Recently statistics have showed that Chinese airlines are suffering protecting load factors because of capacity additions while the European airlines on the contrary are suffering due to capacity reductions.
The four major Chinese airlines required capacity increases while only one, China Eastern recorded a fall during the month of July. Year on year all four together realized an increase of 11.3%. Nevertheless the struggle for load factors remained since all airlines recorded capacity increases ahead of growth demand.
Air China registered the largest increase by 27.1% in July, although these double digit results were not enough to outstrip the 28.2% y-o-y jump in supply. The fast-growing airline has expanded its fleet over recent months.
In September 2015 it began recording double-digit percentage increase in available cargo capacity and since then its fleet has increased from 518 to 566 aircraft. As a result of supply outstripping demand in July, its load factor slipped by 0.6 percentage points to 57.5%.
The largest decline in load factor during July was experienced by China Eastern, which recorded a 9.4 year on year percentage point decline in July as demand decreased by 11.1% and capacity increased by 5.1%. Although the demand during July was down for the first time in seven months, China Eastern realized an increase.
Hong Kong based Cathay Pacific, world biggest cargo airline, recorded a 1.4% y-o-y increase in volumes in July. Their capacity increased with 6.2% during the month resulting in its load factor going downwards from 64.7% to 61.8%. The airline said that demand for the month had been below expectation.
Clast but not least, China Southern realized an 8% y-o-y increase while its load factor declined as their capacity increased by 12.5%.
While air cargo growth in general has softened across the world as the year has progressed, according to IATA, the slowdown has been more severe in Europe than Asia. During the first half of 2016, European airlines suffered a decline in four of the six months compared to 2015, while Asian airless were only confronted with one month of declining figures.
Conclusion of the current situation during the first half of 2016 is that major airlines from both Asia Pacific and Europe are facing downwards load factors but the circumstances are different. While Europeans seek the reasons by a fall in cargo demand, the Asia Pacific carriers suffer from capacity increases outstripping growth.
For other major Asian airlines that report monthly statistics, their load factor declines seem to be more closely affected by demand slips than capacity additions, like European rivals.
Eva Air saw cargo demand decline by 11% year on year in July while its capacity was reduced by the lower amount of 3.7% resulting in a 4.3 percentage point slip in load factor. SIA Cargo has reported a 5% volume decline and a 1.5% capacity increase. As a result its load factor was down to 58.4% from 62.5% a year earlier.
