While Air Cargo Grows, Ocean Grows Faster

The International Air Transport Association (IATA) reported freight demand grew 2.6% in the first four months of 2007, helped by route expansions and more shipments of perishable goods.

Regional growth indicates Middle Eastern airlines saw 12.2% growth in demand while Asia Pacific carriers increased 3.9% in the four-month period. North America was flat at 0.9% and demand in Europe and Latin America dropped by 0.1% and 5.5%, respectively.

“Freight demand is showing much more price sensitivity than previously,” said Giovanni Bisignani, director general and CEO of IATA. “The cargo business is still growing, but competition with other modes of transport is severe. And sea shipping is taking a greater proportion of the benefits from the economic boom,” he continued.

IATA projected airlines would achieve $5 billion in profit in 2007, adding that it is a $470 billion industry. “A profit of $5 billion is peanuts. We need $40 billion just to cover the cost of capital,” said Bisignani. “The industry is moving in the right direction, but with $200 billion of debt, the financial hole is deep. The challenge is to turn peanuts into sustainable profits.”

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