Cathay has now unveiled plans to shrink from 25 freighters at the end of this year to 20 by 2016. No greater illustration is needed of the declining role of freighters in air cargo.
What makes the example of Cathay so interesting is that, with the possible exception of Gulf carriers like Emirates, surely no operator is better placed to profit from whatever air cargo growth might be available.
Air Freight Cargo Markey
Its base is the world’s largest air cargo hub – and on its doorstep is the world’s most important and dynamic air cargo market. So if Hong Kong-based Cathay is scaling back its freighter plans, the rest of the world needs to take note.
Indeed, cargo director James Woodrow even reckons some of the big names are questioning if they need freighters at all. “My view is that other operators will follow Japan Airlines and get rid of their freighter fleets,” he says. “Others will be doing as we have, and right-sizing their fleet through [strategic] parking and disposals.”
He admits that among those he has in mind are Singapore Airlines, EVA Air, China Airlines and Qantas. Recent years, he says, have been “death by a thousand cuts: everyone held on hoping the industry would turn around”. But now he thinks the trend is clear.
Air Cargo Forwarding Operators
“Air cargo is moving into an era of fewer freighter operators. Those that remain will have to invest in modern, fuel-efficient aircraft, and that is a difficult decision. Most carriers could provide a better business case for a new passenger ‘plane than a new freighter.”
The reason why freighter operations are getting squeezed are, of course, well known to everyone in the industry: growing belly capacity as passenger fleets expand, and slower economic growth than in the 1990s and early 2000s.
Rise of Gulf Carriers
There is also the factor that everyone but Woodrow avoids mentioning – the seemingly unstoppable rise of the Gulf carriers. “They have grown very rapidly and that has to be at someone else’s expense,” he says. “They’ve definitely taken [market] share from us.
“The lowest cost of providing capacity is a B777 belly, and they can fly freighters only half way to Europe and then can switch to bellies and distribute to their huge networks. That has made Europe much more difficult for us.”
Meanwhile Cathay has been replacing B747-400 passenger aircraft to Europe with more cargo-friendly B777s and increasing frequencies. London is a good example of this. A few years ago it would have had three B747s a day, with 35 tonnes of capacity between them, whereas now it is five B777s – with up to 20 tonnes each.
“So, in a three-year period, belly capacity has trebled, and consequently the number of freighters we fly to London and Manchester has decreased. We now have only 11 freighter flights a week to Europe when, in 2008, it was 32.”