An American Airlines 777 is loaded with cargo at Philadelphia International Airport.
Leslie Josephs/CNBC
Airlines’ cargo revenue is slumping. That is an indication of excellent news for travel recovery.
Delta, United and American this month each reported year-over-year declines of about 40% of their second-quarter cargo revenue.
For the primary half of 2023, Delta’s cargo business generated $381 million, down from $561 million in the primary half of 2022, while American’s cargo unit brought in $420 million compared with $692 million in the primary six months of last yr. United brought in $760 million from cargo to date this yr, down from $1.2 billion a yr earlier.
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Meanwhile, airlines are reporting record revenue, if not earnings, because of the rebound in travel demand. Meaning the business impact of cargo, which once helped prop up airlines’ revenue in the course of the Covid pandemic travel plunge, has faded.
Cargo revenue at United, which generates essentially the most of that business of the three largest U.S. carriers, for the primary half of 2023 represented a lower than 3% slice of the carrier’s $25.6 billion year-to-date revenue.
That is a significantly smaller portion than 2020, when cargo revenue made up greater than 10% of United’s sales.
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Through June, cargo revenue made up 1.3% and 1.6% of overall revenue at Delta and American, respectively, down from 3.5% and 12% in 2020.
However it’s not all bad news.
Flying goods all over the world was a lifeline for passenger carriers in the course of the pandemic when bookings dried up and travel restrictions forced airlines to slash service abroad.
Normally about half the world’s air cargo flies within the bellies of passenger planes. That reduced cargo capability in the course of the pandemic helped drive shipping rates as much as records, together with strong e-commerce demand, supply chain problems and port congestion.
But travel demand has roared back, particularly for international trips, as customers rush to take vacations abroad that they postpone in recent times.
The renewed demand has prompted airlines so as to add back service. U.S.-Europe flights alone are expected to be the best in five years.
The added passenger capability also boosts the world’s supply of space to fly cargo, at the identical time that demand for air cargo is waning.
The Baltic Air Freight Index, which tracks worldwide air cargo rates, is down 47% from a yr earlier. In May, the newest available data, the International Air Transport Association, said air cargo capability was up nearly 15% from the identical month of 2022 while demand dropped 5%.
Airlines are planning to expand flights this yr, too, to capitalize on strong international travel demand, a trend that would further drive down cargo revenue.
Clarification: This story has been updated to make clear that half the world’s air cargo flies within the bellies of passenger planes.
