Air cargo: IATA says Middle East and North Africa show promise

The International Air Transport Association (IATA) called for coordinated efforts to deal with the challenges of growth in the Middle East and North Africa (MENA).

“Over the last decade, the carriers of the Middle East and North African region have grown from 5 percent of global traffic to 11 percent,” said Giovanni Bisignani, IATA’s Director General and CEO. “Planned aircraft purchases of $200 billion over the next decade will support this growth into the foreseeable future. This expanding global presence brings with it the challenge of playing a larger role in the global aviation community,” said.

The financial situation of the MENA carriers is improving. For 2010, IATA is forecasting a bottom line improvement of $1 billion on the $600 million that the region’s carriers lost in 2009. “We are expecting the region to make $400 million profits this year. A more cautious approach to capacity is helping to drive this improvement. While demand is in line for a 21 percent increase over last year, the capacity increase has been limited to 15.9 percent,” said Bisignani in a keynote address to the Arab Air Carriers Organization (AACO) Annual General Meeting in Cairo, Egypt.

Luciana Suran, an economist with CB Richard Ellis Economic Advisors, noted that air cargo is ramping up for U.S. multinationals in a number of emerging nations.

“Even though it may be more expensive in the short term, many companies will absorb that for velocity benefits,” she said at the recently-concluded Supply Chain Executive Summit in Houston.

For 2011, IATA expects a fall in global profitability to $5.3 billion from the $8.9 billion that airlines are expected to make in 2010. IATA expects MENA carriers to follow the trend with a reduced 2011 regional profit of $300 million. The small profit will be partially driven by an expected capacity expansion of 10.6 percent outstripping demand growth of 10.4 percent.