Japan's airlines eye catering to semiconductor, e-commerce shipments

Demand for semiconductors and e-commerce products, among other goods, will likely be key to the success of Japanese airlines' cargo business as All Nippon Airways and Japan Airlines introduce freighters to shore it up. Both of Japan's major airlines expect the air cargo market to grow in the long term despite current shrinkage from the pandemic period. ANA is scheduled to acquire Japan-based Nippon Cargo Airlines on Oct. 1, while rival JAL will possess its own freighters for the first time in 13 years. ANA signed an agreement with NCA on the share exchange in July, a necessary procedure for implementing the previously announced plan of making it a wholly-owned subsidiary. NCA possesses eight large freighters, excluding those on lease, and has an extensive route network in Europe and the United States. JAL is converting three of its medium-size passenger aircraft to freighters, scheduled to become operational next April. These moves come at a challenging time -- both airlines posted a year-on-year revenue decline for their cargo business in the April-June period. ANA's cargo and mail revenue dropped 56% to 45.3b yen ($310m), while JAL's dropped 47% to 34.3b yen due to declining demand and airfreight rates. They also expect year-on-year declines in cargo and mail revenue for fiscal 2023, ending next March, to 253b yen for ANA and 172b yen for JAL. Demand for global air cargo surged in 2021, partly because of high e-commerce sales and the disruption of marine logistics, offsetting airlines' significant drop in passenger revenues. ANA's cargo and mail revenue in fiscal 2021 was 361.7b yen, 2.25 times higher than in pre-pandemic fiscal 2018.<br/>