Covid-19 slump steadily reversing in air cargo business; India a strong performer
Indian carriers played a commendable role to support the government's Lifeline Udan initiative, launched on March 26, a day after the nationwide lockdown was imposed
Global air cargo volumes continued to recover from the Covid-induced slump, and the fall in the industry-wide cargo volumes softened in October as compared to September, the International Air Transport Association (IATA) has pointed out in its latest report.
According to the premier global aviation body, the industry-wide cargo-tonne-kilometres (CTKs) fell by 6.2% year-on-year in October. The year-on-year decline was a sharper 7.8% in the previous month.
To put things into the Indian perspective, from January to August (excluding April) -- a period that was largely marred by the pandemic -- the national carrier Air India carried 25,294.9 tonnes of cargo. Its wholly-owned subsidiary Alliance Air carried 202.6 tonnes of cargo during the same period. Another Air India arm, the Air India Express carried 227.8 tonnes of cargo from January to March, according to data from the Directorate General of Civil Aviation (DGCA).
Among the other major Indian carriers, SpiceJet carried 51,269.7 tonnes, IndiGo 98,534.5 tonnes, AirAsia India 15,520.1 tonnes and Vistara 9,796.7 tonnes of cargo in the period from January to August (excluding April). GoAir carried 6,949.9 tonnes of cargo between February and August (excluding April and May). Dedicated cargo operator Blue Dart transported 47,676.9 tonnes of cargo between January and June, according to DGCA data.
An Air India cargo operation underway. Image courtesy: Lifeline Udan
Indian carriers played a commendable role to support the government's Lifeline Udan initiative, launched on March 26, a day after the nationwide lockdown was imposed, to transport medical supplies and other essential commodities to the remotest corners of the country, with special emphasis on the Nort East Region, hill states and island territories.
SpiceJet said it had cut the net loss in the seasonally weak second quarter (July-September) on the back of strong cargo and passenger businesses. Its cargo revenue grew 39% quarter-on-quarter and 157% year-on-year.
Among its other achievements in the cargo business, it had introduced dedicated cargo flights connecting Northeast India to the rest of the country and became the first Indian airline to introduce dedicated freighter services to Leh. From March 25 (when the lockdown began) to November 11, SpiceJet operated more than 9,930 cargo flights transporting 76,500 tonnes of cargo.
SpiceJet has also lifted 233 tonnes of medical supplies from Shanghai and Guangzhou in China and 21 tonnes medical supplies from Hong Kong and Singapore up to June 1.
Blue Dart operated 630 cargo flights carrying 10,394 tonnes of cargo from March 25 to June 1. Out of these, 26 were international cargo flights. Blue Dart also lifted medical supplies of around 318 tonnes from Guangzhou and Shanghai in China and 24 tonnes from Hong Kong, from April 14 to June 1.
Indigo operated 258 cargo flights from April 3 to June 1, carrying around 1,370 tonnes of cargo. These included 133 international cargo flights. It also included medical supplies carried free of cost for the government.
Vistara operated 34 cargo flights from April 19 to June 1, carrying around 217 tonnes of cargo.
Global growth drivers
The IATA said that the near-term outlook is upbeat since the last quarter is the peak season for air cargo traffic and demand drivers are supportive. The IATA expects air cargo volumes to fall by 12% in 2020 and recover to pre-pandemic levels next year.
The last quarter coincides with the festive season in various parts of the world, and events like Diwali and Christmas, for example, involve large-scale consumer spending. As a result, this is the peak season for air cargo business. The air cargo business received a fillip in the wake of the Covid-19 pandemic that restricted movement and caused stores to shut down.
This in turn forced the consumers to turn online and adopt e-commerce in a bigger way. In the US, online sales more than doubled since the outbreak of the pandemic. Since 80% of the cross-border e-commerce is supported by air cargo operators, this burgeoning of online shopping has prodded the air cargo sector towards recovery.
The manufacturing sector in Europe and North America has been largely been unaffected by the resurgence of the pandemic, as can be witnessed in the PMI numbers for October and specifically in the new export orders figures, which is a leading indicator of air cargo demand.
An Alliance Air plane taking part in the Lifeline Udan mission undertaken by the Indian govt. Image courtesy: Lifeline Udan
Global goods trade is also on the path of steady recovery and is expected to grow by 7.2% in 2021, on top of 9.2% decline in 2020, the World Trade Organisation (WTO) has pointed out. Global economic activity remains below 2019 levels in most markets, but the GDP results of the third quarter are much better than that in the previous quarter, the IATA said.
The near-term outlook shows that the operating environment has been more supportive of cargo than passenger traffic, which is understandable given the urge of governments across the world to prevent the spread of the coronavirus. "Global CTKs are expected to contract by 11.5% year-on-year in 2020 compared with a dramatic 66% decline in passenger volumes. The story will be similar in 2021," the IATA report said.
Cargo capacity needs to be better
However, cargo capacity is still in shortage. Belly cargo capacity has been recovering slowly as airlines have been adjusting their flight schedules to the new travel restrictions. Dedicated freighters have increased their cargo capacities and utilisation rates, but it has not been enough to offset the overall decline in cargo capacity.
International air cargo continued to slowly recover in sync with the broader industry trends. International CTKs declined by 7.5% year-on-year in October, as compared to 9.8% in September.
While Africa led the CTK growth chart, Latin America remained at the bottom. The Latin American airlines, however, registered the fastest growth among all regions. International air cargo volumes picked up for the second month on the trot in the Asia-Pacific region despite Golden Week holidays (a typically weak period for air cargo business).
International CTKs of North American airlines rose by 1.3% year-on-year and the air cargo business in Europe also seemed to be largely unaffected by the resurgence of the coronavirus in October. The Middle Eastern airlines showed no improvement in international CTKs flown.