Dive Brief:
- International air cargo capacity is set to inch closer to pre-COVID-19 levels as U.S. passenger airlines deploy more flights to meet a jump in demand for Transatlantic travel in the winter and summer months.
- Airline executives in recent earnings calls say they've seen a jump in passenger demand after the White House moved to allow fully vaccinated foreign visitors into the U.S. starting Nov. 8.
- "This is promising for air cargo, as any uptick in demand before various holidays in the US can be met with more capacity quickly," Flexport wrote in a market analysis earlier this month, adding it's a sign that Europe-to-North America airfreight will see a more stable peak season in 2021.
Passenger demand jumps after US updates travel policy
| Airline | Comments |
|---|---|
| Delta Air Lines | Delta is adding back flights to its winter schedule following a surge in November and December bookings from Europe, President Glen Hauenstein said. |
| American Airlines | American Airlines saw bookings increase by 66% to the United Kingdom and a 40% increase to "core Europe" in response, President Robert Isom said. |
| United Airlines | United Airlines saw bookings for November and December travel increase 35% compared to two years ago, which gives the airline confidence "summer 2022, particularly over the Atlantic, will be robust," President Brett Hart said. |
Dive Insight:
The current air freight market is strained for capacity as passenger airlines, which carry cargo in their bellyholds, still haven't returned to full capacity following the onset of the COVID-19 pandemic. The lack of space is especially pronounced in lanes "dominated by passenger flights" like the Transatlantic, said Niall van de Wouw, Clive Data Service's Managing Director.
Air shipping rates have jumped in response. Delta's cargo revenue "was nearly 40% higher despite flying less than half of our wide-body international flights compared to the same period of 2019," said Hauenstein. And Clive Data Services said in a news release that September 2021's average rate was more than double what it was in 2019, prior to the pandemic.
Passenger travel still has a long journey to recovery. Airlines' scheduled U.S.-Europe capacity is expected to reach 65% of 2019 levels in November and 75% in December following the White House's announcement, according to the International Air Transport Association. But any additional capacity will be welcomed by shippers, many of which are opting to move more freight via air ahead of peak season to avoid ocean congestion.
"As market challenges persist on the water, significant ocean conversion freight is challenging major airports," C.H. Robinson said in a Europe-to-North America market update.
Next year could bring further relief for shippers, as airline executives expressed optimism about more capacity coming online in 2022. United Airlines expects its Latin America and Transatlantic bookings "will gradually build to 2019 levels and above by summer 2022," said Andrew Nocella, executive vice president and Chief Commercial Officer, and it's adding 10 new Transatlantic routes next year.
Meanwhile, American Airlines President Robert Isom expressed "cautious optimism" on the company's Q3 earnings call about its Transatlantic business.
"As we get into next year, with every passing week, we see our bookings step up more and more across Transatlantic," Isom said. "And so we're really encouraged by that. But the big variable will be when corporate starts returning back to office and start traveling again for business which we anticipate being more in the Q1 timeframe than the Q4 timeframe."
