Air cargo capacity crunch to become 'more critical' ahead of vaccine deliveries, Iata says

Global capacity shrank an annual 22.6% in October as much of the passenger fleet remains grounded

European carriers reported a decrease in air cargo demand of 11.9% in October compared to the previous year. AFP.

A severe capacity crunch facing the global air cargo industry will become more critical ahead of the mass Covid-19 vaccine rollout expected around the world, according to the airline industry's biggest lobby group.

Global air freight capacity – measured in available cargo tonne-kilometres – shrank 22.6 per cent in October, from the same period a year ago, the International Air Transport Association (Iata) said on Monday in its monthly report. This is nearly four times bigger than the contraction in air cargo demand, indicating the capacity crunch continues as much of the world's passenger fleet remains idle.

The end of the year is typically peak season for air cargo industry, which will likely get an added boost with consumers relying on online shopping, 80 per cent of which is delivered by air.

"So the capacity crunch from the grounded aircraft will hit particularly hard in the closing months of 2020," Alexandre de Juniac, director general of Iata, said. "And the situation will become even more critical as we search for capacity for the impending vaccine deliveries."

Air cargo is a rare bright spot for the aviation industry that has been hammered by the Covid-19 pandemic. Vaccine deliveries could unlock massive opportunities for airlines and help them reduce the staggering losses from the industry's worst-ever crisis.

Global air freight demand, measured in cargo tonne-kilometers, was 6.2 per cent below previous-year levels in October, according to Iata. That is an improvement from the 7.8 per cent year-on-year drop recorded in September.

However, the pace of recovery in October was slower than in September with month-on-month demand growing 4.1 per cent.

The continued, albeit slower-paced improvement last month, was driven by growing new export orders, an uptick in global goods trade and indications of continued economic recovery in the fourth quarter.

Among the regions, Middle Eastern carriers reported a decline of 1.9 per cent in year-on-year international cargo volumes in October, unchanged from September, Iata said.

However, the pace of recovery in October was slower than in September, with month-on-month demand improving 6 per cent and 2.5 per cent respectively.

"The weaker performance is driven by less demand in Africa-Middle East trade lanes," Iata said. International capacity decreased 22.7 per cent.