Expanding horizons: Alaska Airlines Cargo’s path to global growth

The airline industry continues to evolve as companies seek to strengthen their position s in the competitive global marketplace. Alaska Airlines , a prominent player in the U.S. aviation sector, has made significant strides in expanding its cargo operations, particularly following its recent merger with Hawaiian Airlines . Here, Cargo Facts Consulting explore s the leadership changes within Alaska Airlines Cargo , the expansion of its freighter fleet and network, and the projected growth in th e carrier’s cargo revenue. These developments position Alaska Airlines to become a formidable competitor in both domestic and international cargo markets, particularly in the profitable Asia-Pacific region. Leadership c hanges f ollowing m erger In September 2024, Alaska Airlines appointed Ian Morgan as v ice p resident of c argo and Jason Berry as e xecutive v ice p resident of c argo at Alaska Air Group , marking a strategic shift for its cargo division. Morgan will oversee Alaska Air Cargo’s daily operations, while Berry retains enterprise-level oversight alongside his role as p resident of Horizon Air . Morgan, with leadership experience at ECS Group , British Airways Cargo and Qatar Airways Cargo, brings deep industry expertise. Berry, a long-time Alaska Air Group leader, directed Alaska Air Cargo from 2013 to 2019 before joining Horizon Air. Their combined 70 years of experience position them to drive Alaska Air Group’s cargo operations forward. Fleet e xpansion , r oute e nhancements Alaska Airlines continues to demonstrate its commitment to growth, particularly through the expansion of its freighter fleet and its domestic freighter network. In November 2023, the airline received its first 737-800 freighter, N584AS, which was originally delivered to Alaska Airlines in 2007 and subsequently converted under Boeing’s STC at the COOPESA facility at Juan Santamaria International Airport (SJO) in San Jose, Costa Rica. Alaska’s second 737-800BCF was delivered in July 2024 after conversion by KF Aerospace at Kelowna International Airport (YLW) in Kelowna, British Columbia . These two additions, along with three existing 737-700 freighters, bring Alaska's freighter fleet to five aircraft as of January. In April 2024, Alaska Airlines launched its inaugural freighter service from Anchorage to Los Angeles via Seattle. This service offers enhanced connectivity between Southern California and Alaskan communities, operating twice a week and marking Alaska’s first scheduled freighter route to the lower 48 with a destination other than Seattle. The route carries retail and e-commerce products north and fresh seafood south, supported by a sophisticated cold-chain network. The Seattle-Los Angeles segment serves industries reliant on time-sensitive shipments, such as aerospace and biotechnology. During the holiday season, capacity was temporarily increased to three times a week, with the January schedule has been redeployed to the Anchorage-Kodiak route, increasing frequency to three times weekly. Figure 1 below displays Alaska Airlines' freighter network map, and is filterable for their two 737 types. Figure 1 – Alaska Airlines freighter network Source: Cargo Facts analysis of FlightRadar24 data

Through its $1.9 billion acquisition of Hawaiian Airlines, finalized Sept . 18, 2024, Alaska Airlines Cargo opened the door to international expansion. Hawaiian Airlines’ widebody aircraft will be utilized to enhance cargo services, with new nonstop flights from Seattle to Tokyo Narita and Seoul Incheon beginning in 2025. Daily nonstop service to Tokyo will commence on May 12 aboard Hawaiian’s Airbus A330-200, capable of carrying a combination of baggage and cargo in 26 LD3 containers. Nonstop service to Seoul is expected to begin in October , although the aircraft to be used (either the A330-200 or the Boeing 787-9 ) has yet to be confirmed. By 2030, the airline plans to include at least 12 non-stop global destinations with long-haul widebody aircraft from its Seattle hub. This expansion will include a combination of European and Asia-Pacific destinations. These new routes will significantly bolster Alaska Airlines Cargo, but the greatest impact will come once the integration of Hawaiian and Alaska’s networks is complete . Hawaiian already services destinations across the Pacific, including Japan, Korea, American Samoa, French Polynesia, New Zealand and Australia. Integration of the fleets, including both narrow and widebody aircraft, will provide seamless shipping across a global network. Although the two airlines will continue to operate separate cargo networks for now , plans are to integrate them as soon as is feasible. Additionally, the expanded fleet will allow Alaska Airlines to redeploy Hawaiian’s A330 aircraft on high-demand routes, such as between Seattle and Anchorage during the peak summer season, to take advantage of the aircraft’s increased seating and cargo capacity. Projected revenue g rowth Since their founding in 1932, cargo has been an important component of Alaska Airlines’ operations. During the past decade, cargo revenue has contributed from $110 million and $130 million annually, a substantial addition to the company’s bottom line but still below the revenue levels of industry leaders. However, integration of the two airlines’ cargo operations is expected to significantly increase profits. Alaska Airlines anticipates an additional $150 million in annual cargo revenue once the merger is fully realized , for comparison they achieved $ 128 millio n in 2023 . Of this addition , $35 million is projected to come from optimizing fleet deployment and improving load factors to industry standards, while $55 million will stem from yield enhancements. Figure 2 – Comparison of c argo r evenue Source: Cargo Facts analysis of Hawaiian Airlines and Alaska Airlines financial statements

Note: The above information for Hawaiian Airlines is reported as other revenue (e.g., cargo and miscellaneous), Alaska Airlines reports cargo revenue.

The Hawaiian market presents unique challenges due to a significant imbalance in the flow of goods between the continental U nited States and Hawaii. Analyzing Bureau of Transportation Statistics trade data from 2019 to 2024 reveals a freight and mail trade imbalance averaging over 370 million pounds annually, favoring freight moving to the islands. Through a redesigned network , Alaska Airlines will look to capitalize on this imbalance rather than suffer from it. Figure 3 – Hawaii's trade imbalance Source: Cargo Facts analysis of Bureau of Transportation Statistics trade data

Additionally, the growing demand for air cargo between the U.S. and Asia presents a significant opportunity for Alaska Airlines. Tokyo Narita International Airport (NRT) and Seoul Incheon International Airport (ICN) are major cargo hubs, with NRT ranked 12th and ICN ranked 5th for global cargo traffic when measured by weight of material handled. As reported by IATA , Asia-Pacific airlines' international cargo ton-kilometers grew 12 % year over year in September 2024, reflecting the growing importance of the region in global trade. The region accounts for approximately 40% of global air cargo traffic, with Japan and South Korea emerging as key economies for high-value exports, including electronics, automotive parts, pharmaceuticals and industrial products. By launching new routes to Tokyo and Incheon, Alaska Airlines is poised to capitalize on this increasing demand for freight services. Both airports are heavily investing in expanding their cargo capacities, and the post-pandemic recovery of global supply chains has led to heightened demand for air cargo. Expanding into international markets like Tokyo and Incheon not only diversifies Alaska’s cargo network but also provides access to high-margin, time-sensitive sectors such as electronics and automobiles. By linking its cargo operations in Seattle to these new international destinations, Alaska Airlines enhances the connectivity between its North American network and key Asian markets. This integration creates synergies, attracting cargo from other regions of the U.S. and supporting complementary services to existing destinations in China, Southeast Asia and beyond. The addition of these routes will strengthen Alaska’s logistics network and solidify its position in the competitive global air cargo market. Amazon A330 o perations s trengthen c argo c apabilities As part of Hawaiian Airlines' pre-merger operations, the carrier played a pivotal role in Amazon 's air cargo network. Hawaiian operate s a fleet of Airbus A330-300 freighters under a long-term contract with Amazon Air , facilitating the e-commerce giant's global logistics and distribution. These aircraft have been deployed on high-demand domestic and trans-Pacific network , ensuring rapid delivery for Amazon's expansive customer base. Alaska Airlines Cargo plans to leverage this partnership post-merger, utilizing the A330 fleet to complement its existing operations and enhance network efficiency. The collaboration with Amazon diversifies Alaska’s revenue streams and strengthens its presence in the time-sensitive e-commerce sector, aligning with its broader cargo growth strategy. Figure 4: Hawaiian A330-300F n etwork Source: Cargo Facts analysis of FlightRadar24 data

Alaska Airlines’ strategic initiatives to expand its cargo network, coupled with leadership changes and integration of Hawaiian Airlines’ operations, signal a new era for the airline’s cargo division. With a growing fleet of freighters, the launch of new international routes and a projected increase in cargo revenue, Alaska Airlines is poised to capitalize on the global surge in demand for air cargo services. As the company continues to integrate its operations and optimize its network, the expanded reach and capabilities will not only drive increased profitability but also enhance its position as a key player in global logistics. The future of Alaska Airlines Cargo looks promising, with significant growth on the horizon as it continues to evolve in the dynamic air cargo industry.

Expanding horizons: Alaska Airlines Cargo’s path to global growth

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