Asia-Pacific freighter capacity tapped out leading into peak

With carriers attempting to squeeze out any additional frequencies available from their freighter fleets, the capacity situation leading into peak season will leave airfreight operators with little option for expansion outside of passenger freighters and bellyspace of passenger networks, according to a recent webinar on the Asian airfreight market hosted by DSV. “What’s quite clear is that freighters, both airline operations and integrator operations, have basically reached max utilization,” George Edmunds, general manager of cargo commercial at Cathay Pacific, said during the webinar. “There are no freighters sitting around parked at the moment, and everyone is flying their freighters really as hard as they possibly can.” [caption id="attachment_96776" align="alignright" width="450"] Photo/Cathay Pacific[/caption] Freighter operators frequently increase utilization around the fourth quarter as retailers prepare for the traditional peak season. Cathay Pacific is moving into its own peak schedule, Edmunds said, by increasing its trans-Pacific frequencies from 36 to 39 per week. The increase in freighter utilization can also be seen in market analysis from the International Air Transport Association, which has consistently reported increases in available freighter capacity compared to pre-pandemic operations. In its June analysis, IATA noted the capacity onboard dedicated freighters had increased by 29.7% from June 2019. However, while the increase in operations is a boon to the capacity-strapped market, heavy freighter utilization is unsustainable. “That’s only made possible by effectively pausing maintenance for a period of time, which is why we can only maintain that frequency for three months,” Edmunds said. “What you see here is that any recovery in any additional cargo capacity is going to rely on passenger bellies and cargo-only passenger aircraft… those are possible but only while rates remain high. For there to be a meaningful recovery in capacity and to increase beyond current levels, we need to rely effectively on the ability for passenger to be able to fly more freely.” Meaningful long-haul recovery for airfreight capacity is likely years away, Edmunds said, and passenger recovery is likely to begin with regional, narrowbody flights within the Asia-Pacific region. Long-haul passenger flights that could boost capacity for trans-Pacific cargo is reliant on the return of business travel, and “if you look at the Cathay network, the idea that we might be operating in the foreseeable future four flights per day, for example, through JFK, as we used to do, I can’t see that really happening until three to four years’ time from now,” Edmunds said. “A lot of that passenger capacity may never come back.” The gloomy outlook for passenger capacity on trans-Pacific lanes will likely leave those routes reliant on freighter capacity, but that forecast has not led to a surge in widebody freighter orders, Edmunds noted. “Everybody needs to be convinced that freight rates are going to remain elevated for a longer time than current,” he said, pointing to the traditionally mixed performance of airlines with large freighter fleets. The unwillingness to risk new freighter orders in an unstable market makes passenger-to-freighter conversions more palatable, he added. “I think you’ll see a lot of activity in that area — I think you’ll also see quite a lot of activity by the e-commerce players, either leasing or signing up long-term charters on that basis, but maybe more based on smaller A330s and narrowbody fleets as well,” Edmunds said.

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