Aircraft load factors are trending downward

The low price of oil compared to the long-term average is having a positive
impact on airlines’ earnings. According to IATA, the cost of kerosene is likely to
account for around 20% of all airlines’ total expenses (including passenger
airlines) in 2016. This figure stood at around 33% in 2012 and 2013. However,
the lower price of fuel for airlines is being offset by relatively low load factors for
freight aircraft, which stood at a historically low 42.5% on average in the first half
of 2016, primarily on account of the rise in cargo capacity outpacing demand at
the present time.

This oversupply is intensifying competition in the industry and
putting pressure on average returns, much like in the ship transport sector.