Saturday, August 22, 2009

Air Freight Slump Could Force Merger

Demand for JAL Cargo collapsed
Shipping News Feature

JAPAN – Japan Airlines (JAL) and Nippon Cargo Airlines (NCA) are conducting talks on the merging of their respective freight services due to a huge drop in the demand for air cargo carriage, it was announced yesterday.

JAL has seen a 39 percent drop in its international cargo volume in its first quarter and a 23 percent drop in the second this year. Freight traffic has now been in decline for the airline for eleven months and, combined with an almost 50 percent drop in passenger numbers, has led to the operator posting a $1 billion loss in the three month period ending June.

These losses have forced JAL to cut back across the board and the company hopes that it will be able to transfer its freighter operations to NCA by the 1st of April, 2010.

In a statement JAL said :

“Following the collapse of the economy in the United States last autumn, the financial crisis that spread worldwide caused demand for air cargo transport to fall drastically and market situations to worsen.

“Further consolidation is expected to bring about more benefits such as allowing both companies to significantly reduce cost and to fortify their technical expertise.”

NCA, which is part of the transportation group Nippon Yusen Kaisha, has also been forced to make cut backs in light of the recession. On the same day that the JAL agreement was made NCA announced they were cutting their freight services to Frankfurt from September.