, said major regional airlines with separate cargo businesses are bearing the brunt of the slump in the industry since the 2008 global financial crisis.
"The people who are really suffering in the cargo business are the ones operating big fleets of dedicated freighters and that includes Singapore Airlines, Cathay Pacific, Korean Air, among others," Herdman told AFP.
