The aviation industry has been facing one of the most disruptive crises for more than three months, and this crisis has clipped our wings severely without any exceptions. The beginning of June 2020 finally brings light at the end of the tunnel for the aviation industry, companies are ready to adapt and perform in the “new normal”. Making every player in the industry vulnerable, this crisis has shown us all that we need a “Plan B”, which in today’s circumstances is, air cargo.
Firstly, I’m not a doctor, a scientist, or a medical official; so, if you expect me to put coronavirus under the microscope and give medical advice, you’re reading the wrong article. However, I will try to put the air cargo industry under the microscope based on my thirty-plus years of experience in the industry, and I am sure that you will find the answers for questions you have on your mind, in this blog post.
To get a better understanding of what is going on within the aviation industry and what has caused in particular the increase of air cargo, we can evaluate the facts and figures shared by IATA. According to the analyses, the service capacity of the passenger airline market sector is expected to decrease by 82% in the second quarter, 56% in the third quarter, and 33% in the fourth quarter of 2020 on year-on-year basis of each quarter. In light of these numbers, IATA predicts that the loss of income will be 314 billion dollars in 2020 which makes about 55% decrease according to the revenue estimation that was announced before. However, if the normalization was not realized, this foreseen loss would be even greater. With the aforementioned 4th quarter scenario (33% capacity loss), we could only reach the achieved figures of year 2019 at the end of 2021 with an optimistic estimates. As active players of aviation industry, we have to be cautiously optimistic but we should keep in our mind that if we were to go over the worse-case scenarios, we would be talking about 2022 in order to match with 2019.
When we focus on air cargo in the midst of this foreseen recession, we notice the only increase observed in the aviation sector is in the number of cargo aircraft flights, which are called freighters flights. Before Covid-19, the share of the freighters cargo was about 50%. Thanks to the freighters, at least 50% of the air cargo operations will still continue without any problems. However, since the remaining half depends on the cargo carried on the passenger aircraft, which is called belly cargo, it is inevitable that air cargo will struggle overall to meet the demand. The suspension of passenger flights has sharply decreased belly cargo capacity about 80%, which has driven the sector to create a fast solution, another Plan B within the air cargo industry.
As we all know, while the upper deck of a passenger aircraft is reserved for the passengers and overhead bins for their convenience, the lower deck is utilized with passenger luggage and air cargo. Nowadays, passenger aircraft is still in use for the regular cargo operation; however, since fewer passengers are flying and very high air-cargo demand is requested from the market, airlines started to evaluate the option of carrying the cargo in the upper deck of the aircraft as the plan B. In other words, passenger aircrafts are being transformed into cargo aircraft by replacing passengers with cargo boxes.
Normally, the replacement of passengers with cargo boxes in the upperdeck of the pax aircraft is not easy task and has to be realized according to certain regulations determined by IATA and ICAO. Since passenger cabins are manufactured for the passengers’ usage only, they have certain weight limits and restrictions. Therefore, there are only certain types of cargo that can be placed there. Nowadays, most of the cargo carried in the upper deck are PPE’s and pharmaceutical items such as masks, glasses, drugs, etc. It is not possible to put heavy cargo and restricted cargo in the passenger cabins.
To sum up, with freighters and passenger aircraft loaded with full air cargo has been trying to keep the damage to a minimum. Although we notice the cargo capacity offered in the market is still about 27% lower than that of last year year-on-year basis as of 1st of May, additionally is about 80% lower than before Covid-19 compared to passenger flights, we can claim that air cargo has been playing the role of savior for the aviation industry in this new normal.
For air cargo, being in the limelight has both pros and cons. On the one hand, today’s conditions have established the necessary foundation for air cargo to flourish. On the other hand, at the center of this great demand, the development areas have come under the spotlight and urgent work needs to be done in this area. What can the stakeholders within the supply chain do to improve the current transportation process? What kind of actions do the authorities take? These are the topics and questions we will be focusing on in our next blog post...