Mike King, Special Correspondent | May 04, 2012 12:07PM EDT
Declining cargo revenue and rising fuel prices devastated the profits of Asia’s leading airlines last year, according to the Association of Asia Pacific Airlines.
Preliminary association figures revealed that Asia Pacific-based carriers in aggregate recorded $4.8 billion in net profit in 2011, 47 percent lower than the record $9 billion achieved in 2010.
Collective revenue for the region’s carriers totaled $162 billion, up 10 percent, but cargo revenue fell 1.4 percent, to $22 billion, as international cargo traffic declined 4.8 percent. Operating expenses rose 15 percent to $155 billion, driven upward by a 28 percent surge in fuel costs, which totaled US$52 billion.
Andrew Herdman, director general of the Association of Asia Pacific Airlines, said that even though Asia Pacific carriers outperformed the overall industry, last year’s profit still only represented a 3 percent profit margin and was a poor return on capital.
While Asian airlines have continued to benefit from stronger economic growth within the region this year, cargo markets have remained weak, keeping operating margins under pressure.
“Airlines around the world are still facing a number of significant challenges in 2012, including the effects of persistently high oil prices, and slower economic growth in the major developed markets,” Herdman said.
“Airlines are responding by carefully matching capacity to changes in demand, and maintaining strict cost controls throughout the business,” he said.
Contact Mike King at michael@borderline.eu.com.