Montreal, Canada - Airlines respond to coronavirus around the world by canceling their passenger flights and grounding some of their planes.
But Monday afternoon, Delta said it’s putting an unspecified number of passenger jets back in the air, flying out of 13 American airports and to 70 destinations overseas. Delta’s not selling any tickets for those planes, however. Rather, they’ll be operated by Delta’s cargo arm, running charter flights to cater to anyone who needs to move a package or pallet.
By using jets outfitted to carry people to carry stuff instead, Delta’s following the lead of Korean Air and Singapore’s budget carrier Scoot. Others are likely to follow. Reps for British Airways and Cathay Pacific have said they’re considering similar moves. That may conjure visions of ghost planes carving through the air, but it’s a natural outgrowth of the Covid-19 pandemic.
Passenger air travel has cratered in the past few weeks. Globally, airlines have canceled more than 185,000 flights since the end of January, according to the International Air Transport Association. The slashing continues. Lufthansa, Air France, and KLM are all reducing capacity by up to 90 percent. Delta announced it will cut total capacity by about 40 percent. American Airlines will fly 75 percent fewer international flights between mid-March and May than it did in the same period last year. The outlook is so grim, the US airline industry has already asked for more than $50 billion in federal aid.
The thing is, those planes carry more than people, their stuff, and their germs. They usually carry some freight as well, an easy way for an airline to turn spare room into a source of revenue. In Asia, passenger planes account for about 45 percent of air freight capacity, says Neel Jones Shah, who runs air freight operations for Flexport, which helps businesses organize their shipping efforts. On transatlantic routes, they provide 80 percent. Now that passenger flights between the US and Europe (including the UK and Ireland, as of this weekend) are approximately donezo, that capacity has disappeared.
With only dedicated freighters to do the work, shipping costs have nearly doubled, compared with typical rates. This time of year, it typically costs $3 to $3.50 per kilogram to send your stuff from Shanghai to Chicago.
They’re now well above $6,
Transit times have roughly doubled, too, as more shipments have to wait their turn. It usually takes three to five days to fly something from Hong Kong to Chicago. Right now, it’s more like five to eight days.
Sharpening the bite of the capacity crunch is the fact that the US and Europe are going into lockdown just as China’s factories, which dropped to as low as 15 percent production capacity in January and February, are increasing their output. The initial drop left companies with dwindling inventories of all sorts. Now companies that usually get goods by ship are desperate to restock and can’t wait for the cheaper, slower ocean crossings.
We have a lot of customers that did their first air shipments over the past few weeks,
Production’s ramping up, capacity is well short of demand, rates are quite high, and transit times are longer.
Combine super-low jet fuel prices, pilots who are being paid whether or not they fly, and historically high freight rates, and it’s easy to see Delta’s thinking. Shah expects more carriers to give it a go.
I think they can make the economics work.
It does take a bit of logistical work, says Camilo Garcia Cervera, the head of business development for WebCargo, an arm of logistics company Freightos. Airlines will have to sort out flight crew assignments and make sure they’ve got enough handlers around, with the proper equipment, to run a cargo operation. But they’ve done it before, during the and the 2002 SARS contagion and again during the 2015 port strike on the US West Coast.
Airlines like Delta may ease the freight capacity shortage and slow the decline of their stock prices, but the industry will remain on shaky ground for a good while. Garcia Cervera says that even if the coronavirus disappeared tomorrow, it would take weeks to get everything back to normal. And that’s not gonna happen.
We expect the situation in the Pacific to last for months. Carriers know there won’t be passenger demand.” If the freight capacity shortage doesn’t stretch into the holiday season, he says it’ll likely be because the pandemic has triggered a global recession that dampens demand.
(quoted from AirLiner Watch)