Unlike Airline Passengers, Cargo Never Complains. But Can It Make Money For Airlines During Coronavirus Crisis?

The adage about airline cargo is that, unlike airline passengers, cargo never complains.

Another benefit: Cargo, unlike airline passengers, is still flying during the coronavirus crisis. In fact, demand for air cargo capacity has surged because about half of the world’s air cargo once traveled in the belly of passenger aircraft.

While cargo accounted for less than 2% of Delta revenue in the first quarter, “In the short term, it’s more than 2 % of current revenues,” CEO Ed Bastian said Wednesday on a first quarter earnings call with reporters, Delta is “flying a lot of cargo missions, as well as carrying freight, medical supplies out of China [and] working with cargo carriers,” Bastian said.

On the analysts’ earnings call (Delta had two earnings calls), Bastian said, “We’ve instituted charters going over to China as we’re bringing medical supplies, [personal protective equipment] back to the workers on the front line of this crisis …We’re taking some of the main deck seats off a few of our international planes to facilitate taking greater lift in the short term, and we’ll continue to use those resources where it makes sense for, certainly for some time to come.”

Does it make financial sense for passenger carriers to operate cargo carriers?

“With the present air freight prices, it does,” Bjorn Fehrm wrote in trade publication Leeham News on Thursday. “The high freight prices are a result of half the world’s freight capacity disappearing with the grounding of passenger jets.”

Fehrm noted that while widebody passenger aircraft operating as cargo only can make money, narrow body aircraft need to provide cabin capacity as well as cargo hold capacity. “For single-aisle jets the belly cargo holds are too small [so] a cabin cargo loading system is necessary for efficient operation,” he wrote.

However, longterm, it probably doesn’t make sense to take seats out.

An Airbus A320 can load five tons of standard containers, but could carry 18 tons with a cabin cargo system, Fehrm said. A Boeing
BA
737-800 can carry 6.6 tons of cargo under the floor, but 21 tons if the cabin is reconfigured.

While cargo cannot possibly replace the majority of revenue lost due to the vast decline in passenger traffic, “It’s absolutely good for morale,” said aviation consultant Bob Mann. “It shows that [airlines] are agile and respond when called upon. It’s a public health logistics crisis, and they are helping out.”

Joe DePete, president of the Air Line Pilots Association, said in an interview that pilots “want to fly this mission; they are proud of doing this mission, and they know that the supplies coming back mean that people will live or die,”

DePete noted, however, the carriers must provide crews with safety guarantees including sufficient cockpit cleaning and disinfecting as well as notification when other pilots have tested positive for Covid-19.

A problem, Mann said, is that a lot of the traffic is one-way, delivery health care supplies from China and elsewhere. “You fly one-way empty,” he said. “The live leg has to be exceptionally profitable. “There is peak directional logistics demand. It won’t last in the normal course of business, assuming there is a normal course of business.”

Still, each day brings a new announcement of a passenger airline providing cargo service. American, for example, said Thursday that it operated an all-cargo Boeing 777-300 flight to carry soybean and corn seeds from Buenos Aires to Miami on April 16.

The flight broke American’s all-time record for freight volume, moving 115,349 pounds of soybean seeds. The previous record for American’s 777-300 was 103,384 pounds, set in 2014 on an LAX-Heathrow flight. American has shipped more than 290 tons of seeds in the past few weeks.

“Spring is planting season for soybean and corn crops in America’s heartland, and these seeds are a top commodity shipped aboard flights from Argentina to the United States,” American said. In the fall, “Seeds from the grown plants are shipped back to Argentina to wait for the next growing season in the warmth of the southern hemisphere,” it said.

American has expanded its cargo-only schedule to 46 weekly flights, offering more than 6.5 million pounds of capacity to transport critical goods each week between the United States and Europe, Asia and Latin America. The U.S.-bound cargo include personal protective equipment and pharmaceuticals.