Airlines convert aircraft to freighters but market still frantic

The air freight sector is attempting to adapt to the COVID-19 crisis by converting passenger aircraft to freighters. So far, the effects have been minimal with the air freight market still in chaos, however, over the weekend (11/12-Apr) reports emerged that the US Federal Aviation Authority was about to permit US airlines to remove the seat from their aircraft enabling greater cargo space.

This is already happening in certain regions, with Air Canada “reconfiguring” three passenger aircraft to increase their cargo capacity beyond belly freight. AirFrance-KLM has re-deployed two Boeing 747 ‘combis’ whilst Etihad has announced the establishment of 10 new routes mainly to Asia but also to Amsterdam using converted Boeing 787s.

It appears that a number of these aircraft are being used to establish emergency routes between major locations such as China, Europe and the US. For example, in the case of AirFrance-KLM a “special cargo air bridge” for Philips has been established between China and Amsterdam. This, presumably, is designed to support production within Philips’ medical equipment division.

So far, the seeping of new capacity onto the airfreight market does not seem to have had much impact on prices or delays. One of the problems is that the demand for the movement of healthcare products remains very high, with simple low-priced personal protection clothing which normally would be moved by sea now consuming large volumes of airfreight. There is also furious activity on the supply chain of high capital items such as ventilators with, for example, the Chinese government pleading with the Swiss to ship Swiss-made components to China for their ventilator manufacturers.

The result is that prices remain at multiples of their normal levels, with certain participants not price sensitive. Lead times for airfreight are often between a week and two weeks depending on the route. 

Of course, the danger for airlines is that they if rollout a fleet of adapted freighters they might be confronted in a few days or weeks with collapsing demand as the crisis fades. The danger is that they will be stuck with converted aircraft and falling demand as the world shifts back to cheaper sea freight solutions.

Source: Transport Intelligence, April 14, 2020

Author: Thomas Cullen