Coronavirus

Airlines Shift From Passengers To Cargo

For the airline industry, keeping at least some top line in place to cover enormous fixed costs is a critical strategy as demand for travel has cratered.

To that end, American Airlines Group (and a number of peers) said last week that it has shifted some of its passenger jets – where, of course, passengers would have filled the space – and put them to work transporting cargo.

Bloomberg reported that, for American, the shift represents the first flights for the carrier without passengers since 1984.

The planes, Boeing Co. 777-300s, will transport medical supplies, eCommerce items and office equipment, flying between Frankfurt and American Airline’s base at the Dallas-Fort Worth airport.

The move has also been adopted by other firms, grappling with the growing impact of the coronavirus.

By putting those idled jets to work, American Air and its peers, can at least gain some revenues, and in the process also get critical items where they need to go as medical professionals battle the virus.

The strategy is being deployed across nations, as carriers that had cut back on flights through the past several months amid various international border closures are now bringing traffic back, where the (passenger) seats are empty, but the cargo holds are full.

American, for its part, said it had grounded about a third of its fleet and had slashed international flights by about 75 percent for April.

As FlightGlobal reported last week, Korean Air has started deploying passenger planes as cargo transport on routes that have been dormant. Per a statement, the company seeks “new opportunities in the market amid unpredictable changes, such as suspensions of flights and the U.S. restrictions on European countries.” The carrier noted that the vast majority of its flights had been grounded. In evidence of the new strategy, this month the airline transported emergency supplies and agricultural products from South Korea to Vietnam, using a passenger jet to ferry the cargo.

In a similar move, Cathay Pacific is considering operating cargo-only services on passenger jets to Japan, following significant cuts to the passenger network. As COVID-19 has reduced passenger traffic by about 50 percent, there has been some optimism for cargo flights in the region. As reported in AirlineRatings, Cathay Pacific said in its earnings report last week that “following the recent reduction in U.S.-China trade tensions … we have maintained our cargo capacity intact.” The Asia routes are especially critical as Chinese supply chains re-open.

Amid cheaper fuel prices and the prospect of realizing higher freight forwarding fees, putting idled jets in the air is serving as a tailwind for airlines to embrace cargo transport. Brian Clancy, managing director of Logistics Capital & Strategy LLC, told The Wall Street Journal that some freight forwarders may pay $9 to $11 a kilogram to have freight transported by an airline, where they once spent $3 a kilo.

Separately, the Journal reported, Deutsche Lufthansa AG has slashed 95 percent of its passenger flights, and said it might use at least some those flights to haul cargo. The financial publication quoted CEO Carsten Spohr as stating at a news conference that “the transport demand has clearly increased, and we want to make our contribution wherever possible to maintain the delivery chains.”

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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