Aviation companies embracing an all-cargo business model 29/04/22

A number of aviation companies are embracing an all-cargo business model that involves the use of aircraft with seats removed as a faster, cheaper way to market than buying full freighters.

This year, AELF FlightService plans to begin operating 10 large Airbus A330 and A340 aircraft that have been retrofitted to carry freight on the main deck. AELF management believes that making the configuration more permanent will appeal to shippers of lightweight, e-commerce goods in a tight market. By eschewing the traditional tactic of buying used passenger aircraft and structurally reinforcing them to handle large containers, the company intends to minimise upfront costs and speed time to market.

AELF is waiting for the European Union Aviation Safety Agency (EASA) to approve the design modification, clearing the path to transform the AELF aircraft into cabin freighters with floor-loading capability. 

EASA and the Federal Aviation Administration granted supplemental type certificates to temporarily modify passenger cabins as an emergency measure so airlines could move critical medical and other supplies when the pandemic threw economies into turmoil. The EASA exemption expires at the end of July, but the new certification will allow the light-duty freighter to fly beyond the current deadline.

Many airlines jumped at the chance to operate passenger freighters when travel demand plummeted. The resulting shortage of global cargo capacity, combined with high demand for transport of medical supplies, vaccines and e-commerce purchases, boosted freight rates, making the flights profitable. Air cargo demand grew 6.9% in 2021 and projections are for another strong year. But many carriers have returned the aircraft to full passenger service or are phasing them out as travel demand continues to recover. Rising fuel prices also hurt the economics of operating aircraft that can’t carry as much cargo as a full freighter.

“We see a good opportunity going forward even with passenger belly freight returning to the air and some of the maritime supply chain issues working through. We think this is a good space to be in and it’s a good complement to the dry leasing side of the business,” Joe Cirillo, chief operating officer at AELF FlightService, said in an interview.

The hybrid cargo model – between a pure heavy freighter and an auxiliary passenger aircraft – is a novel response to the ongoing capacity challenges faced by cargo owners and logistics providers. Eastern Airlines, a small passenger airline, is following a similar strategy with a fleet of up to 35 Boeing 777 aircraft aimed at business with low-density goods for import or export.

Source: FreightWaves