After a 3.3% decline in 2019, air freight is said to grow more than 2% next year according to the International Air Transport Association (IATA). The trade association for the world’s airlines represents 290 airlines – or 82% of total air traffic – supporting many areas of aviation activity.
At IATA’s Global Media Days event in Geneva on 12 December, Andrew Matters, the organisation’s Deputy Chief Economist, stated that there have been “tentative signs of improvement”.
According to figures from IATA, air freight demand made a slow start to the peak season. Airlines in North America saw a decrease in demand by 2.4% in October 2019, compared to the same period a year earlier, while European airlines experienced a 1.5% decrease. Asia-Pacific airlines, in addition, saw freight volumes decrease by 5.3% in October 2019, compared to the same period in 2018.
Why hasn’t 2019 been the greatest year?
At the time of the June forecast, economic performance in 2019 was worse than what had been anticipated. A number of negative factors including slow economic growth across the board, deterioration in global trade and the US-China trade war has meant that air cargo has suffered.
IATA Director General and CEO Alexandre de Juniac stated that 2019 has been “a very tough year” for those in the air freight industry, adding, “slowing economic growth, trade wars, geopolitical tensions and social unrest, plus continuing uncertainty over Brexit all came together to create a tougher than anticipated business environment for airlines.
Yet the industry managed to achieve a decade in the black, as restructuring and cost-cutting continued to pay dividends. It appears that 2019 will be the bottom of the current economic cycle and the forecast for 2020 is somewhat brighter. The big question for 2020 is how capacity will develop, particularly when, as expected, the grounded 737 MAX aircraft return to service and delayed deliveries arrive”.
What can we expect from the air cargo industry in 2020?
At the event in Geneva, IATA announced they have forecast that the global airline industry will produce a net profit of $29.3 billion in 2020, improved over a net profit of $25.9 billion expected in 2019. The future is looking brighter for the air cargo firms.
In addition to this, other highlights of expected 2020 performance include that the overall industry revenues are forecast to reach $872 billion – which is a +4.0% on $838 billion in 2019 – the return on invested capital is forecast to be up by 6.0% – improved from 5.7% expected in 2019 – and passenger numbers are expected to reach 4.72 billion – up 4.0% from 4.54 billion this year.