Cathay Pacific says freight capacity not in sync with demand; expects demand to pickup in 4Q2016

Cathay Pacific manager cargo sales and distribution John Cheng, via the carrier's CXWorld magazine, reiterated (Aug-2016) the challenges in the cargo business in 1H2016, where cargo revenue fell by 17% with yield declining by around the same amount. The main reason was the big drop in fuel surcharges collected across the network, Mr Cheng said. He said another major issue is that the low fuel-price environment has encouraged carriers to bring older aircraft back into service. He explained: "We've seen a big increase in capacity that is not in sync with demand... And it's not just freighters - there has been an increase in belly capacity, too,
especially from the Middle East carriers." The capacity issue affected transpacific routes in particular, with yield down 20% year-on-year. On the positive side, tonnage stabilised from 2Q2016 and the cargo team saw growth into India, where yield has been less of an issue than on transpacific services. Mr Cheng said the carrier is "cautiously optimistic" of a pick-up in demand in 4Q2016. He said: "We will put a stronger focus on the diversification of our higher-yield special products and do our best to upsell once we hit the peak". [more - original PR]