Strong Airfreight Rates
There is good news for the airfreight sector. First, airfreight rates are projected to remain strong with freighters expected to increase their market share. In particular, networked airfreight or air express solutions are projected to take a greater share of the market. These are the projections presented in a recent Transport Intelligence (TI) whitepaper. Other key TI predictions include:
- A structural change to occur in the airfreight market stemming from the global pandemic,
- Increased use of freighters to meet demand,
- Freighter sector consolidation, and
- Heightened pressure on capacity over the short-term due to COVID-19 pressures.
The TI whitepaper also cited Boeing predictions that the air fleet will experience a 3.2% annual increase over the next two decades, at the same time that cargo demand increased by approximately 4% year over year during the next 20 years. These predictions are based on a preposition that there will be a decline in belly freight capacity which, in turn, will keep freight rates high.
Still dominated by uncertainty is how long it will take for passenger air services to recover given the airlines’ current financial positions. The TI whitepaper noted that, any recovery is likely to still reflect the airlines’ inability to capitalize on major tourist seasons thereby making them less inclined to add more aircraft over the short-term.
Brussel Airport Experiencing Higher than Pre-Pandemic Cargo Volumes
In another good sign, Brussel Airport’s March 2021 cargo volumes were actually higher than before COVID-19. The airport recorded a 41% year-on-year increase in cargo volumes totaling 74,000 tons. This figure represents a 27% increase over March 2019. Additionally, full freighter traffic rose by 73% year on year which was evident across all existing airlines operating at the hub. Also noted was the increase in both import and volumes, particularly evident in Asia and North America.
DHL, which added additional routes in 2020 to support e-commerce business, was credited for driving a 65% year on year increase in express services at the hub. Other data reported by Brussel Airport included: a 43% increase in March’s trucked freight volumes, in contrast to the passenger number decline by 91% year on year in March.
When Will Long Haul Travel Resume?
What the entire air transportation industry and the traveling public want to know most is when will long haul travel start coming back and where? OAG has been analyzing this topic and is venturing to make some projections. Notably, it sees some nations already making strong strides in their populations’ vaccination; a sure sign that these consumers may be first on the block to start making long trips soon. For many, visiting family and friends and taking vacation is a distant memory. Once a high percentage of a nation’s population does become vaccinated, it is expected that people will start booking these trips again for family reunions, vacations, business meetings and industry conferences. The expectation is leisure travel will see the greatest gains, earliest.
VisitBritain routinely tracks international passenger travel to the United Kingdom (UK), recording data by country of origin, year, and quarter, as well as mode of transport, age groups, type of travel package, length of stay and travelers’ nationality. Currently, the UK has one of the world’s highest levels of vaccination; a likely driver of more travelers believing it to be one of the safer travel destinations. Approximately 45% of all trips made to the UK from Australia and New Zealand in 2019 were to visit family and friends. Contrast this figure with data relating to family and friends travel coming from the U.S. which was 15% of its total travel, but still amounted to twice the volume of Australia/New Zealand market.
Bilateral migration (i.e., migration between countries) is also a factor in air travel demand. Based on the World Bank database of estimated bilateral migration, it is expected that family and friends travel where ties are strong will be reflected in this travel relating to certain nations. Two cited were travel between the U.S. and Mexico due to a lack of restriction on air travel and the fact that family ties may be driving more Americans to celebrate holidays in Mexico.
As for other regions, Middle East hubs are experiencing 50% of their 2019 capacity, and with a higher percentage of Turks living in Germany and many Germans taking vacations in Turkey, it is believed that the capacity now 60% below what it was in April 2019, will rise to just 1% lower in July. That projection is based on the belief that there will be family and friends travel over the summer.
Keeping this and related data in mind, it is expected that the Top 15 long haul routes to generate higher traffic volume sooner will involve 10 routes in the U.S. or Canada, 3 of which are transatlantic, 3 of which involve travel from the Philippines, and some of which may include a Middle East airport.
Sustainability – Top of Mind
Airlines, airports, and ground handlers are more acutely focused on sustainability. In late 2020, Dnata, for example, completed its first “green” aircraft turnaround in the U.S. It serviced a Viva-Aerobus A320 at John F. Kennedy International Airport in New York solely utilizing zero-emissions ground support equipment. This trial, conducted in November, involved turning around the A320 using electric baggage tractors and conveyor belts to offload and then load the aircraft. This was followed by the use of a Mototok remote-controlled electric pushback tractor to position the aircraft for taxi and departure. Trials are also underway to apply other time and energy saving technologies such as electric taxing and autonomous tugs.
In other sustainability news, WheelTug recently conducted its first demonstration of its preproduction electric taxiing system. It consists of a modified nosegear incorporating an electric motor powered by the aircraft’s auxiliary power unit. The system was used on an AlbaStar Boeing 737NG at Memphis International Airport. Last August, a five-month trial was completed at Amsterdam Schipol Airport on TaxiBot’s semi-robotic towing tractor to assess how the system could help reduce carbon emissions and improve operations. Other developments in this area include Aircraft Towing Systems World Wide’s development of a towing system which would be build into airport taxiways and ramps to move aircraft between gate and the runway using electric power.
Further demonstrating the heightened focus on sustainability was the recently announced Eco-Skies Alliance. This novel program involving participation by leading global corporations working with United Airlines is focused on promoting more sustainable power flying. Its goal is to help corporate customers reduce their environmental impact and establish sustainable aviation as the norm. Among the corporations participating are Siemens, Boston Consulting Group, CEVA Logistics, Deloitte US, and World Energy.