2020 may have been a bust for commercial passenger airlines, with 2021 not looking much brighter, but it’s a different ballgame for cargo airlines. There was a big demand for air cargo in 2020, and that’s staying strong. The demand is fuelled by disruptions to normal supply chains and a huge increase in e-commerce. While many passenger airlines are culling their fleets and postponing orders, the opposite is happening at cargo airlines.
New York state-based Atlas Air made a splash yesterday when it decided to buy the last four 747-8 Freighters to be made by Boeing. Atlas Air already flies 72 aircraft and is the world’s largest operator of the 747 jumbo jet.
“The 747-8F is the best and most versatile widebody freighter in the market,” said Atlas CEO John Dietrich yesterday, giving Boeing’s most iconic aircraft type a pat on the back. When signing the contract, Boeing’s Stan Deal said he expected the global air cargo fleet to grow by more than 60% over the next 20 years.
Tuesday was a good day for Boeing. Atlas Air competitor DHL also decided to take an additional eight new Boeing 777 freighters. That builds on an original order of 14 aircraft made in 2018. According to DHL, they already operate over 260 dedicated aircraft with 17 partner airlines. DHL planes operate around 600 daily flights across 220 countries and territories.
“Fueled by globalization, digitalization, and the unprecedented demand of our customers during the recent peak season, our global e-commerce volume grew by more than 40% in Q4. With the order of eight new widebody freighter aircraft, we underline our conviction that e-commerce is an enduring megatrend,” said DHL’s CEO, John Pearson.
The buys are welcome news at Boeing, having just announced a desultory total sales figure of 157 commercial aircraft across 2020. But it’s not just good news at new aircraft manufacturers like Boeing. Last week, Simple Flying reported Cirium expects demand for over 3,300 freighters across the next 20 years. While approximately 1,000 of those freighters will be factory fresh, most of the extra freighters will come from conversions.
Cargo gives a second life to many older passenger aircraft
Businesses that specialize in overhauling and extending older aircraft’s working life are also doing brisk business. Many prosper converting used passenger planes into cargo planes. AerSale’s Arizona MRO facility is now busy converting 24 former Boeing 757-200 passenger aircraft that belonged to United Airlines and American Airlines.
Emerging cargo airline Amazon is also buying used aircraft to support its exploding e-commerce business. Last month, Simple Flying reported Amazon was picking up three former Delta Boeing 767-300ERs for conversion into cargo planes. Traditionally, Amazon has dry leased aircraft operated by other airlines. Now it is starting to become an aircraft owner.
Earlier in January, Amazon confirmed the purchase of four former WestJet Boeing 767-300ERs. Amazon bought the planes last March. They are now in Mexico City, getting converted into cargo planes.
Amazon’s e-commerce business is reliant on fast shipping. Referring to the recent aircraft acquisitions, Amazon’s Sarah Rhoads said;
“Having a mix of both leased and owned aircraft in our growing fleet allows us to better manage our operations, which in turn helps us to keep pace in meeting our customer promises.”
The cargo sector of the commercial airline market is much smaller than the passenger sector. However, the cargo sector is booming. Because cargo companies take a good mix of both new and used planes, the boom helps underpin a wide variety of businesses across the airline industry. It’s a rare piece of bright news in a gloomy wider aviation environment.