Consultant Insight: Beyond cargo route expansions, airlines push offerings

As U.S. airlines report dismal results for the fourth quarter and full year of 2020, cargo remains a bright spot. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] American Airlines noted in its Jan. 28 earnings report that while cargo revenue in the fourth quarter was up 32% year over year, it declined 10.8% for the full year. For the year, the carrier operated more than 5,200 cargo-only flights, domestic and global, transporting 167 million pounds of critical goods and supplies. American expects cargo will continue to be a focus in 2021. Reporting its first annual net loss since 1972, Southwest Airlines had a 60% decline in overall 2020 operating revenues. Freight operating revenues were down 64% for the year and remained unchanged for the fourth quarter compared to the fourth quarter in 2019. Last week, United Airlines reported cargo operating revenues up 77.2% year over year for the fourth quarter, with a 39.8% increase for the full year. The airline flew the first of the COVID-19 vaccines from Europe in November. Meanwhile, Delta Air Lines, one of the first airlines to report fourth-quarter and 2020 full-year earnings, said cargo operating revenue was up 17% for the fourth quarter but down 19% for the full year. Delta’s cargo group has also launched a few initiatives, including priority COVID-19 vaccine handling and new leadership appointments. Jannie Davel has been named managing director, commercial, and Vishal Bhatnagar has been named managing director, global cargo operations. "This year [2021] will continue to be a period of both challenge and opportunity,” Rob Walpole, vice president of Delta Cargo, said of the two appointments, which were announced Jan. 12. “With the global industry focus on distributing COVID-19 vaccines alongside supporting our customers during a period where global supply chains continue to face disruptions and structural hurdles, our new leadership team stands ready to assist our customers." Expansion of cargo routes continue for the airlines, the more recent being Delta Cargo announcing a cargo-only service between Detroit (DTW) and Brussels (BRU) beginning in January. United Airlines also launched a cargo-only service between Atlanta (ATL) and Frankfurt (FRA) on Jan. 10. But perhaps one of the most innovative services is from American Airlines, which launched “Flagship Cellars,” a program that offers customers wine by the bottle, in customized cases or via a monthly subscription plan for $99 per month. With fewer passengers these days, American is selling off the collection of wine that would have been served to passengers on international and transcontinental flights. American expects to generate $40,000 to $50,000 in sales during the first three months of the year, according to CNN . While that’s not much compared to lost passenger revenues, “it is more so a way of engaging with customers, even when they are not traveling with us,” according to an email from American Airlines to CNN. In addition, members of the American Airlines AAdvantage loyalty program will earn mileage for their wine orders. The move to keep customers engaged is timely, particularly as airfreight capacity in the bellies of passenger aircraft is unlikely to recover to 2019 levels until 2023, according to an AirCargo 2021 webinar this week. But capacity gains will likely vary among trade lanes. According to Accenture’s latest capacity report on Jan. 18, the trans-Pacific trade lane continues to show capacity growth since the beginning of 2021, and the Latin America-North America air cargo capacity increased back to pre-COVID levels early in January. However, capacity for other trade lanes, such as the trans-Atlantic lane and South America-Europe lanes, shows double-digit declines.

Consultant Insight: Beyond cargo route expansions, airlines push offerings

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