Friday, May 22, 2009

More Cuts in Air Freight Capacity Expected

Demand Outstripped by Cargo Fleets.
Shipping News Feature

WORLDWIDE - Cuts made to the international air cargo fleet in recent months are not sufficient, according to heads of the industry.

Major operators such as Cargolux, Cathay Pacific, Lufthansa and Delta have already cut services significantly in response to the global downturn. However, further reductions will be required to further hedge against unnecessary losses.

Robert Van de Weg, head of sales and marketing at Cargolux, says that though in previous downturns operators could afford to reduce capacity by a few percent in the short term, the severity of the current crisis precluded this as an option. Cargolux has already reduced capacity by 10%, but demand is down by 25% and thus it is likely that further cuts will need to be made.

But in a positive development, much of these cuts can be made part of fleets purchase strategies. Bill Flynn, CEO of Atlas Air-the world largest operator of 747 freighters- believes that: ‘Retirement of older generation freighter aircraft will mitigate the impact of reduced demand.’

By delaying ordering and delivery of replacement aircraft he believes that it will be possible for operators to mitigate the worst effects of the recession, especially as there are signs that the decline in the industry is beginning to bottom out.

This policy will allow air cargo operators to weather the current storm and then be in a good position to make strong recoveries as the situation improves.