An increase in capacity has raised concerns that Asia-Pacific carriers will see lower freight rates and falling yields despite strong passenger demand.

Prime mover Singapore Airlines posted a more than 70 per cent rise in net profit for the year to March. On the other hand, said UK-based Airline Business magazine, SIA Cargo, suffered a loss at the operating level as the breakeven load factor rose on the back of rising fuel costs and lower yield.

Other Asian freight carriers are also coming under pressure amid a slowdown in volume and rising capacity.

Seventeen airlines of the Association of Asia Pacific Airlines have seen their collective freight load factor on international runs shrink 1.6 per cent from January to April to 65 per cent, down from 66.7 per cent. Freight tonne kilometers were up 1.7 per cent year on year, while available freight tonne kilometers grew by 4.3 per cent.

With regard to mainland China carriers, in 2006 Air China and China Southern Airlines reported profits on the back of higher demand, but China Eastern Airlines was said to have experienced steeper losses, remaining in the red, although the losses were smaller on significantly increased sales.

In South Korea, Asiana Airlines' net profit dropped 67 per cent despite an eight per cent increase in sales. At Korean Air outbound cargo shipments slowed and freight revenue was up just 0.6 per cent, the report said.

Thai Airways International posted weaker results for its fiscal second-quarter to March, with net profit dropping by nearly a third despite eight per cent revenue growth.

Qantas Airways in Australia, on the other hand, is forecasting higher earnings for the financial year to June. It expects pre-tax earnings to grow by 40 per cent over 2005/6 and by around 30 per cent more in 2007/8.

Malaysia Airlines has also sharply raised its earnings forecast for the calendar year after recording better-than-expected profits in the first quarter, it said.