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Saturday, Aug 02, 2025

Middle East Air Cargo Capacity Rises Amid Falling Demand

Middle East Air Cargo Capacity Rises Amid Falling Demand

Regional air cargo capacity increased by 1.5% in June while demand contracted due to geopolitical tensions and airspace disruptions.
The Middle Eastern air cargo market saw a 1.5 percent year-on-year increase in available cargo space in June, despite a 3.2 percent decline in regional demand caused by ongoing geopolitical tensions and airspace disruptions.

This development marks the second consecutive monthly contraction in cargo volumes in the region, according to the International Air Transport Association's latest air cargo market report.

The rise in capacity came amidst route disruptions affecting parts of Iran, Iraq, Israel, and Lebanon.

The regional slowdown reflects a broader global trend in air cargo, with IATA projecting 0.7 percent volume growth for the year, down from 11.3 percent in 2024.

The anticipated slowdown is attributed to rising protectionism, including new US tariffs and the rollback of de minimis exemptions on low-value imports, which could negatively impact e-commerce-related air freight.

Willie Walsh, IATA's director general, emphasized that stability and predictability are crucial for trade, noting the importance of emerging clarity on US tariffs in business planning.

However, he highlighted the significantly higher tariffs on goods imported into the US compared to previous months.

While the full economic impact of these trade barriers remains uncertain, Walsh stressed the need for governments to simplify, speed up, lower the cost, and secure global trade through digitalization.

In June, Asia-North America and Africa-Asia trade lanes each contracted by 4.8 percent, while Middle East-Europe declined by 4.5 percent.

Conversely, Europe-Asia trade expanded by 10.6 percent for a 28th consecutive month.

Air cargo demand grew modestly by 0.8 percent year-on-year in June, with differing trends among major players.

North American traffic decreased by 8.3 percent due to trade tensions, while European growth slowed to 0.8 percent.

In contrast, the Asia-Pacific region experienced a 9 percent expansion.

Disruptions from military conflict in the Middle East contributed to a 3.2 percent decline in regional cargo traffic.

Middle Eastern carriers reported a 0.4 percent decrease in passenger demand and a 1.1 percent increase in capacity year-on-year.

The load factor dropped by 1.2 percentage points to 78.7 percent compared to June 2024.

Routes to North America and Europe experienced annual decreases of 7 percent and 4.4 percent, respectively, impacted by military conflict.

Despite these challenges, global demand for air travel grew by 2.6 percent in June, slower than previous months due to disruptions in the Middle East.

Global industrial production rose by 3.2 percent year-on-year in May, and goods trade increased by 3.5 percent.

Jet fuel prices were 12 percent lower than a year ago, easing cost pressures for airlines.

However, new export orders remained in contraction at 49.3 according to the Purchasing Managers' Index, which recovered to 51.2, indicating expansion.

Middle East airlines are projected to post the world's highest net profit margin of 8.7 percent in 2025, generating a net profit of $6.2 billion and earning $27.20 per passenger.

This outlook surpasses all global peers despite demand volatility and regional instability.
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