Coronavirus relief package offers air cargo a safety net

On Friday, U.S. President Donald Trump signed into law the massive, $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, under which U.S. airlines and other cargo operators will be eligible to receive billions in loans and — if they are willing to grant an equity share to the U.S. government — direct cash assistance. The bill allocates $25 billion in financial guarantees for passenger carriers, which in today’s environment of faltering demand for air travel is seen as necessary for survival. Cargo carriers, meanwhile, laud the $4 billion set aside for their corner of aviation, not for an immediate need, but as a lifeline that could protect the air cargo supply chain if the market deteriorates. Recognized by most governments as an essential service, particularly in times of crises, air cargo demand remains strong. Although cargo carriers aren’t known to be suffering any dire cash flow issues, there are several scenarios that could stress carriers to a point where they’d consider seeking stimulus. “The whole design for the $29 billion in grants and loans is to protect the employees — to make sure airlines have the cash flow to pay their employees,” said Tim Komberec CEO, Empire Airlines and President of the Regional Air Cargo Carriers Association. “If we got into a situation anywhere in our operation where we were literally going to have to furlough employees, that’s what would cause us to seek help.” A major drop in demand for time-sensitive transportation would be the most obvious drag on cargo carriers, but for now there is no indication air cargo demand will track the precipitous fall of passenger aviation. “Right now the demand for air cargo is huge. As long as factories are producing and consumers are able to buy, air cargo’s in pretty good shape,” said Komberec. Even if underlying demand drops, bellyhold capacity will remain much lower until passenger flights resume. There is a real concern that the intensifying outbreak could temporarily idle a crew base or cargo distribution center if social distancing and other precautionary measures aren’t enough to quell the outbreak. Such a shutdown could strain smaller operators. Both Part 121 and Part 135 carriers are eligible for loans under the act. See also: Crew safety amid pandemic challenges cargo carriers While cargo airlines were specifically supported in the language of the CARES Act, “the freight forwarder who serves as the key intermediary between shippers and those entities went unmentioned,” Brandon Fried, the executive director of the Airforwarders Association (AfA), said in the industry organization’s response applauding the quick passage of the act. The AfA had earlier submitted a letter to members of the U.S. Senate, including party leaders and relevant committee chairs, explaining freight forwarders’ role in facilitating air cargo shipments and requesting financial relief specifically for forwarders. Whether some freight forwarders may be eligible for federal relief under the cargo airline or airline contractor provision is unclear, but AfA leadership is concerned that most would not be, stating, “it is disconcerting to the point of negligence that our voices as the businesses acting as the hub to this wheel of commerce went unfunded.” However, the organization is optimistic that additional legislation related to pandemic relief is forthcoming and said that it has already been in touch with members of Congress who have previously supported air cargo and forwarders, “to enlist their help in ensuring that we are implicitly included by name at this critical time in our industry.” Cargo Facts Asia 2020 will be held on April 21-22, as a virtual event, continuing its keen focus on the Asia market. Although the event will look much different, the excellent content will remain the same, with the best and brightest minds addressing the most pressing industry issues for Asia Pacific — including those around COVID-19. To register and for more information, visit www.cargofactsasia.com .

Coronavirus relief package offers air cargo a safety net

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Wallace on Kalitta’s COVID-19 operations

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Related Posts

Western Global nabs remaining Lufthansa MD-11Fs

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CARGO FACTS CONSULTING

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Follow Us