Cathay to cut to freight-only passenger flights as air cargo rates retreat
HONG Kong's Cathay Pacific is reported to be preparing to cancel 'many' of its freight-only flights as air cargo rates begin to drop following the decline in demand for personal protective equipment and the use of alternative shipping methods
HONG Kong's Cathay Pacific is reported to be preparing to cancel 'many' of its freight-only flights as air cargo rates begin to drop following the decline in demand for personal protective equipment and the use of alternative shipping methods.
Air freight rates have fallen by half from their peak last month, according to TAC Index.
'Cargo has been tapering off, and as a result, there will be many cancellations of cargo-only passenger aircraft flights, as the commercial decisions are made closer to the time of the flight,' the airline said.
Cargo revenue has been Cathay's primary source of income for at least three months, as the collapse in air travel has seen passenger revenue dry up. With the grounding of numerous passenger aircraft, which typically carry half the world's cargo, airfreight pricing surged on the shortfall in capacity.
Among Asian airlines, who rank among the biggest cargo carriers globally, a mixed picture was emerging, reports the South China Morning Post.
Korean Air, the sixth largest, said it anticipated a 'change' in demand, but its capacity was still rising, while seventh-placed China Airlines told Reuters it was concerned about the outlook against a weak global economic environment.
Cathay, meanwhile, planned to 'remain agile in the deployment of our aircraft to ensure our available cargo capacity is aligned with market demand', the airline said in an emailed statement. In May, the airline operated 900 such return flights.
Korean Air says it was currently using passenger planes for 70-80 return cargo-only flights per week.
'If the global economic recession and trade restrictions due to Covid-19 continue for a long time, the air cargo market is bound to face challenges,' a Korean Air spokeswoman said. 'We expect cargo demand to change, but currently cargo transport capacity is on the rise due to the increase in cargo-only passenger flights.'
Cargo freight pricing from China to Europe has halved to US$6 a kilo in June since the end of April, according to TAC Index data. China-US pricing topped $15 by mid-May but has dropped by two-thirds. Rates pre-Covid had hovered around $2 to $3 a kilo.
Rates from Hong Kong to the US and Europe, meanwhile, are all starting to give up the significant gains, but remain 50 per cent higher than at the same time in 2019.