Cathay Pacific included on Dow Jones sustainability indices for first time

By BA Staff

Cathay Pacific Airways announced that the concerted effort the airline has made towards operating as a sustainable organization has led to it being included on the Dow Jones Sustainability Indices (DJSI) for the first time.

The DJSI are recognized as the leading global sustainability benchmark, tracking the stock performance of the world's leading companies in terms of economic, environmental and social criteria. The indices serve as benchmarks for investors who integrate sustainability considerations into their portfolios.

Membership of the DJSI is by invitation only and is based on both company market capitalization and overall performance scores. In joining the Asia Pacific listing, which commenced in 2009, Cathay Pacific now ranks alongside other major organizations in the region, including some of the world’s biggest airlines.

In the benchmarking scorecard produced for DJSI, the airline was assessed on a wide range of criteria ranging from brand management and anti-trust policies to risk management, fleet management and corporate philanthropy. In the Environmental Dimension, Cathay Pacific rated well above the industry average for its environmental policy/management system and environmental reporting.

 Cathay Pacific Head of Environmental Affairs Mark Watson said:

“The Dow Jones Sustainability Indices are a highly respected tool for assessing an organisation’s performance across key areas. At Cathay Pacific we are well aware of the need to operate in a socially responsible and sustainable way and it is a great honour to be invited to be included in the DJSI. The ratings given by DJSI analysts will provide motivation to further improve on our sustainability efforts.”

Read more »

IATA reports rising passenger traffic growth as business confidence returns

The International Air Transport Association (IATA), an airline industry association which represents some 240 airlines comprising 84% of global air traffic, announced global passenger traffic results for February showing that demand growth is accelerating on the back of stronger business confidence, particularly in emerging regions. Passenger demand rose 3.7% compared to February 2012.

October 2012 appears to have been a turning point for air travel markets. Since October, passenger demand has been growing at an annualized rate of 9%. This is almost double the growth trend over the first 9 months of 2012.

Read the Passenger Traffic Analysis for February 2013 at the end of the article

Tony Tyler, IATA Director General and CEO said

“February’s performance was good news. Demand for air travel continues to rise on economic optimism and improved business confidence. But that comes with a few caveats. Much of the growth is concentrated on emerging markets. Europe continues to be a laggard. And the handling of the banking crisis in Cyprus has reminded all of us that the deep problems in the Eurozone economies still remain,”

Capacity was up 1.0% on the previous February and the industry load factor stood at 77.1%. “Airlines are carefully managing capacity expansion, which is keeping the load factor at a record high. This is helping the industry to remain profitable despite persistently high oil prices.”

International Passenger Markets

February international passenger demand was up 3.6% compared to the year-ago period, and 0.9% compared to January. Capacity rose 1.1% versus February 2012 and load factor climbed 1.8 percentage points to 76.3%.

• Asia-Pacific carriers recorded an increase of 4.5% compared to February 2012. Continuing improvements in China’s economy and growth in intra-Asian trade provided strong support to the passenger business of the region’s airlines. With this robust performance, demand associated with Asia-Pacific’s emerging markets has been a major driver of the stronger growth in international traffic seen recently.
• European carriers recorded 0.8% growth compared to February 2012. Reflecting the contraction of the Euro-zone economy in the fourth quarter of 2012, European carriers have not seen any growth in international demand since October. They have responded by tightly managing capacity, which declined 2.0% year-on-year in February. This pushed the load factor up to 76.5%.
• North American airlines’ international traffic rose just 0.3% in February compared to February 2012; however this doesn’t reflect the significant underlying growth trend over recent months. International revenue passenger kilometres for North America are up 3% in February compared to October. The load factor rose to 76%, reflecting a 4.6% reduction in capacity year-on-year.
• Middle East carriers saw year-on-year demand expand by 10.6%--the strongest among all the regions. Capacity expansion was held to 9.7% with the result that load factor rose 0.7% points to 77.7%, the highest for any region.
• Latin American airlines posted year-on-year growth of 7.0%. A 9.9% rise in capacity, however, pushed load factor down 2.1 percentage points to 76.7%. Robust economic growth in countries such as Colombia, which is experiencing strong demand for commodities exports, is contributing to rising air travel.
• African airlines’ traffic climbed 7.7% compared to February 2012, second best among the regions, while capacity rose 3.9%, boosting the load factor 2.3 percentage points to 65.2%. The rise in load factor commenced in mid-2012, supported by an increase in demand and also from tighter capacity management.

Domestic Passenger Markets

Domestic markets climbed 3.9% in February compared to a year-ago, driven primarily by surging demand in China, as all other markets experienced declines with the exception of Australia, which rose 2.2%. Total domestic capacity was up 0.8% compared to February 2012 and load factor rose 2.3% points to 78.8%.

• US traffic dipped 0.6% in February while capacity dropped 2.5%, pushing load factor up to 80.4%, second highest among the domestic markets. As with international traffic, the year-on-year growth rate is masking a recent uptick in the growth trend. The US market has been growing at an annualized rate of 9% since the fourth quarter of 2012.
• China’s domestic traffic soared 20.2% compared to a year ago, reflecting the impact of Chinese New Year-related travel, but also the continuing acceleration of the economy. With capacity up 13.7%, load factor jumped 4.5 percentage points to 83.8%, which was the highest for any domestic market. Compared to January, traffic was up 5.3%.
• Japan’s domestic market contracted 3.1% compared to February 2012 owing to the flat-lining economy and related weak domestic demand for air travel. Japan’s domestic traffic is 12% below pre-Tsunami levels. Capacity fell 4.7% year-on-year and load factor was the lowest for any market at 62.4%.
• Brazil saw traffic fall 4.3% on a 10.6% plunge in capacity as the country’s airlines act to offset downward pressure on profitability, with economic growth continuing to fall below expectations. Load factor rose 4.6% points to 70.7%.
• Indian domestic traffic dropped 9.1% in February compared to a year ago. In addition to the slowing economy, Indian airlines have been reducing capacity from previously unsustainable levels. Capacity declined 7.5% in February and load factor slipped to 74.5%.

See some great aerial views of the ramp at New Delhi airport

On March 20, IATA raised its outlook for the industry’s earnings performance to a net profit margin of 1.6% from 1.3%. While the airline industry outlook is positive, margins are still thin, and any shock, like that of Cyprus can have extreme repercussions.

IATA is also concerned on the flight delays, longer lines at security and border check-points at US airports thanks to budget sequestration measures which began to take effect on Monday, April 1.

Tyler was critical of these measures saying

“It’s unfair that air travellers should suffer the impact of sequestration given that airlines and passengers already pay around $4.5 billion a year in fees and taxes for the essential services of border control and airport security. It is unlikely that the savings that will be achieved from sequestration will offset the damage to the economy if air travel is discouraged by these cutbacks. Aviation is an important catalyst for economic growth and prosperity. The cost of the shocks, uncertainty and unpleasant surprises can only hamper efforts to revive the economy. The government’s priority should be on extracting the greatest economic benefit possible from aviation—not making it more difficult to do business,”

You can download the detailed Passenger Traffic Analysis for February 2013, here or read it online below.

Read more »

IATA report on airline performance should set panic bells ringing in government

Airline body, International Air Transport Association (IATA) announced international scheduled traffic results for January showing a deepening year-on-year demand slump.

International passenger demand fell by 5.6% in January 2009 compared to the same month in 2008, a full percentage point worse than the 4.6% year-on-year drop recorded in December, and the fifth consecutive month of contraction.

Air cargo is a key indicator of economic and manufacturing activity. It had collapsed 22.6% in December 2008, and this has only worsened in January 2009 with a 23.2% drop. Simple translation, manufacturers are still shedding inventory and cutting production.

Clearly alarm bells are ringing, but it does not appear that governments are hearing them.

Giovanni Bisignani, IATA’s Director General and CEO statement says it best

The drop in demand is much more harmful. The industry is shrinking with revenues expected to fall by US$35 billion to US$500 billion, delivering a loss of US$2.5 billion this year.

Airlines remain in intensive care, but while others ask for government bailouts, our demands on Governments are much more modest. First, don’t tax us to death in order to pay for investments in the banking industry. This includes the UK government’s plans to increase its multi-billion pound Air Passenger Duty and the Dutch Government’s misguided departure tax.

In 2008, even as governments delivered tax breaks to stimulate economic growth, the airline industry took on an additional tax burden of US$6.9 billion.

Second, give airlines the commercial freedoms that every other business takes for granted. With the world’s capital markets in disarray, archaic ownership restrictions are an unnecessary burden that must be lifted. Today’s crisis highlights the need to change the structure of this hyper-fragmented and fragile industry

See the detailed results here.

Do you agree with Giovanni Bisignani's view ? Post your opinions via a comment.

Read more »

IATA: Air cargo performance even worse than post 9/11. The FUD factor at work.

SCARY!!!!, there is no other word to describe the performance numbers and the forecast from IATA, the association representing 93% of the global commercial air transport industry.

For the month of December, it is now official -- ALL regions of the world, have reported major declines in cargo performance in December 2008 when compared to December 2007. Across the globe, air cargo, a vital barometer of world trade, is down 22.6%.

In November, Africa was the sole region showing positive compared to a year ago. Again, the Asia Pacific region, which represents 45% of global air cargo, led the world with a whopping 26% fall, when compared to December a year ago, this on top of 16.9% decline in November.

As per Giovanni Bisignani, IATA’s Director General and CEO

“The 22.6% free fall in global cargo is unprecedented and shocking. There is no clearer description of the slowdown in world trade. Even in September 2001, when much of the global fleet was grounded [post the 9/11 terror attacks on New York city], the decline was only 13.9%,”

The year on year performance does not reflect the oncoming tsunami of collapsing world commerce and trade. On an annual basis air cargo is down 4% with Latin America leading the world down 13.5%. Asia Pacific is down 6.6%.


Those of us, hoping for a global recovery in 2009, data from the Economist Intelligence Unit (EIU) and IATA, shatter those hopes. Business and consumer confidence are at historic lows. Leaders at the World Economic Forum meeting at Davos are talking about a mind numbing 0.5% growth for 2009. While India and China will experience moderate growth of around 6%, the recession in the developed economies will ensure the global recovery will commence only in 2010.



Semiconductors shipments are one the highest users of air cargo and a key barometer in global electronics production. The shipment performance of the global semiconductor industry reflects the deepening impact of the global recession.


Across the globe, the aviation market have been hit, and hit hard. Revenue Passenger Kilometers (RPKs) are down, and Freight Tonne Kilometers (FTKs) are way down.


Airlines have been retiring or parking their aircraft in record numbers. The silver lining in this saga, is that airlines, mostly in the middle east, have been taking deliveries of new more fuel-efficient aircraft, and refreshing their fleet to cut down operating costs.


Airlines across the world are facing deepening losses, and I am sure we are going to see the many airlines and brands simply disappear during 2009. US airlines were smart and cut their capacity ahead of the drop in demand, unlike airlines in other regions. This will aid them in returning to profitability sooner.


The bad news is going to continue in 2009. Passenger markets are expect to decline another 3%, which freight will decline another 5%.


Part of this precipitous drop in global trade is due to the "FUD Factor". Fear Uncertainty and Doubt. Every procurement manager, and individual consumer has retreated in to a shell. Stop all purchases. Buy only the bare minimum. This has slammed the brakes on the global economy so hard, that there is hurt everywhere.

Life is going to be difficult, but the world is still here. Caution is needed, but so is pragmatism. Surely there is no need to retreat so hard, and withdraw so deep.

As the world emerges from this shell, and consumption re-starts, the shelves are going to be bare, as existing inventories would have been fully consumed, and capacity cuts in manufacturing will be take supply well below demand. At that point air cargo will increase with a vengeance.

Read more »

Shocking drop in global air cargo confirms global economic meltdown

The recently announced results by The International Air Transport Association (IATA), is nothing short of shocking.

International air cargo is down by a whopping 13.5 per cent in November when compared to November 2007, and passenger growth is down by 4.6 per cent.

Graph legend
RPK - Revenue Passenger Kilometres (sales)
ASK - Available Seat Kilometres (capacity)
FTK - Freight Ton Kilometres (sales)
ATK - Available Ton Kilometres (capacity)


Even for year to date comparisons January to November between 2008 and 2007, global air cargo is down 2.2 per cent


Globally air cargo transports about 35 per cent to 40 per cent of global trade, by value. The negative growth in air cargo clearly shows the rapid fall in global trade, and the broadening impact of the deepening economic slowdown.

Even the middle east, the region showing consistent growth, slipped in to negative territory at -1.6 per cent. The largest air freight zone, Asia Pacific, which contributes 44.6 per cent to global air freight, contracted by the largest -16.90 per cent. Capacity cuts of 1 per cent in passenger and 3.7 per cent in cargo, could not keep up with the rapid declines.

India
As per data from the Airports Authority of India, available till October 2008; India year-to-date passenger performance is significantly worse than the rest of Asia Pacific and global performance. Passenger growth is down to -3.4 per cent vs. -0.8 per cent (Asia Pacific) and +2.2 per cent global.

However on the freight front, India has a Y-T-D growth of 4.2 per cent based on actual tonnage, compared to -4.7 per cent in Asia Pacific and -2.2 per cent globally.


Bangalore
For some unexplainable reason, Bangalore's performance is way below the national standard, at -14.8 per cent and -5.3 per cent for monthly passenger and freight performance, and -8 per cent and -7 per cent for year to date passenger and freight performance.

Highlights of the IATA report :

International Passenger Traffic

• The November passenger decline of 4.6% is a considerable worsening from both the 1.3% demand contraction in October and the 2.9% fall in September.
• Asia-Pacific carriers face the most difficult operating environment with a 9.7% decline in November, following a 6.1% contraction in October. The region also had the most aggressive capacity cuts at -5.1%. While Chinese domestic traffic rebounded after the Olympics, travel to and from international markets continues to decline, reflecting the weakness in both global trade and consumer confidence.
• North American carriers saw international traffic decline by 4.8% - the second largest drop among the regions. Until August, the region’s carriers had been shifting capacity to international markets. With the near collapse of the investment banking sector and consequent reductions in business travel, North Atlantic travel slumped. Carriers have started to cut international capacity with a 0.8% drop in November (following 0.4% growth in October)
• European carriers saw international traffic drop by 3.4% as all the region’s major markets (intra-Europe, North Atlantic, and Asia) slumped.
• Smaller emerging markets fared better. African carriers saw traffic decline by 1.6%. This is a considerable improvement from the 12.9% drop in October, resulting from stronger intra-African traffic. Middle Eastern carriers saw traffic increase by 5.6%. This is up from 3.5% growth in October, but represents a step-change from the double-digit expansion that characterized growth prior to the current financial crisis. Latin American carriers saw a slight decline in growth to 3.3% (compared to 4.5% growth in October), buoyed by the region’s positive, albeit slower, economic growth.

International Freight Traffic

• Asia-Pacific carriers (representing 44.6% of global freight) saw freight traffic fall by 16.9% in November - the largest decline of any region. As freight accounts for a larger percentage of revenues for the Asia-Pacific carriers, fourth quarter profits for the region’s carriers will be disproportionately (and negatively) impacted by the downturn in the global air freight market.
• Double-digit freight declines were also experienced by Latin American carriers (-15.7%), North American carriers (-14.4%) and European carriers (-11.0%). Freight traffic for Middle Eastern carriers turned negative (-1.6%), following 1.0% growth in October. African carriers, while being the only region posting freight growth (2.2%), saw a decline from the 3.0% growth posted in October. Plummeting business confidence and the continuing turmoil in financial markets indicates that the worsening trend will be continued in December.

Giovanni Bisignani, IATA’s Director General and CEO said

“The industry is now shrinking by all measures. The 1.0% capacity cut in international passenger markets in November could not keep pace with the 4.6% fall in passenger demand. We can expect deep losses in the fourth quarter,”

“With no end in sight for the worsening global economy, the 2008 gloom will carry over into the new year. Relief in the oil price has been outstripped by the falls in demand and capacity cuts are not keeping pace. The industry is back in intensive care. Improving efficiency everywhere will be theme for 2009,”

While the end to the global economic slowdown is still much further away than expected, the freight performance in India, shows us, the Indian economy is still performing well. We have to defeat the FUD Factor (Fear Uncertainty Doubt) that is in our minds.

Read more »

Video of global air traffic over 24 hours

Happy 2009.

As we wake up to a new year, I bring you an interesting video I came across on YouTube, which shows the global air traffic over 24 hours. But speeded up to complete in one minute.

Air traffic follows the sun, at its peak during daylight, just like most human activity does.

In the initial stages of the video as it is day time in Asia and evening approaches in the Americas, there is massive activity in the USA, and hordes of flights being launched towards Europe over the Atlantic.

At the same time as morning approaches Europe, the flights start descending on to Europe from both east and west, which then return back mid-day in Europe.

There are interesting patterns along the South East Asia to North East Asia routes, and also South America to the Iberian peninsula.

But the flights to, from, and within the United States, whether trans-Atlantic or trans-Pacific is simply staggering.

I also invite your attention to the number of flights over India at night.

Read more »

IATA figures confirm global aviation slowdown

The Centre for Asia Pacific Aviation reports that the International Air Transport Association (IATA) released international traffic data for Aug-08 that confirmed a continuing downturn.

International passenger demand growth slowed to 1.3%, following disappointing growth of 1.9% in July. Passenger load factors fell to 79.2% a sharp drop-off from the 81% recorded during the same period last year as capacity growth outpaced demand.

International freight traffic saw its third consecutive month of contraction with a 2.7% decline following drops of 1.9% in July and 0.8% in June.

Giovanni Bisignani, IATA’s Director General and CEO said, “Passenger traffic grew by 5.4% in the first half of the year. That slowed to 1.9% in July and 1.3% in August. The contrast between the first half of the year and the last two months is stark.” “The slowdown has been so sudden that airlines can’t adjust capacity quickly enough. While the drop in the oil price is welcome relief on the cost side, fuel remains 30% higher than a year ago. And with traffic growth continuing to decline, the industry is still heading for a US$5.2 billion loss this year.”

Bisignani said, Air freight has declined for the past three months, led by Asia Pacific carriers that posted a 6.5% decline in July and a 6.8% decline in August. “Airlines carry 35% by value of the goods traded internationally. The three-month decline - led by weakness in Asia-Pacific markets - is a clear indication that global trade is slowing down. This shows that the impact of the financial crisis is broad geographically and will worsen before it gets better.”

Passenger

• Asia Pacific carriers reported a 3.1% contraction, following a 0.5% decline in July. Economic distortions surrounding the Olympics in China and a weakening Japanese economic outlook contributed to the decline. While some recovery in this weak performance is expected in coming months, clearly the region’s economies are feeling the impact of the turmoil in the financial markets.
• Middle Eastern carriers saw traffic growth drop to 4.3% following 5.3% in July and well below the 10.6% growth recorded during the first 6 months of the year.
• In contrast, international passenger traffic carried by North American airlines accelerated from 4.2% growth in July to 5.2% in August, in Latin America from 8.1% to 11.9% and in Europe from 1.3% to 1.6%.
• August is usually the second strongest month of the year, but the 79.2% load factor achieved was 1.8% points lower than last year although scheduled capacity is planned to slow very sharply to the point where it barely grows by the end of the year.

Cargo

• The 6.8% decline in international freight shipped by carriers in the Asia Pacific region had the greatest impact as they comprise 45% of the global air cargo markets.
• The other big market players also showed weakness. European carriers experienced a 0.9% decline, while US carriers reported weak growth of 0.8%.
• Sharp declines in freight traffic in Latin America (-13.2%) reflect restructuring in Brazil with cuts in capacity.

Bisignani added,“The industry crisis is deepening and no region is immune. Urgent measures are needed. From taxation to charges and operational efficiencies, all areas impacting the business must be examined for ways to reduce costs and drive efficiencies. It’s a matter of survival.”

Despite this slowdown, foreign carriers are still bullish on India, and Bangalore in particular. Emirates in is the process of adding its 3rd daily flight, and is today the dominant foreign airline in Bangalore.

Read more »