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China Eastern modifies bellyhold cargo deal with China Cargo

CHINA Eastern Airlines has modified its bellyhold freight business deal with sister carrier China Cargo Airlines, reports London's Air Cargo News

07 October 2020 - 19:00

CHINA Eastern Airlines has modified its bellyhold freight business deal with sister carrier China Cargo Airlines, reports London's Air Cargo News.

The modification comes amid the Covid outbreak that has affected the industry across the globe. The SkyTeam carrier announced that the adjustments come amid falling demand for passenger transport.



'As a means of temporarily enhancing air cargo transport capacity under extraordinary circumstances, [China Eastern] is required to further clarify the business scope and pricing methods under unconventional circumstances such as 'passenger-to-cargo conversion',' said China Eastern.



'The company and China Cargo Airlines have negotiated and agreed to adjust and optimize the [business deal's] scope, pricing methods and settlement methods without altering, amongst others, the business entities, rights and obligations, and business procedures of both parties,' said the company.



Previously, China Cargo will have to pay the China Eastern group a contractual fee, while China Cargo will also get an annual reimbursement for its operating costs.



Although the broad mechanics of payment will not change much, the newest adjustments will clearly define pricing methods under 'unconventional circumstances??.



'Under unconventional circumstances, the transportation service fee is based on the actual operating revenue passenger aircraft's cargo transport, and determined by taking into account the actual operating cost and reasonable profit margin,' said China Eastern.



'Exclusive operation proposal for passenger aircraft cargo business??, which will see China Cargo have 'exclusive operation to independently operate and manage the company's passenger aircraft cargo business,?? said the company.



The partnership began in March 2018, as a way to allow China Eastern to focus on its passenger transportation business.



Other details include the elimination of any competition between the two companies. China Cargo is 83 per cent owned by Eastern Logistics, which in turn is owned by China Eastern controlling shareholder CEA Holding.


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