When the pandemic forces the airline industry to rethink their activities

The aviation sector has been and still is severely affected by the crisis caused by Covid-19. Due to worldwide public health measures, travel restrictions and border closures, airlines had no choice but to switch to solution mode and establish new priorities to maintain some revenue-generating activities.

With more than 80% of the passenger aircraft fleet grounded since the start of the pandemic, commercial cargo transport capacities have been highly impacted. Did you know that a large proportion of freight goods are transported on board passenger flights? In fact, 70% to 80% of global air freight travels in the holds of passenger planes rather than in a cargo aircraft.¹ The reason behind this operational strategy is to optimize the space available on board and reduce the costs of air transportation. Thus, with only a small number of passenger flights still in operation, the air freight capacity is reduced while transport costs rise.

To overcome these constraints, some of our Canadian airlines specializing in passenger flights have been able to react quickly. They have modified their aircraft fleets to meet the needs of the freight industry, for which demand has not declined since last March. For instance, Air Canada has modified the interiors of its aircraft by removing the seats from seven (7) of its passenger planes in order to transform them into all-cargo flights.

Thus, Montreal-Pierre Elliott Trudeau airport (YUL), that was not initially intended to be an all-cargo facility has adapted to face the crisis. Obviously, this new vocation is temporary for the international airport, which intends to regain its hybrid character once air operations are back to normal.

Other major airlines, such as American Airlines and United Airlines, began operating cargo flights this year in hopes of reducing their financial losses. In the third quarter of 2020, United’s freight revenues jumped nearly 50% from the previous year.²

This resilience of airline carriers demonstrates the importance of freight transportation within the entire airline industry. Nowadays around the world, the very notion of cargo traveling inside a passenger aircraft is an essential input in the calculation of the profitability of a route for an airline. On November 20^th, during the RELAUNCH MTL virtual forum held by the Chamber of Commerce of Metropolitan Montreal, the Vice-President of Public Affairs of the Airports of Montreal, Martin Massé, declared, “It is extremely important for Montreal that the cargo industry is in good health to enable our airlines to maintain market share in destinations on the other side of the globe, like in Asia or elsewhere.” In addition, he underlines, “It is necessary to find a good balance between the presence of passengers in business class and in economy class, but it is also necessary to count on a larger space dedicated to cargo in renewed aircraft, as is the case in the Boeing 787 or the new Airbus.”

Since air transport has limits in terms of weight and volume, companies that produce or distribute high-value goods, but of reasonable size, tend to favor this means of transportation. According to the International Air Transport Association (IATA), air freight represents less than 1% in volume, but more than 35% in terms of the value of commercial trade around the world. ³ The right mode of transportation for the right product, this is the motto behind the success of the transport and logistics industry. Therefore, air transport is sometimes the most optimal solution depending on the nature of the product, delivery schedules and the distance to travel to reach the destination.

Despite the negative effects of the pandemic, some airlines have adjusted and even have been rethinking the very nature of their operations. As a result of recent findings, new projects have emerged at Air Canada that recently announced its intention to enter the all-cargo market thanks to the acquisition of new aircraft designed specifically for the transportation of commercial goods, which will improve their fleet of passenger aircraft by the end of 2021.

With these new perspectives and more diversified operations, the airline industry is gradually preparing for its economic recovery. And everything suggests that, just like a phoenix, it will rise from its ashes and resume its ascent shortly.