'Qatarstrophe' Weak Demand Dent Middle Eastern Air Cargo

The Middle East region is currently embroiled in one of its biggest diplomatic crisis in recent times. That, along with limited growth in demand, has had a rippling effect on the region’s air cargo market.

- Surya Kannoth

Middle East carriers’ share of freight volumes during the first half of 2017 fell for the first time in 17 years, according to data released by the International Air Transport Association (IATA).

The regional carriers’ share dipped slightly to 13.9 percent, from 14 percent last year, IATA said. Freight volumes grew 3.7 percent year-on-year and capacity rose 1.5 percent in the first half of 2017.

Regional freight demand, measured in freight tonne kilometers, rose by 7.6 percent year-on-year in the first half, but below the 10.8 percent average annual rate over the past five years. “The slowdown in growth is mainly due to strong competition from carriers in other regions particularly on the Asia-Europe route rather than a significant decrease in demand which has continued to trend upwards at a solid rate of around 10 percent in annualized terms since early 2017,” said the industry body in a statement.

“The region’s carriers have not seen the strong pick-up in the seasonally adjusted traffic trend that has been apparent in the major regions over the past year or so,” it added.

Brakes on growth

Middle Eastern airlines have benefited for years from high oil prices that spurred government spending and regional growth. But demand has softened after more than two years of depressed oil prices, exposure to weaker markets and currency fluctuations.

During a media briefing in March this year, on the sidelines of the IATA World Cargo Symposium in Abu Dhabi, Alexandre de Juniac, director-general and chief executive of the IATA, warned that airlines across the world need to “manage their assets cleverly.”