Cargo To Save Local Airlines Amid Global Slump, Crises
Local airlines have been urged to shift focus to air cargo operations to enhance the chances of survival during the current restriction in passenger services and the difficult recovery that lies ahead.
Industry experts said the airlines could follow the pragmatic examples of carriers like Lufthansa, Air Canada, and Kenya Airways that are deploying passenger carriers to cargo operations, which are currently unrestricted in Nigeria.
The call comes at a time when the International Air Transport Association (IATA) released data for March air cargo performance demonstrating a severe capacity shortfall.
Global demand fell by 15.2 per cent in March compared to the previous year (-15.8 per cent for international markets). Global capacity shrank by 22.7 per cent in March compared to the previous year (-24.6 per cent for international markets).
Notwithstanding, African airlines were less affected by disruptions in March. They saw year-on-year growth in international cargo tonne kilometers (CTKs) fall by 1.2 per cent following the positive annual outcomes in January and February.
The Africa-Asia market was the only trade lane which continued to post growth in March, with volumes up almost 10 per cent year-on-year. International capacity decreased by 8.2 per cent.
Aviation security consultant, Group Capt. John Ojikutu (rtd), said there was nothing in the Aviation Ministry’s lockdown directives that stopped the domestic airlines from operating special flights, especially cargo freights as Air Peace is doing.
“I said this long time ago when the Lufthansa model came out on the CNN. I advised that the airlines and Airlines Operators of Nigeria (AON) should meet the Nigerian Civil Aviation Authority (NCAA) for a redefined standard for the use of their passengers’ aircraft for local cargo operations and regional later.
“I said this than to ensure that the extension of the crew and aircraft licences (by the NCAA) were not wasted. I am not sure what benefits they had from the extensions, and if there is any life left in the extensions. Instead of the operators looking out for government’s intervention funds, they have better prospect of survival in cargo operations,” Ojikutu said.
Indeed, international markets account for 87 per cent of air cargo. Belly capacity for international air cargo, however, shrank by 43.7 per cent in March compared to the previous year. This was partially offset by a 6.2 per cent increase in capacity through expanded use of freighter aircraft, including the use of idle passenger aircraft for all-cargo operations.
IATA’s Director General and Chief Executive Officer (CEO), Alexandre de Juniac, yesterday, said at present, we don’t have enough capacity to meet the remaining demand for air cargo.
“Volumes fell by over 15 per cent in March compared to the previous year. But capacity plummeted by almost 23 per cent. The gap must be addressed quickly because vital supplies must get to where they are needed most. For example, there is a doubling of demand for pharmaceutical shipments that are critical to this crisis.
“With most of the passenger fleet sitting idle, airlines are doing their best to meet demand by adding freighter services, including adapting passenger aircraft to all-cargo activity. But mounting these special operations continues to face bureaucratic hurdles. Governments must cut the red tape needed to approve special flights and ensure safe and efficient facilitation of crew,” de Juniac said.
IATA observed that there are still too many examples of delays in getting charter permits issued, a lack of exemptions on COVID-19 testing for air cargo crew, and inadequate ground infrastructure to/from and within airport environments. Air cargo needs to move efficiently throughout the entire supply chain to be effective.
IATA urged governments to cut the paperwork for charter operations, exempt cargo crew from quarantine rules that apply to the general population, and ensure there is adequate staff and facilities to process cargo efficiently.
While there is an immediate capacity shortage, the collapsing economy is expected to further depress overall cargo volumes.
Short-term analysis shows that global manufacturing activity continued to contract in March as government-imposed lockdowns caused widespread disruptions. Following the sharp decline in February – which exceeded that of the global financial crisis – the global manufacturing Purchasing Managers’ Index (PMI) rose slightly in March but remained in contractionary territory. This improvement was due to the stabilization of the China PMI; excluding the China outcome, the global index fell to its lowest level since May 2009.
Looking at the prospects for the rest of 2020, the World Trade Organisation forecast gives little indication of a quick recovery. The optimistic scenario is for a 13 per cent fall in trade in 2020, while the pessimistic scenario sees a 32 per cent fall in trade in 2020. This will deeply impact air cargo’s prospects.
One area of demand, however, is growing sharply. Pharmaceutical shipments are tracking at double previous-year volumes. This excludes shipments of medical equipment.
“The capacity crunch will, unfortunately, be a temporary problem. The recession will likely hit air cargo at least as severely as it does the rest of the economy. To keep the supply chain moving to meet what demand might exist, airlines must be financially viable. The need for financial relief for airlines by whatever means possible remains urgent,” said de Juniac.