Airfreight in respiratory distress
The aviation industry is in an unprecedented crisis. For once, it is likely to hit passenger aviation harder than the airfreight segment. But one cannot manage without the other, as the events of recent weeks have reminded us. The ongoing situation may change daily – or even hourly.
This century is still less than 20 years old – but in this short time the aviation industry has already weathered many crises. First came the attacks of 11 September 2001, triggering a wave of airline bankruptcies of carriers that, as with Swissair, seemed unshatterable as national symbols.
Then came the ‘annus horribilis’ of 2009, in the wake of the global financial crisis, and in 2010 the eruption of an Icelandic volcano with a nigh-on unpronounceable name, spewing ashes into the air and paralysing swathes of the global aviation schedule for weeks. This was followed by the fallouts from the Sars, Mers, bird and swine flu, Ebola and Chikungunya epidemics. Covid-19 poses a new threat, however. Previous epidemics were contained regionally, but the current outbreak has benefited from the advanced degree of globalisation.
What future for the industry?
The world will not be the same after Covid-19. Some analysts have predicted more rapid consolidation of airlines, which could go as far as halving the number of aviation service providers.
The most pessimistic observers have even predicted nothing less than the end of the industry. In the eye of the storm the industry associations are raising their voices and have managed, amongst other things, to ensure that at least freight will continue to be transported by air – and not just relief supplies. Now that production has restarted again in China, it is only air transport that can guarantee the supply chains.
Most passenger planes grounded
However, about half of all air cargo volumes are usually flown in the belly holds of passenger planes operating on scheduled services – but most of these services have been suspended and their units grounded in the meantime. There is thus a sudden lack of capacity, which has driven up demand. In order to meet it, ever more mixed carriers are temporarily converting their widebodies into ‘only-freighters’. Calling them full-freighters would go a bit too far.
A virus flies around the world
It all started in Asia in January, when there were still complaints that the lunar year started particularly early this year. The Association of Asia Pacific Airlines has calculated that there was a 4% decline in its members’ cargo performance in the first month of 2020, when comparing the figures with H2 / 2019. The passenger segment figures were still positive in January (+2.7%); February saw a steep decline, however (–34.8%). At –3% the impact on cargo business was much smaller, despite production lulls in China lasting many weeks. Some airlines, first Cathay Pacific, then Singapore Airlines and subsequently Korean Air, reacted quickly by temporarily using grounded wide-body passenger aircraft as ‘only-freighters’.
The crisis did not pass Middle Eastern airlines by either. Emirates and Etihad Airways discontinued their passenger services, while Qatar Airways cut its programme back greatly. These large providers’ freighter operations have been unaffected by developments.
Middle Eastern and North African airlines have already cancelled around 16,000 passenger flights, as per an estimate released by Iata on 19 March. Africa, which recently experienced the strong- est freight growth, appears to be particularly vulnerable. South African Airways, which is already in crisis, was forced to cancel services on its Cape Town–Johannesburg route.
Ambivalence has characterised the continent that has emerged as the second Covid-19 focal point. Europe’s large mixed carriers with main-deck capacities are operating at full speed. Swiss, IAG and Alitalia have adopted the Asian model for their large passenger aircraft.
The same applies to the major US airlines American Airlines, Delta and United, Air Canada and the most important Latin American carriers, such as Latam Cargo. At the same time, freight forwarders and charter brokers are strengthening their services on trans-Atlantic routes.