Air cargo: few other industries would tolerate its structural overcapacity

IATA's most recent air freight market analysis, published 1-Oct-2014, said "The outlook for air freight markets has started to look better again", but it added that "the extent of future gains could be limited". IATA cautioned that trade volumes are expanding at a slower pace than global economic growth and that gains in business confidence have been slow due to the presence of political and economic risks. Recent concerns in the financial markets about the outlook for global economic growth add to this note of caution about future air cargo demand.

However, air cargo faces much more fundamental problems. It accounted for just 8.6% of total airline industry revenue in 2013, down from 12.4% a decade earlier. Freight load factor was just 45.3% in 2013, compared with almost 80% for the passenger business.

Very few other industries would tolerate such a degree of overcapacity. Perhaps the approach of many LCCs - to ignore cargo - is the right one.