Air cargo: structural reform urgently needed where capacity exceeds demand by over 100%

Freight has become the perennial underachiever in the air transport industry. According to IATA, its share of world airline revenues fell from 12.4% in 2003 to 9.1% in 2012 and will fall to an estimated 8.7% in 2013. While a sharp increase in cargo traffic and yield led the industry back into profit in 2010, freight has been a drag since then. It underperforms the passenger business in traffic growth, yield growth, load factor and daily utilisation.

In early Sep-2013, IATA described the outlook for air freight markets as "cautiously positive" amid signs that a cyclical recovery in demand may be starting. Indeed, this optimism has been echoed in comments from Turkish Cargo and Lufthansa Cargo anticipating better conditions in 4Q2013 and 2014.

That may be so, but major structural reforms are going to be essential in a sector that fails to fill even half of the capacity it supplies into the marketplace.