Air cargo industry faces higher costs, lower yields, IATA says

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Cargo airline executives predict a bleak financial future in the short-term despite some positive signs in the global economy, the International Air Transport Association (IATA) says today.

An IATA poll of the heads of the air cargo industry in the first quarter showed that executives expect to see no traffic growth and smaller profits.

The industry's profits are being squeezed by two major factors, IATA says. A spike in jet fuel prices has increased costs, while an increase in air freight capacity is pressuring airlines to reduce prices, the industry group says.

Although the number of freighters in the market is not growing, the fleet mix is trending towards larger aircraft as new widebodies enter service this year, IATA says. Meanwhile, the number of passenger aircraft with belly-holds for cargo also is increasing significantly, IATA adds.

Those financial pressures will likely mean the air cargo industry will not realise higher profits as the global economy shows some signs of improving.

The demand for air cargo remains "soft", IATA says, as increasing global trade has tended to favour transport by sea freight.

IATA blames a one-month downturn in air cargo revenues in January on the Chinese New Year holiday.