Higher turnover, lower profits for Asia Pacific air carriers

Andrew Herdman, Director General of AAPA

Asia Pacific airlines received higher revenue, but lower profits last year.

The Association of Asia Pacific Airlines (AAPA) said the total net profit of $4.8 billion in 2011 was down 47% on the previous year, due to higher oil prices and a weaker cargo market.

Based in Kuala Lumpur, AAPA said total revenue among its 17 carrier members was up 10% on a year ago at $162 million. However, it added that this represented only a 3% profit margin and “a poor return on invested capital”.

Overall, cargo revenue fell 1.4%, to $22 billion last year, and operating expenses rose 15% to $155 billion. This was largely due to a 28% surge in fuel costs, said AAPA.

“Profit margins were squeezed by high oil prices, as well as the impact of a weak air cargo market,” said Director General Andrew Herdman.

He warned that persistently high oil prices and slower economic growth in the major developed markets would continue to cloud prospects.

“So far this year, Asian airlines have continued to benefit from stronger economic growth within the region, but air cargo markets remain weak,” he said, adding that airlines were responding with stricter cost controls and cutting services to match the softer demand.