Operating expenses and jet fuel cost rose 28.77 percent and 44.02 percent, year-over-year, for Air China in 2011, leaving operating profit down 42.73 percent when compared to 2010.
Officials blame a “significant decline” in cargo coupled with a dwindling international passenger market and increased international competition for the meager financial numbers. Conversely, Air China experienced a rapidly growing domestic passenger business in 2011.
Cargo revenue in 2011 declined, year-over-year, by 2.37 percent; while revenue tonne kilometers increased by 0.14 percent last year, capacity far outpaced this bump by growing by 4.22 percent. Freight and mail load factor was also down 2.42 percent, when compared to 2010.
To try to reverse these cargo trends, Air China Cargo introduced new sales and marketing efforts, focused on developing its Shanghai cargo hub and strengthened transit support at existing cargo stations. The carrier also reduced non-producing long-haul capacity, while introducing new routes.
It was a rough year for both passenger and cargo, Wang Changshun, Air China’s chairman, is looking forward to the rest of 2012. Some of his goals for the coming year include increasing the carrier’s cooperation with Cathay Pacific Airways and deploying Air China’s capacity more effectively in response to market trends.
“In 2012, the steady and continuous growth in the Chinese economy will bring new opportunities in the aviation industry,” he said in a statement. “However, internal and external factors, including the lack of growth momentum in the European and American economies, the accelerated structural consolidation in the Chinese economy, the increasingly challenging domestic and international economic landscape, resource limitations (including airspace, slot constraints, infrastructure and manpower resources) and the high operating cost of our core business will generate new challenges and greater pressure for the company.”