As demand continues to outpace supply in the air cargo industry, a report in McKinsey & Company’s The Daily Read advises carriers to investigate short- to medium-term opportunities to boost their cargo services rather than rushing headlong into major investments in freighter f leets. Air cargo has, without question, been a lifeline for the industry during the pandemic – and that’s forced airlines, which have scaled back their freighter capacity over the past decade, to rethink their strategies. “They can enhance their f lexibility through measures such as increasing the deployment of so-called freighters, or passenger airplanes that are used to transport cargo. They may also look at freighter conversions, especially as their passenger f leets reduce in number to meet the supply/demand shortfall,” the report advises.And that shortfall is brought into sharp focus by statistical evidence. Before the pandemic, cargo typically made up around 12% of the sector’s total revenue; that percentage tripled last year. The report quotes data from the Airline Analyst which reveals that only 21 (down from 77 in 2019) of the airlines around the world that disclosed their operating performance achieved positive operating profits for the third quarter of 2020, traditionally the industry’s most profitable quarter. Among these 21 airlines, cargo revenue accounted for 49% of total revenues on average.With limited capacity – as bellyhold supply in passenger aircraft diminished – cargo yields reportedly increased by about 30% last year. Belly supply will clearly begin to increase as Covid-related restrictions are eased, but will take a few years to reach pre-pandemic levels.The message to airlines is to remain agile and f lexible to changing demands in a world where uncertainty is the only constant.
