EletiofeAirlines’ Pandemic-Driven Cargo Business Will Keep Flying

Airlines’ Pandemic-Driven Cargo Business Will Keep Flying


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Businesses around the globe have suffered immeasurably in 2020. Some, however, have taken far more devastating pandemic-related kicks to the head than others. Foremost among them: the airline industry. It has been the hardest hit, according to S&P Global, outpacing restaurants, resorts, theme parks, and other leisure facilities. Other studies show passenger bookings down between 71 and 96 percent globally in the months since Covid-19 arrived, and there’s little hope of a travel turnaround anytime soon, even if vaccines hit the streets today.

Because of the vast reach and entangled impact of air travel worldwide, countless other industries have suffered right along with the airlines. Air travel for business has pretty much withered away to nothing, due to passengers being uncomfortable flying or forbidden to do so by border closings or corporate edicts. Then there’s the leisure travelers, who represent the lion’s share of passengers, if only a small percentage of revenue. (Credit the largely corporate-funded business-class crowd for that differential.) With everyone from vacationers to peripatetic social media influencers grounded, tourist destinations are reeling just as badly. All sit in a holding pattern waiting for permission to come, but also permission to go.

Though it might seem ironic that the industry most devastated by the spread of Covid-19 happens to be the virus’s primary vector for international distribution, the fact is that decimated air travel isn’t good for anyone. The industry employs nearly 90 million people worldwide and in 2019 generated $612 billion in revenue. In a flash, that all vanished. “There’s no other way to say it—the impact has been unprecedented and incredibly traumatic,” says aviation analyst Richard Aboulafia of the Teal Group. “The worst years in history for the business have seen a 2 or 3 percent drop, and this year we’re going to see it down 70 percent or more overall.”

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Aboulafia thinks a rebound in air travel—assuming the deployment of vaccines goes smoothly—won’t happen fully until 2023. That’s a relatively speedy recovery, given the depth of the hurt. But it’s also dependent on the airlines and their supporting networks of companies still existing, something that’s not guaranteed without government financial support beyond what has already been provided, and which Aboulafia says has been crucial so far. It’s also imperative that borders open up, businesses resume sending their road warriors out into the world, and civilians start feeling safe getting on an airplane again.

This is all uncharted territory—none of these variables have foregone conclusions. There will remain depths of trepidation and uncertainty in the traveling public, and the fact is that the world is changing right beneath the airliners’ wings. Businesses may ultimately decide that Zooms and emails are doing the job just fine, and severely curtail future business-travel budgets. One report in The Wall Street Journal suggested that business travel could permanently drop up to 36 percent for this very reason. It’s an unsettling proposition for frequent fliers like Megan Stewart, a Colorado-based business development executive for aerospace giant Lockheed Martin. Stewart travels hundreds of thousands of miles each year, mostly on United Airlines, and says that Zoom isn’t cutting it. “The part of our business that really matters most are the relationships with customers,” she says. “It takes years to close sales sometimes, so you need that personal interaction with people. When you’re with someone in person, you’re watching their mannerisms and understanding whether they’re really in agreement with what you’re saying. Over Zoom you can’t tell if they’re being polite, or are they just silent because they’re multitasking and typing out notes to other people.”

Survival Mode

So much of this is out of any one party’s control that the industry can only adopt a wait-and-see attitude. The airlines were able to withstand the early months largely thanks to $25 billion in grants and loans from the federal government. That support was only intended to help bridge companies through September, and an additional $17 billion is currently being negotiated in Congress as part of the next Covid relief bill. To further bolster its prospects, airlines deployed a variety of additional tactics, including furloughing or laying off employees and parking—temporarily or permanently—older or underutilized aircraft. In some cases this has sped up the retirement of some models arguably ahead of their time. The Airbus A380, a double-decker behemoth that was already struggling against smaller and more efficient long-range aircraft like Airbus’ own A350 and the Boeing 787 Dreamliner, has itself become a victim of the pandemic. “The big four-engine jets are the least efficient and most maintenance-intensive,” Aboulafia says. “With the airlines already favoring profitability over market share, thus focusing more on point-to-point travel with smaller jets rather than hub-and-spoke travel, the pandemic will only accelerate that process. So the A380, already in trouble, is done.”

Airlines have also consolidated routes and eliminated thousands of flights that duplicated the more popular ones several times a day. Ultimately, though, they’ve needed to keep aircraft in the skies in order to serve the customers who are ready and able to fly and to fulfill commitments made in exchange for the government funding. But one of the paramount reasons the airplanes have kept flying turned out to be one of the most important revenue sources during this crisis: cargo.

Though the air transport industry, from large cargo haulers to the consumer-oriented shippers like UPS, FedEx, and Amazon, have their own fleets of aircraft circling the globe constantly, passenger-carrying aircraft have always plugged the gaps by loading shipping containers into belly storage. That capability took a hit as the airlines cut their routes, so many have begun flying cargo-only flights to keep cash flow up and crews and personnel busy. United made this switch almost immediately, assembling a team back in March. “I think it was less than a week from the time we proposed the idea until we were actually flying a cargo-only airplane,” says Chris Busch, managing director of United’s cargo operations for the Americas. “Now we’ve executed over 8,000 of these flights.”

Those planes have carried more than half a billion pounds in cargo thus far. Though the aircraft retain their passenger seats, belly storage is dedicated solely to those loads, rather than a mix of cargo and travelers’ luggage. Engineers had to calculate the impact of more weight in the bottom and less weight up top to ensure the airplanes’ balance wouldn’t be compromised, and the overall financial logic of flying just cargo and no high-dollar business-class flyers had to make sense, to make certain they wouldn’t lose money on the deals. Once those hurdles were cleared, Busch says, the challenge became integrating the flights into airline operations normally geared toward passenger flights and managing the arrival and departure of the different loads, which could include pharmaceuticals, perishables, and ecommerce packages.

Almost all major airlines worldwide have pursued similar strategies, citing the financial lifelines the services provide and the relative ease of handling the delivery needs of stuff rather than people. (Presumably because pallets of inkjet cartridges and soccer balls don’t whine about poor Wi-Fi service.) The airlines are also positioning themselves to help distribute Covid-19 vaccines as they become available. Because vaccines require precisely chilled conditions, air shippers have had to develop procedures to ensure the safety of both the cargo and the crew. Most of the vaccines will be kept frozen with dry ice, which is classified by air transport regulators as dangerous—it releases carbon dioxide as it evaporates, so adequate venting is essential. According to United, a single Boeing 777-200 can carry a million doses of a vaccine.

Busch says that United’s cargo-shipping skills will likely remain a key part of the airline’s post-pandemic operations. “We are absolutely a passenger airline first, but on the cargo side we’ve shown what we can do,” he says. “So they’ll look over the next few years, when planning routes, at where the cargo demand is, and how it might match up with passenger flight operations.”

Body Movin’

But even cargo-only flights won’t be as profitable, long-term, as properly filling the seats above all the printer ink and soccer balls with actual human beings. For that, all the key boxes will have to be ticked—corporate green lights, receptive destinations, and passenger safety, perceived or otherwise. Travel industry critic Zach Honig, editor-at-large for The Points Guy, notes that passengers will expect the health precautions airlines have put in place to continue. This includes mask mandates, disinfecting high-touch surfaces, electrostatic or UV virus-killing treatments, and middle-seat blocking, even if the latter may not be strictly necessary. “Airlines have already moved away from this, citing studies which conclude that there’s a low risk of catching Covid-19 on a plane,” Honig says. “Still, the middle seat will continue to be an especially unappealing option even after the pandemic, given that it’ll be especially difficult to avoid close contact onboard.”

It’s here that the airline recovery will diverge from what may or may not be strictly necessary to what actually registers amid the finer nuances of human perception—i.e., what people see as the benefit versus the risk. It goes back to the Zoom question, and whether that’s good enough. “At the trough of the traffic dip, last spring, this was being said about all types of travel, not just business travel,” says analyst Courtney Miller of aviation industry news site the Air Current. “Then a funny thing happened: People started to travel again. The industry was at 3 percent of daily 2019 numbers in mid-April, and it just topped 45 percent for a brief period during Thanksgiving. People are willing to fly again. If daily infections are four times higher than they were in April, why then is traffic 15 times higher? We’re funny creatures. Time does things to our confidence in dealing with threats.”

We’ll see whether that confidence is actually hubris or foolishness, but once the Covid-19 threat is definitively reduced, Miller suspects that the traffic recovery will surprise people. Business travel simply isn’t possible right now, but the incentive to fly remains. “It’s one thing to meet with a client virtually, but it’s another altogether when your competitor is there and you’re not,” he says. “That is the most powerful force in determining business travel. Once those flood gates open, companies will be forced to be physically present if their competitors are willing to do so.”

For Stewart, the frequent business flier, beyond building relationships there’s another layer to the competitive advantage of flying: Leveraging knowledge that can only be acquired on site. This happens through sidebar conversations, noticing details that can only be gleaned in person, and simply observing the culture of the environment you’re moving through. “You simply don’t learn as much over Zoom or in those watered-down, lawyered-up generic virtual presentations,” she says. “It happens when you’re sitting in the bar or at dinner with people, and the absence of that is a major hindrance to businesses.”

As for the risks of traveling to score that advantage, Stewart thinks things are as well managed inside the travel loop as they can be. “I’m ready to go today,” she says.

There are certainly plenty of printer cartridges and soccer balls that would love the company.

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