Airline cargo revenue is cratering. Here’s why that’s actually good news

Airlines’ cargo revenue is slumping. That’s a sign of good news for travel recovery. Delta, United and American this month each reported year-over-year declines of about 40% in their Q2 cargo revenue. For the first half of 2023, Delta’s cargo business generated $381m, down from $561m in the first half of 2022, while American’s cargo unit brought in $420m compared with $692m in the first six months of last year. United brought in $760m from cargo so far this year, down from $1.2b a year earlier. Meanwhile, airlines are reporting record revenue, if not earnings, thanks to the rebound in travel demand. That means the business impact of cargo, which once helped prop up airlines’ revenue during the Covid pandemic travel plunge, has faded. Cargo revenue at United, which generates the most of that business of the three largest US carriers, for the first half of 2023 represented a less than 3% slice of the carrier’s $25.6b year-to-date revenue. That’s a significantly smaller portion than 2020, when cargo revenue made up more than 10% of United’s sales. Through June, cargo revenue made up 1.3% and 1.6% of overall revenue at Delta and American, respectively, down from 3.5% and 12% in 2020. But it’s not all bad news. Flying goods around the world was a lifeline for passenger carriers during the pandemic when bookings dried up and travel restrictions forced airlines to slash service abroad. Normally about half the world’s air cargo flies in the bellies of passenger planes. That reduced cargo capacity during the pandemic helped drive shipping rates up to records, along with strong e-commerce demand, supply chain problems and port congestion. But travel demand has roared back, particularly for international trips, as customers rush to take vacations abroad that they put off in recent years.<br/>