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Cargo, one of the least glamorous aspects of flying, is proving a rare ray of light for airlines amid the coronavirus gloom.
The grounding of passenger planes at a time of increased demand for everything from medical supplies to iPhones has boosted freight rates. With much of the world’s population house-bound and shopping online instead of hitting the malls, analysts see no let up in demand, particularly as the peak year-end holiday season approaches.
“Airfreight is going to be a bright spot for carriers at least for this year because while borders are closed that doesn’t mean people aren’t buying,” said Um Kyung-a, an airline analyst at Shinyoung Securities Co. in Seoul. “That trend is likely to continue as cargo capacity remains limited.”
The sort of goods moving along this global conveyor belt 30,000 feet in the sky also track the pandemic’s unfurling. Masks and gloves have given way to semiconductor chips and PC parts as consumers set up work-from-home arrangements. Fresh produce is also big as people venture out less. Ultimately, once a vaccine is found, airlines will be used to disperse billions of vials quickly and in a temperature-controlled environment.
Under normal circumstances, about 60% of air cargo globally is flown in the belly hold of passenger flights. With hundreds of those jets parked in deserts waiting out the pandemic, airfreight costs have spiraled: rates to North America from Hong Kong are up almost 70% from early January.
For Qantas Airways Ltd., medical freight out of China hit a peak in May and June.
“What we saw were huge uplifts of light but very bulky freight — masks and gowns and gloves and the like. That was when we started to see airlines put light, fluffy boxes into passenger cabins,” said Nick McGlynn, who oversees Qantas’s freight sales and network as the unit’s chief customer officer.
That’s now subsided and Qantas has since been flying fresh produce from Australia into Asia including “significant amounts” of tuna to Japan and coral trout to Hong Kong, he said. On routes back to Australia, it’s dominated by medical supplies, car parts and electronics, as well as components for Caterpillar Inc. mining equipment from the U.S.
Fiji Airways is making a little extra from carrying seafood and kava, CEO Andre Viljoen said during a presentation last week.
Bloomberg Intelligence predicts belly capacity from passenger air fleets won’t return to pre-pandemic levels before 2022. Not every airline is able to pivot to address the changed circumstances. But those that can haven’t wasted any time.
In the U.S., United Airlines Holdings Inc. recently operated its 5,000th cargo-only flight (the busiest air cargo routes are between Asia and North America.) The carrier’s revenue from cargo jumped more than 36% in the second quarter to $402 million.
American Airlines Group Inc., meanwhile, has relaunched cargo-only services after a 35-year hiatus. In September, it expects to operate more than 1,000 cargo-only wide-body flights, primarily Boeing Co. 777s and 787s, to 32 destinations in Latin America, Europe and Asia.
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#iFlyEVA #TravelwithEVA #StarAlliance #EVAAir1:53 AM · Sep 1, 2020
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