All points
1850 words
- The COVID-19 pandemic caused airlines worldwide to drastically reduce passenger flights in March 2020. Long-haul international routes suffered the largest cuts because border closures, quarantine requirements, and travel restrictions nearly eliminated demand for intercontinental travel.
- Daily round-trip flights between Europe and the United States fell from approximately 500 to 80. Comparing April 2019 with April 2020, this represented an 80–90% reduction in transatlantic passenger flights.
- Passenger aircraft normally transport approximately 45% of the world's air cargo. Freight travels in the belly holds beneath passenger cabins, sharing space with checked baggage. Canceling passenger flights therefore also removes substantial freight capacity.
- Approximately 60% of air cargo between Western Europe and the United States normally travels on passenger aircraft. With 80–90% of transatlantic passenger flights grounded, approximately half of the air cargo capacity serving that market disappeared within weeks.
- Global air cargo capacity declined approximately 23% in March 2020. The reduction was less severe than on transatlantic routes but still represented a major worldwide loss of freight transportation capacity.
- Lockdowns initially appeared likely to reduce demand for air freight. Consumers were buying less, businesses were ordering fewer goods, and suppliers were reducing production. These effects spread through supply chains, reducing the volume of products needing transportation.
- Factory closures further disrupted international supply chains. Manufacturing restrictions in numerous countries reduced production and limited the availability of goods for shipment, creating additional reasons to expect air cargo demand to fall.
- The urgent need for personal protective equipment changed the expected demand for air freight. Hospitals needed large quantities of masks, face shields, gowns, and other protective equipment to reduce healthcare workers' exposure to COVID-19.
- Hospitals were not prepared to maintain nearly universal protective-equipment usage for extended periods. Their normal inventories were insufficient for the pandemic, forcing healthcare facilities worldwide to seek emergency supplies.
- China produced approximately half of the world's medical masks before the pandemic. Its factories manufactured around 20 million medical masks daily, making the country the world's leading producer of medical personal protective equipment.
- China increased medical mask production from approximately 20 million to more than 100 million per day by early March 2020. This fivefold expansion substantially increased the country's ability to supply protective equipment during the developing global emergency.
- China's manufacturing recovery coincided with rapidly worsening outbreaks elsewhere. As Chinese factories began reopening, infections accelerated in Europe and the United States, placing China in a crucial position to supply countries facing medical shortages.
- Hospitals in Italy, Spain, and the United States were reusing masks because supplies were running dangerously low. Some facilities reportedly had only days of protective equipment remaining despite reuse, creating extreme urgency for new deliveries.
- Air freight became essential because medical supplies needed to arrive as quickly as possible. Hospitals could not afford to wait for slower transportation methods while protective-equipment inventories approached exhaustion.
- Global demand for air cargo declined only 15% in March 2020 despite widespread economic shutdowns. Emergency shipments of protective equipment and other medical supplies helped sustain demand that would otherwise have fallen further.
- Air cargo capacity contracted eight percentage points more than demand. Capacity declined 23% while demand fell 15%, producing a substantial imbalance between available freight space and the amount of cargo requiring transportation.
- Air freight prices increased sharply on major routes from Asia. During the final two weeks of March 2020, shipping rates from Hong Kong to North America rose 27% above normal, while rates from Shanghai to Europe increased 50%.
- The freight price increases created a financial incentive for airlines to expand cargo operations. With less transportation capacity available relative to demand, carriers could charge substantially more to move urgent shipments.
- American cargo airline Kalitta Air increased its long-haul flying by nearly 50%. The company brought aircraft out of storage to expand freight capacity and take advantage of the surge in demand.
- Dedicated cargo airlines could not expand quickly enough to replace the lost capacity. Their fleets, pilots, and maintenance personnel were limited, preventing them from increasing operations indefinitely in a matter of weeks.
- Passenger airlines possessed substantial unused aircraft capacity. With passenger demand having collapsed, airlines had aircraft available that could potentially carry freight instead of travelers.
- Cargo normally accounts for approximately 15–20% of an average airline's revenue. The contribution varies considerably by route, with long-haul international services generally earning a larger proportion of revenue from cargo than domestic and short-haul flights.
- Long-haul passenger aircraft have greater cargo revenue potential than industry-wide averages suggest. Most North American airline operations are relatively short domestic flights carrying little freight, which lowers the average cargo revenue contribution across their networks.
- Removing passengers also frees additional space in aircraft belly holds. On normal flights, checked baggage occupies part of the available cargo capacity. Passenger-free operations can devote more of that space to commercial freight.
- A passenger Airbus A330 can carry approximately 38,000 pounds (17,000 kilograms) of belly-hold cargo. The dedicated freighter version can transport approximately 132,000 pounds (60,000 kilograms), giving the passenger aircraft only about 29% of the freighter's cargo capacity.
- Higher freight prices made passenger aircraft more competitive in the cargo market. With shipping rates rising by as much as 50%, a passenger A330 carrying freight could potentially earn approximately 44% of what a dedicated A330 freighter would earn on a flight under normal market conditions.
- Passenger aircraft did not need to match dedicated freighters' normal revenue to become financially viable. The economics depended on operating costs as well as cargo capacity, and several pandemic-related changes substantially reduced those costs.
- Jet fuel prices collapsed from approximately $2.20 per gallon in January 2020 to $0.40 by late April. The dramatic fall reflected exceptionally weak fuel demand and reduced one of airlines' largest operating expenses.
- Lower fuel prices sharply reduced the revenue required for flights to break even. Because fuel is normally an airline's largest operating expense, its approximately fivefold price reduction made freight-only flights more financially attractive.
- Government payroll support also reduced the additional staffing costs of operating cargo flights. In the United States, airlines receiving specified government relief funding were required to retain employees rather than lay them off or furlough them.
- Airlines could use staff they were already paying to operate additional freight flights. With pilots and other employees remaining on payroll, the marginal personnel cost of operating another aircraft was relatively small.
- Airlines began placing freight directly inside passenger cabins. Cargo was positioned on passenger seats and secured in place, allowing aircraft to transport goods beyond their normal belly-hold capacity.
- Transporting cargo inside passenger cabins increased loading complexity and time. Securing shipments on seats required additional handling, but the extra freight capacity helped compensate for the aircraft's limitations compared with dedicated freighters.
- The combination of expensive freight, cheap fuel, available employees, and unused aircraft made passenger-free flights potentially profitable. This was an unusual, temporary commercial opportunity created by the pandemic rather than a normal feature of passenger airline economics.
- American Airlines, Air Canada, Lufthansa, and Air New Zealand began operating cargo-only services using passenger aircraft. Major international airlines entered the emergency freight market despite having built their networks primarily around transporting travelers.
- United Airlines operated large numbers of passenger-free aircraft simultaneously. At certain points, as many as dozens of its passenger planes were flying cargo missions around the world at the same time.
- Air Canada introduced an unusual 16-hour nonstop cargo-only flight between Sydney and Toronto. The pandemic-driven freight market created routes and aircraft operations that had not previously existed.
- Air Greenland used a small Dash 8 turboprop aircraft to transport COVID-19 tests for processing in Denmark. The operation demonstrated how smaller passenger aircraft could support specialized medical logistics rather than conventional passenger transport.
- Titan Airways flew medical supplies to the remote island of St Helena using a passenger Airbus A318. Cargo-only flights became a way to supply isolated communities with essential medical equipment.
- Wizz Air operated passenger Airbus A321 aircraft to Shanghai via Kazakhstan to collect medical supplies for Hungary. The airline used aircraft normally assigned to passenger services to establish an emergency supply connection with China.
- Cargo-only operations were not limited to large airlines or intercontinental freight routes. Smaller carriers and aircraft were used for medical testing logistics, remote-island deliveries, and targeted national supply missions.
- Anchorage, Alaska, briefly became the world's busiest airport in April 2020. Its rise was particularly unusual because global airport traffic rankings were normally dominated by major passenger hubs such as Atlanta, Chicago, Los Angeles, Dallas, and Beijing.
- Anchorage was already an important international cargo hub before the pandemic. Its location made it a convenient stopover for aircraft flying between Asia and North America.
- Stopping to refuel in Anchorage allows freight aircraft to carry more cargo. On long-distance routes, aircraft can reduce the amount of fuel carried at departure, use the weight allowance for additional freight, and replenish fuel during an intermediate stop instead of flying nonstop.
- Anchorage also serves as a freight sorting and transfer point. Some cargo is reorganized or exchanged between aircraft there, making the airport useful for more than refueling.
- The United States' severe COVID-19 outbreak increased the importance of cargo flights from Asia. In April 2020, the United States led the world in reported new and total coronavirus cases, creating substantial demand for medical products manufactured predominantly in Asia.
- Hundreds of cargo aircraft passed through Anchorage daily during the emergency. Its position along Asia–North America freight routes helped it maintain exceptionally high flight activity as medical shipments surged.
- Anchorage's temporary position as the world's busiest airport reflected two simultaneous developments. Conventional passenger hubs experienced extraordinary traffic declines, while Anchorage benefited from continued cargo operations and increased demand for urgent medical imports.
- The immediate air cargo shortage was not expected to become a lasting growth opportunity. The extraordinary demand for protective equipment was tied to the medical emergency and would weaken once shortages eased.
- Air freight demand closely follows global economic conditions. Reduced consumer spending, lower business activity, and disrupted production were expected to damage the market after emergency medical demand subsided.
- The pandemic's broader economic damage threatened a prolonged downturn in international air cargo. The episode anticipated that the world economy would emerge substantially weaker, potentially creating months or years of depressed freight activity.
- Urgent medical shipments were expected to move toward slower transportation methods as supply pressures eased. Once buyers no longer needed immediate deliveries, they could choose less expensive shipping options, reducing demand for premium-priced air freight.
- The cargo boom could eventually give way to the same weakness affecting passenger aviation. Passenger airlines temporarily benefited from emergency freight demand, but that demand did not remove the longer-term threat posed by the global economic slowdown.
- The profitability of passenger aircraft operating without passengers depended on exceptional conditions occurring together. High cargo rates, historically cheap fuel, available airline staff, and urgent demand temporarily supported flights that would normally be difficult to operate profitably without passenger revenue.