Cathay Pacific flags rising cargo demand on back of emerging peak

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Cargo demand is ramping up across Cathay Pacific’s network as the sector enters the beginning of the traditional peak season. Tonnage carried improved nearly 7.0 per cent month-on-month in September, although this was still substantially below pre-COVID-19 levels, says Cathay Pacific Group chief customer and commercial officer Ronald Lam.

“Our freighter fleet schedule has been stepped up and is now operating at peak season levels, with services notably increased on transpacific routes. We also operated a greater number of cargo-only passenger flights compared to August – 525 pairs in total – and continued to charter Air Hong Kong flights to complement our freighter and passenger schedules, he says.

In September, the carrier began uplifting mail for Hongkong Post in its passenger cabins using its reconfigured B777-300ER ‘preighters’, which have had some of the Economy Class seats removed to provide additional cargo space. This aircraft was also deployed to run a new, temporary service to Pittsburgh serving the seasonal upsurge in demand.

Meanwhile, cargo demand remains depressed and “is only recovering at a slower-than-expected pace due to capacity constraints,” according to Lam.

Cathay Pacific and Cathay Dragon carried 109,453 tonnes of cargo and mail last month, a decrease of 36.6 per cent compared to September 2019. The month’s revenue freight tonne kilometres (RFTKs) fell 30.4 per cent year-on-year.

The cargo and mail load factor increased by 9.8 percentage points to 75.3 per cent, while capacity, measured in available freight tonne kilometres (AFTKs), was down by 39.5 per cent.

In the first nine months of 2020, the tonnage fell by 33.9 per cent against a 34.9 per cent drop in capacity and a 26.9 per cent decrease in RFTKs, as compared to the same period for 2019.

Passenger services remain devastated with the two airlines carrying a total of 47,061 passengers last month, a decrease of 98.1 per cent compared to September 2019. The month’s revenue passenger kilometres (RPKs) fell 97 per cent year-on-year.

“September rounded off what has been an incredibly difficult summer, traditionally the peak passenger travel season of the year,” Lam laments. “We continued to operate minimal capacity – just 9.0 per cent in September – a marginal month-on-month increase from about 8.0 per cent in August.”

This was despite the resumption of some services, notably Cebu, Philippines and Perth, Australia. Daily passenger numbers remained low, averaging just 1,568, while load factor sat at about 25 per cent.

“In September, we continued to rely heavily on student traffic to the UK. We launched three charter services from Hong Kong to London to cater to demand from transit passengers from the Chinese mainland, and another from Hong Kong to Tel Aviv for transit passengers from Shanghai.”

Lam also notes that demand from the Chinese mainland has gradually increased since the lifting of the ban in Hong Kong of ex-Chinese mainland transit travel in mid-August. Overall, transit passengers accounted for about 33 per cent of Cathay Pacific Group total traffic in September, he adds.

Lam says that after carefully studying numerous scenarios facing the industry and the Cathay Group airlines, it expects to be operating approximately 10 per cent of its pre-pandemic passenger flight capacity for the rest of 2020 and under 50 per cent for overall 2021.

“Among the multiple scenarios studied, this one is already the most optimistic that we can responsibly adopt at this moment. We assume we will be operating well below a quarter of pre-pandemic capacity in the first half of next year, but will see a recovery in the second half of the year – only assuming the vaccines currently under development prove to be effective and are widely adopted in our key markets by summer 2021,” he says.

The International Air Transport Association (IATA) has downgraded its full-year 2020 passenger traffic forecast to reflect a drop of 66 per cent and does not anticipate passenger travel will return to pre-COVID-19 levels until 2024.

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