The next two years will not be plain sailing for airlines despite an encouraging recovery in the freight market since last fall, according to David Hoppin, managing director of transportand logistics analyst MergeGlobal.

Airfreight shrank by an unprecedented 26 per cent in value terms in 2009, from US$60.7 billion to $44.9 billion. By February 2010, volumes were still nine per cent below the peak of two years ago and while Hoppin does not think a double-dip recession is inevitable, he did warn delegates at the Executive Summit of The International Air Cargo Association (TIACA) in Leipzig in May that he was “deeply concerned” about the macroeconomic situation in the US and parts of the Eurozone.

The US saw two consecutive years of declining consumption in 2008 and 2009, for the first time since the 1930s. High unemployment levels were also likely to remain through 2011 in North America and Europe. This reduced demand formajor lines of flown goods including clothing, electronic products and toys,he noted.Hoppin said the “debt-fueled spendingbinge of recent years” was over thanks tohigh level of household debt, which wasapplying “the force of gravity on consumerspending”.

Observing that as government stimulus packages are coming to an end and the restocking phase is winding down, growth will now be more muted with Hoppin predicting it will take until the second half of 2011 before the airfreight industry returned to its pre-recession level. Intercontinental trade as a percentage of world GDP will stay above the 10 per cent mark, but airfreight’s share has fallen to 3 per cent as the result of massive growth in deepsea container shipping, he said.

Airlines have become more efficient, but so have manufacturers and the transport component in final product price has increased as a result of high fuel prices, eroding the benefit of outsourcing to Asia to reduce labor costs, Hoppin said. “For all the good things about it, airfreight is energy intensive. The cards are being stacked against air.”

On the upside, he noted that products that were early in their life cycle – “new evolutions of technology” – such as tablet computers and e-books, could expect to have a positive impact on airfreight for many years.

As airfreight flows change – intra-Asia traffic had grown as big as the Europe-Asia trade lane by 2008, for example – carriers face major decisions about their future fleet needs.

The Boeing 747-8, the first 130-tonne capacity freighter built for scheduled services, will be delivered later this year, but Hoppin suggested that not all airlines’ networks could cost-effectively support it. Smaller freighters with lower operating costs and the all important ability to be filled efficiently on a round-trip basis, will still be a key force, he said.

“Don’t assume that the market will grow to support the operation of everlargerfreighters,” Hoppin concluded.