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While the impact of the COVID-19 pandemic on the air cargo sector can be seen as a bubble, the fundamentals of the air cargo sector need to be viewed in a much broader context – in particular, the evolution of e-commerce and the rapid economic growth of the emerging markets. The air cargo market is, without doubt, a growing sector within the aviation industry and is one that cannot be ignored.
The current growth in demand for freighter capacity is attributable to the following factors.
Reduced belly cargo capacity
The wide-scale lockdowns, border closures, and travel restrictions brought about by the COVID-19 pandemic have resulted in a dramatic decline in global passenger flights. At the peak of the pandemic in May 2020, the weekly flight frequency for global passenger airlines had fallen by about 70 percent (as compared with data for May 2019).
International passenger traffic remained weak during the first half of 2021, but signs are pointing toward some improvement as more people get vaccinated and international travel restrictions are gradually eased. However, the spread of the COVID-19 Delta variant has weakened consumer travel sentiment and significantly dampened the outlook for long-haul flights.
Domestic passenger traffic is recovering faster than international traffic. Major domestic markets started on a path to recovery in 2020, with the pace accelerating in 2021, especially in the United States, by far the biggest domestic market.
According to Boeing, passenger belly cargo typically accounts for 54 percent of world air cargo capacity. The massive drop in passenger flights resulting from the COVID-19 pandemic has therefore given rise to a corresponding increase in demand for freighter capacity.
As noted above, there is a clear divergence in the pace of recovery between domestic traffic on the one hand and international traffic (particularly long-haul) on the other. Consequently, demand for domestic freighter capacity will reduce faster than international freighter capacity.
According to Boeing’s forecast, the aviation industry will recover to 2019 levels of traffic by the end of 2023 or early 2024, with long-haul international routes taking the longest to recover. The air freighter market will therefore see the effects of the COVID-19 pandemic for some time to come.