Hong Kong’s Cathay Pacific ready to pull plug on ‘many’ passenger flights now being used exclusively for cargo as air freight market weakens
- Rates for air cargo, which had soared with the grounding of planes amid travel collapse, is slowly returning to earth, numbers show
- A decline in demand for personal protective equipment and the use of alternative shipping methods has been behind the drop in prices
Cathay Pacific, the world’s fifth-largest air cargo carrier, is preparing to cancel “many” of the passenger flights it has repurposed to carry only freight, the strongest signal yet that the short-term boom in the air cargo market is weakening.
Air freight rates have fallen by half from their peak last month, according to TAC Index, the industry’s price-guide bible, as demand for personal protective equipment has eased, alternative transportation methods have been employed and global economies continue to slow.
“Cargo has been tapering off, and as a result, there will be many cancellations of cargo-only passenger aircraft flights, as the commercial decisions are made closer to the time of the flight,” Hong Kong’s de facto flag carrier, which operates from the world’s busiest air cargo airport, told staff earlier this week.
Cargo revenue has been Cathay’s primary source of income for at least three months, as the collapse in air travel has seen passenger revenue dry up. With the grounding of numerous passenger aircraft, which typically carry half the world’s cargo, air freight pricing surged on the shortfall in capacity.
Among Asian airlines, who rank among the biggest cargo carriers globally, a mixed picture was emerging.