- Passenger airline cargo revenues fall, but could be positive for the travel industry.
- Delta, United and American all reported 40% declines in second-quarter cargo revenue.
- During the pandemic, the transport of goods was vital, but with the recovery of travel, the demand has decreased.
Cargo revenues for major passenger airlines are in free fall, surprising news but one that could be considered positive for the travel industry.
Let’s see: during the second quarter of this year, Delta, United and American have all reported year-over-year declines of about 40% in their freight revenue.
This decline in cargo revenues coincides with a boom in overall airline revenues, driven by higher travel demand.
Thus, this phenomenon could be interpreted as a sign of economic recovery in the sector, as the commercial impact of air cargo, which once helped sustain airline revenues during the pandemic crisis, has diminished significantly.
Airlines and freight transport
A clear example of this trend can be seen in the numbers for Delta Airlines, whose freight revenue for the first half of 2023 stood at $381 million, compared to $561 million for the same period in 2022.
Similarly, American Airlines reported $420 million in cargo revenue in the first six months of this year, up from $692 million last year.
For its part, United Airlines has raked in $760 million in cargo revenue so far this year, down notably from $1.2 billion a year earlier.
This reduction in cargo revenue has led to cargo accounting for less than 3% of United’s total revenue of $25.6 billion through the first half of 2023, it says. CNBC.
In pandemic
These numbers contrast with what happened in 2020, when revenue from freight transportation accounted for more than 10% of the airline’s sales.
For Delta and American, cargo revenue represented just 1.3% and 1.6% of their total revenue, respectively, compared to 3.5% and 12% in 2020.
During the pandemic, freight transport was a real lifeline for passenger companies, when travel demand plummeted due to restrictions.
In normal times, about half of the world’s air cargo is carried in the cargo compartments of passenger planes.
Reduced cargo capacity during the pandemic caused shipping rates to rise as demand from e-commerce, supply chain issues and port congestion combined to increase demand for air freight transport.
However, with the recovery in travel demand, especially for international travel, airlines have refocused on their passenger services, which has led to an increase in air cargo capacity and therefore a decrease in demand and revenue for this service.
Data from the Baltic Air Freight Index, which monitors air cargo rates around the world, says there was a 47% decline compared to 2022.
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