Looking for opportunities in crisis-struck aviation: cargo

The aviation market is slowly beginning to shake off the initial “brace for impact”, as it transitions into a new normal and shows signs of recovery in various domestic regions and international routes.

In the air freight industry which had been experiencing turbulent conditions in previous years, the crisis first added up to a sharp decline in cargo capacity. However, on July 17, 2020, an air cargo database WorldACD revealed the results of the 1-year global air freight market evolution starting June 2019. Despite a decrease in capacity and global demand, the worldwide average air freight revenue was up by 21% in the last half-year.

Two factors have stood out for market players navigating this terrain: the strength of their balance sheets prior to the pandemic and their ability to fulfill the demand and find opportunities in the gaps formed by the decline in capacity.

The gap created from loss in capacity allowed some of the players to strengthen their own positions in the market. For example, when the market shrank by nearly 20% between January and May, resulting in widespread interruptions to international trade lines, Turkish Airlines acted as an international bridge preventing any interruptions to the market share. Today, the airline holds a total of 5% of the market, meaning that one in every 20 air shipments is operated by Turkish Airlines. This became possible through the carrier’s ability to convert some of its widebody passenger aircraft for cargo operations to expand its network and capacity.

The cargo capacity would escalate in conjunction with the resuming passenger flights, but given the unhasty return of passenger aircraft, the growing demand for air freight is expected no earlier than in 2021. 

On September 15, 2020, aviation experts will take a closer look at the current situation in the global cargo industry and will share their opinions about opportunities that cargo businesses can use amid the crisis. Register for the virtual aviation conference AIR Convention Digital Week 2020 that is taking place on September 14th – 17th, 2020.

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