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Cathy cashes in on cargo as Venezuela clings to cash

HONG KONG: As IATA CEO Tony Tyler announced his members would make US$25 billion profit next year, his former company Cathay Pacific has reported a 13.1 percent November increase in revenue tonne-kilometres (RTKs) compared to 2013.

Cathay and subsidiary Dragonair carried 165,102 tonnes of cargo and mail during the month, an increase of 12.0 percent year-on-year. For the first 11 months of 2014, tonnage on the two airlines rose by 11.9 percent and RTKs increased 14.8 percent.

Cathay Pacific 777Cathay Pacific Cargo Sales & Marketing general manager Mark Sutch said demand remained "robust" throughout the month with business helped by the bottlenecks in U.S. west coast ports.

Tyler said U.S. airlines are likely to generate over half the industry's net profits next year – in marked contrast to a similar-sized European market that is forecast to produce just US$4 billion.

He added that while US$25 billion might sound a lot, it is just a 3.2 percent margin on global revenues of US$783 million. By comparison, he said, Starbucks can charge about US$7 for a coffee in Switzerland: "Let's assume that their average global margin of 14 percent applies. If that is the case, they will retain as much from selling seven cups of coffee as an airline will make selling an average ticket."

Tyler said partnerships with governments are "crucial" to the future health of the airline industry and noted Singapore, Hong Kong, Chile, the UAE and Qatar are "very enlightened" and understand the strategic value of aviation connectivity.

By contrast, he said heavy taxation and "onerous regulation" contribute to current European airline problems. However in bottom place on Tyler's list of non-helpful governments appears to be Venezuela that is still refusing to repatriate US$3.6 billion to 24 airlines.

While Cathay and some of its peers pursue a paperless cargo business, Tyler admitted the industry remains infamous for its paper processes - despite achieving a 22 percent target for adopting the e-airwaybill. With an 80 percent goal promised by 2016, he said while its not "the grand prize, it is an important and enabling step towards a data-networked e-cargo industry".

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