Airlines explore alternative business as planes stay grounded
With the survival mode “on”, the aviation industry is desperate to look for novel ways to keep their clients and cash reserves in hand for as long as it is possible. For most airlines, cutting expenses is the first order of business. For others, it is a challenge to find new resourceful ways to fatten the profits amid the global economic crisis.
How are airlines keeping things together during these turbulent times? AeroTime has rounded up cases of how inventive carriers might be in search of new revenue streams and attempts to keep credibility.
Filling the empty cabins: the rise of passenger freights
Refocusing efforts on cargo appears to be the most obvious thing to do. As the demand for air travel had weakened and the need for air cargo surged, airlines started to convert their unused aircraft into freighters. It all began with airlines using passenger jets to deliver medical supplies, equipment of various kinds, industrial parts, and high-demand consumer goods.
Plenty of operators worldwide, including Etihad Airways, KLM, American Airlines, All Nippon Airways, and many others, opted for expanding cargo and modified their passenger jets for goods transportation in order to sustain at least some of the operations. Air cargo rates have spiked drastically amidst pandemic, with rates jumping from 27% (from Hong Kong to North America) to 50% (from Shanghai to Europe) in just two weeks, according to Freightwaves data.
How come cargo hit stride at such a rate? Before the pandemic hit the world, more than half of cargo was transported in the so-called “belly” of passenger aircraft. Now that the passenger flights are canceled, retailers still need goods in their stores ‒ having, in fact, even higher demands, such as quick restockings on essential goods (masks and hand sanitizers).
Considered one of a few current sources of growth, air cargo is not a self-sufficient revenue stream that is able to compensate losses in passenger air travel. IATA still estimates airlines will lose up to $252 billion in passenger revenue this year. Nevertheless, the already busy cargo market keeps growing and doesn’t show signs of stopping.
From airline to a food delivery service?
Others may try the path of goods delivery but keeping things grounded. In another, quite unexpected take of how to stay afloat in the crisis, Russian carrier Ural Airlines has decided to place a premium on food experience on-board.
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