Chinese authorities warned about the implications of dwindling passenger flights on cargo shipments, saying international supply chains have been significantly affected and calling for measures to increase air-freight capacity. Chinese carriers will be helped to expand their fleets via lease or purchase, the State Council said in a statement after a meeting Tuesday.
The State Council also said mergers of air freight and logistics firms will be encouraged and express delivery companies will receive support for expansion. Where conditions allow, airports in places such as Beijing, Guangdong, Hong Kong and the Yangtze River Delta will provide around-the-clock customers clearance services, it said.
CATHAY’S CASE
Cathay, Asia’s biggest air-freight airline, has said a third of its cargo capacity was eliminated with the passenger service halts. Typically it carries half of its cargo load on passenger planes and the rest on its freighters. Its Cathay Dragon unit is using Airbus SE A330 aircraft to send cargo to China. The carrier was struggling to fill planes with passengers even before the virus outbreak as traffic slid in the second half of last year with the anti-government protests in Hong Kong, its base.
“While our freighter network remains intact, we are also ramping up our cargo capacity by mounting charter services and operating certain suspended passenger services purely for air freight to meet cargo customer demand,” Cathay Chief Customer and Commercial Officer Ronald Lam said on March 20. Chief Executive Officer Augustus Tang said in a memo to staff the same day that cargo capacity has been added for March and April.
Korean Air, Asia’s second-biggest cargo airline, is also deploying its A330 aircraft to Ho Chi Minh City and Qingdao to transport such products as LCD displays, ship components, mobile phone parts and Korean strawberries starting this month. Scoot is using its Boeing 787 aircraft to fly to Guangzhou and Nanjing twice a week each as charter flights for Singapore Air’s cargo operations, the budget carrier said.
MEDICAL SUPPLIES
In the U.S., American Airlines Group Inc. is shifting some of its biggest idled jets to ferry freight, its first scheduled cargo-only flights since 1984 when the airline retired the last of its freighters. The carrier will use its Boeing 777-300s to fly medical supplies, military mail, e-commerce packages and high-demand office equipment as more people work from home. The flights are between Frankfurt and Dallas-Fort Worth airports.
United Airlines Holdings Inc. is also using some of its 777 and 787 aircraft to make vital shipments, such as medical supplies, to Frankfurt from Chicago, the company said in a statement on its website. The carrier will initially operate 40 cargo charters a week and will continue to seek additional opportunities.
Lufthansa is looking to possibly deploy A330, A350 and 747 jets as freight-only flights to help secure supplies across Europe as it had inquiries to fly medical supplies to eastern Europe, CEO Carsten Spohr said on March 20. That freight would usually travel such distances by road, but the delays at some borders with lines as long at 70 kilometers are causing problems, he said. Among the large network airlines in Europe, Lufthansa is the only one that has kept a sizable full-freighter fleet.
IAG SA’s CEO Willie Walsh said on March 16 that the company may operate some of its passenger aircraft to ensure critical supplies are transported.
The move to operate passenger planes as freighters appears to be limited to short routes for now as cargo demand for longer distances won’t generate profit for most airlines. Still, as more carriers in Europe and the U.S. cut services and oil prices remain low, using passenger planes on longer routes could make economic sense for carriers. Fuel is one of their biggest costs.
“As more flights are cut on long-haul routes and oil prices stay where they are now, airlines could also consider using passenger planes for cargo to Europe,” Um at Shinyoung said. “While people put off any travel plans due to the coronavirus, that doesn’t mean they will stop buying. Global trade will still go on.”
