CFS: No return to pre-COVID balance between freighter, passenger belly capacity

LAS VEGAS — Certain segments of the passenger aviation market are unlikely to return to their pre-COVID normal, leaving combination carriers to adjust for the long-term, while cargo capacity is likely to remain more dependent on freighter aircraft, according to panelists at today’s Cargo Facts Symposium. “Will the market go back to what it was before, with belly capacity making up most of the capacity? We think no,” said Guillaume Halleux, chief cargo officer of Qatar Airways, during the Session One discussion: “The future of freighters: How long will freighter demand remain strong?” While panelists agreed that passenger demand has improved since the early days of the pandemic, business class travel has yet to recover and is unlikely to return to pre-COVID levels along the same routes operated in 2019, according to panelists. “The impact for our industry is really less belly capacity post-COVID, so we are now preparing ourselves for a tomorrow that will not be a copy of the pre-pandemic situation,” Halleux said. “Freighters come in handy there, obviously, as a way to compensate for lost belly capacity. I do believe this is really there to stay.” Meanwhile, cargo demand continues to outstrip capacity and is likely to do so for the foreseeable future, said Michael Steen, chief commercial officer of Atlas Air Worldwide and president and CEO of Titan Aviation Leasing, during the session. “If you think about when the pandemic hit, factories shut down for the better part of 90 days,” said Steen. “Inventory levels in many industries were impacted immediately. That’s had a lasting effect, and if you go to any industry now, and ask what their inventory levels are like, they say, ‘What inventory levels?’ It’s going to take time before those inventories come back.” The growth in e-commerce is also “there to stay,” and to support airfreight demand, Steen noted. “The penetration of e-commerce is still lower than 20%, so there’s a lot of runway there. The last driver is ocean freight, where there is complete chaos.” Airfreight demand is pushing carriers and lessors to pursue freighter fleet growth, or to add freighters for those not already operating them. Conversion houses have added conversion lines and slots where possible to help meet demand, but another problem has emerged, in that freighter conversions have not escaped the supply chain issues impacting the rest of the world’s industries. “Nowadays, obviously everyone wants more aircraft but they are not there,” said Luis Sierra, CEO of MasAir, during the discussion. “Many feedstock [aircraft] are around and people are buying [them], but the lines of conversions are truly stuck up. One of the issues that no one took into account is that the conversion lines are open, but not necessarily the raw materials to convert the aircraft.” MasAir currently operates a trio of 767 freighters, and will begin adding the first of four freighter-converted A330s to its fleet starting next year. It is unclear when conversion lines will be able to more easily secure the parts required for conversion, but Sierra noted his concern that conversion houses could be working through their orders through 2023 and 2024, at "exactly the time when more passenger capacity is going back into the market.”

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CFS: No return to pre-COVID balance between freighter, passenger belly capacity

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