CSCMP's Supply Chain Quarterly
August 17, 2019
Forward Thinking

Global air growth climbed 9 percent in 2017; best year since 2010, IATA says

Capacity rose by just 3 percent, creating rare "factor of three" ratio.

Global air cargo demand surged 9 percent in 2017, posting its best year since 2010 and more than doubling last year's 4.3-percent growth in global trade, the International Air Transport Association (IATA) said today.

Demand, which is measured in "freight ton-kilometers," or one ton of freight flown one kilometer, had been strong for most of the year. Unlike 2010, when the gains that came amid the recovery from the financial crisis and recession quickly dissipated, the increases in 2017 should extend through 2018, the global airline trade group predictedâ??though the gains will not be nearly as strong as last year's. IATA forecast a 4.5-percent traffic increase this year, which Alexandre de Juniac, the group's director-general and CEO, called a "very healthy" expansion. Last year's results were "exceptional," de Juniac said.

The air freight sector boomed in 2017 as a synchronized global recovery triggered demand for manufactured exports to help companies quickly restock their inventories. The mode also benefitted from the beginnings of an expected multi-year expansion in cross-border e-commerce deliveries.

In a revealing statistic that underscored air carriers' ability to maintain tight controls over cargo space, capacity worldwide grew by only 3 percent last year over 2016 levels. It is uncommon for a rise in annual demand to exceed capacity growth by a factor of three. The convergence of strong demand and tight supply led to significant airline rate increases during 2017.

The global increase came even as the Asia-Pacific region, whose carriers control the largest share of the global market at 37.6 percent, and North American airlines grew their traffic at levels below the world average. Asia-Pacific airlines grew their traffic by 7.8 percent, while North America, whose carriers control 20.5 percent of the world market, grew at 7.9 percent. European airlines, which control 24.5 percent of the market, grew traffic by 11.8 percent.

The fastest-growing market was Africa, with a 24.8-percent gain. The continent's airlines control only 1.9 percent of the total world market.

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