Cargo has become the lifeblood for the aviation industry, with airlines scrambling to find ways to dive into the new lucrative revenue stream. But why is cargo suddenly so popular, how can an airline adjust to take advantage of freight and what role does cargo play to end the COVID-19 crisis? Eways presents an overview of the situation.
Why is cargo so popular?
Freight transport for airlines has always been a more lucrative revenue stream than passengers. It might not be so glamorous or make headlines in publications, but it is a reliable revenue earner that is simpler to operate than passengers.
Cargo has several advantages:
- Cargo does not require any entertainment, seating, heating or food onboard an aircraft. Airlines can save money on these extras.
- Cargo demands to be at its destination as soon as possible and doesn’t mind paying a premium to take the first flight.
- Cargo requires less room and weight than passengers.
- Cargo lastly isn’t tempted away to use other forms of transport or demand lower prices. There is no such thing as a low-cost-cargo-carrier.
In regular times, 50% of all air-freight is transported onboard conventional passenger aircraft among passenger’s suitcases. This has been an excellent source of revenue for mainline airlines, who could seemingly dip their fingers into both pies by operating a passenger aircraft.
Alas, as we know, this is not to always be the case.
How was the COVID-19 situation changed cargo transport?
With the decline of an average of 98% of passenger flights worldwide, with localities like Singapore down 99.5% of passenger traffic, there is now no longer enough passenger flights.
With almost 50% of air freight capacity gone overnight, this has left freight forwarders scrambling and willing to pay a 90% price increase to get their goods shipped. There has been a decline of international commerce of around 15% in March, but air freight capacity outmatched it by falling 23% in the same period. It has continued to fall since.
Airlines who specialize in passenger transportation have realized that, despite not having any customers, they could still make a fortune. And those airlines who are only cargo operators like Atlas, have acquired share gains and turned around its bottom line. This time last year, Atlas reported a US$30 million loss for the first quarter. This year the carrier reported a US$23.4 million profit for the quarter, a swing of $50 million.
How have airlines moved into the cargo industry?
Airlines have taken some pretty radical steps to facilitate transporting as much cargo as possible.
- American Airlines operated its first cargo flight for the first time in 36 years, using an empty passenger Boeing 777.
- Airbus has started to use its prototype aircraft, like the Airbus A330-800neo to ship cargo from China.
- Airbus is also offering conversion kits for carriers to convert their A330s and A350s into cargo aircraft. This ‘kit’ guides airlines in removing seats and replacing them with cargo pallets.
- Airlines are stripping the interiors of passenger aircraft, and some are being delivered without interiors – ready to fly cargo flights.
There are even talks of the first cargo A380 being converted in Germany for Atlas. This will be a fantastic step and may bring new life back to the aircraft type destined for the boneyard.
How is cargo shaping the battle against the coronavirus?
Moving cargo has surprisingly become one of the cornerstones of humanities fight against the coronavirus. While you may think this author is hyperbolic, the main freight of all these sectors is essential medical equipment for doctors, nurses, and other front line workers throughout the world.
Without this protective gear (manufactured all over the world) and the aircraft to get it to the hot spots, the virus would have spread much further and resulted in many more avoidable deaths.
Cargo has become a new currency for airlines, and those who embrace the mission to save humanity, or can find ingenious ways to sign up with what they have, are being rewarded with gold.
But don’t march foolhardily into battle without securing your equipment and protecting your front line workers.
Eways Aviation can provide airline heroes with their kids of PPE, facemasks, and other equipment to ensure they come home safe. Eways Aviation has its own production line of inhouse equipment that meets the technological requirements of pathogen protection for carriers and can supply them worldwide within 7-10 days for all types of airlines, big or small.