CFS: Freighters ‘not for the faint of heart’ despite demand imbalance

LAS VEGAS — Some combination carriers are not moving toward dedicated freighter operations, despite the gradual return of passenger travel and ongoing growth in airfreight demand. Many airlines are instead retaining their passenger freighter ops, and choosing to match their fleet to their business plan, according to panelists during a session on combination carrier business models at Cargo Facts Symposium 2021. [caption id="attachment_416857" align="alignright" width="560"] Jim Edgar, senior consultant at Cargo Facts Consulting; Andres Bianchi, CEO of LATAM Cargo; Adam Drouhard, managing director of Alaska Air Cargo; and Michelle Williams, strategy, planning and implementation director at Southwest Airlines.[/caption] Although available global capacity remains limited, converting passenger aircraft into full freighters or operating freighters in general is not always the answer for combination carriers, Andres Bianchi, CEO at LATAM Cargo, said during today’s panel. Instead, he urged that “fleet follows strategy,” or to find the right fleet combination that matches a company’s goals. “Freighters are not for the faint of heart,” Bianchi said. “It’s times like this when big mistakes are made because you think you can project this type of rate or environment on your business case. We’re very clear when we announced we’re doubling our freighter fleet that we never used 2020 or 2021 rates as a basis; we used 2019.” While building a company’s freighter fleet around demand seems easy, it is important to build the right model that works for your company goals, said panelist Michelle Williams, strategy, planning and implementation director at Southwest Airlines. The answer is not always freighters, she added. As a “combination carrier, I have to align to that strategy with what makes sense for Southwest Airlines,” Williams said. “That means that even if we're not pursuing freighters, I think there are other things that we can always look at to say how do we continue to maximize what we to have? … How can we add more products or take advantage of the markets that we have available to us to expand the business, and I think that's how we're going to continue to look at that and be innovative as an industry.” Amid an uncertain and fluctuating market, combination carriers will continue to operate passenger freighters due to the flexibility they offer, according to panelists. However, while passenger freighters have served a niche opportunity throughout the pandemic, it remains an inefficient method of augmenting capacity, panelist Adam Drouhard, managing director at Alaska Air Cargo, said. “The four- or five-hour load times on the aircraft, it’s not efficient. But again, there's a time and a place for it right now in the marketplace,” Drouhard said. Passenger freighters also face capacity limitations due to issues like passenger seats, making it so that only certain types of shipments can be transported, Bianchi said. For instance, e-commerce shipments cannot be transported on passenger seats, Bianchi said. In turn, passenger freighters remain a temporary solution that serves a very specific purpose, he added.

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