Airlines pivot to cargo to compensate for loss of passengers
As travellers stay home because of the coronavirus pandemic and revenue tumbles, American and other US carriers are pivoting to freight. Demand for goods has decreased more slowly than travel demand, and some items, such as personal protective equipment, are newly critical. In normal times passenger planes move about 55% of the world’s cargo, but with so few planes flying, space is precious, and rates are rocketing. Air Canada, Lufthansa and Icelandair all have reconfigured a few planes to carry cargo in the main cabin, and on Thursday the FAA cleared Delta as the first US carrier to transport goods in the cabin. With airlines taking government funds, issuing fresh shares and drawing down billions in loans, every dollar helps. “Cargo remains somewhat robust and a good opportunity for them to generate some revenue when the core passenger side has been suffering,” said Citi analyst Stephen Trent. “If you have to run those flights anyway, best to run them with the belly full.” Last month American flew its first cargo-only flight in 36 years. The company generated $216m from cargo in Q42019, or 1.9% of total sales. As passenger revenue falls, analysts expect that percentage to rise to 2.1% in Q1 2020 and 3% in Q2. Last week American flew 46 cargo-only routes; it plans to “almost double” that number by May 7. Commercial rates for air cargo have soared. Goods moving on certain routes from China to the US now range from $13 to $19 per kilo, said Brian Bourke from freight forwarder Seko Logistics. A year ago the cost was between $3 and $6. <br/>
https://portal.staralliance.com/cms/news/hot-topics/2020-04-27/general/airlines-pivot-to-cargo-to-compensate-for-loss-of-passengers
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Airlines pivot to cargo to compensate for loss of passengers
As travellers stay home because of the coronavirus pandemic and revenue tumbles, American and other US carriers are pivoting to freight. Demand for goods has decreased more slowly than travel demand, and some items, such as personal protective equipment, are newly critical. In normal times passenger planes move about 55% of the world’s cargo, but with so few planes flying, space is precious, and rates are rocketing. Air Canada, Lufthansa and Icelandair all have reconfigured a few planes to carry cargo in the main cabin, and on Thursday the FAA cleared Delta as the first US carrier to transport goods in the cabin. With airlines taking government funds, issuing fresh shares and drawing down billions in loans, every dollar helps. “Cargo remains somewhat robust and a good opportunity for them to generate some revenue when the core passenger side has been suffering,” said Citi analyst Stephen Trent. “If you have to run those flights anyway, best to run them with the belly full.” Last month American flew its first cargo-only flight in 36 years. The company generated $216m from cargo in Q42019, or 1.9% of total sales. As passenger revenue falls, analysts expect that percentage to rise to 2.1% in Q1 2020 and 3% in Q2. Last week American flew 46 cargo-only routes; it plans to “almost double” that number by May 7. Commercial rates for air cargo have soared. Goods moving on certain routes from China to the US now range from $13 to $19 per kilo, said Brian Bourke from freight forwarder Seko Logistics. A year ago the cost was between $3 and $6. <br/>
