Etihad Cargo's revenues rocket during Covid-19 amid spike in freight fares
Etihad Aviation Group’s cargo revenues during the first-half of 2020 shot up by 37% to $490 million as the carrier pivoted away from passenger flights to carrying air freight amid the Covid-19 pandemic.
While the increased cargo revenues failed to offset $758 million of losses incurred by the 58% drop in passenger numbers, the extra sales helped Etihad Aviation to maintain a “satisfactory level of liquidity” during the first six months of the year.
Around 70% of Etihad’s entire fleet was grounded when flights were suspended in and out of the UAE on 24 March, meaning overall revenues for the group fell to $1.7 billion in H1 compared to $2.7 billion in H1 2019.
But the carrier began using some of its grounded passenger jets for cargo operations amid a huge increase in demand for air freight during the pandemic. In total, Etihad carried 254,345 leg tonnes of cargo during the period.
Etihad operated up to 40 of its fleet of 97 passenger aircraft in Q2, including Boeing 787 Dreamliners, 777-300ERs, and Airbus A320 family aircraft as belly-hold cargo freighters to complement its cargo fleet of six 777-200F freighters.
Cargo revenues were helped along by a massive spike in fares during the period.
In fact, revenue earned per unit weight shot up from around $2 per kilogram up to as much as $20 per kilogram in some cases, according to Tom Crabtree, regional director marketing for air cargo at Boeing.
Crabtree said that using passenger aircraft on cargo operations became “very attractive and very lucrative” for operators during the pandemic and provided a source of cash flow after passenger traffic evaporated.
“What we’re seeing now is that while yields are still elevated, they are starting to come back down. I think airlines will have to revisit the economic viability of operations PAX aeroplanes in cargo-only mode as things return to ‘normal’. But that’s going to vary on the region.”
Many airlines in the market turned to carrying cargo in the belly-hold of passenger aircraft during the height of the pandemic as an alternative source of desperately needed revenue.
Rohit Ramachandran, CEO of Kuwait’s Jazeera Airways, said that the move has “been effective”, although the amount of sales generated was still “very small compared to the overall scale of the business”.
Emirates president Sir Tim Clark told a recent conference that ramping up the airline’s cargo operations in the early stages of the coronavirus crisis helped to cushion the impact of the revenue crunch and protect liquidity.
Clark said that while the increased cargo-only flights did not make up for the loss in passenger income, they kept “the wolf from the cash door”.
“Being the opportunists that we are, we could see by late March that with the shrinking of global belly-hold capacity and the shortage of freighters, that there was an opportunity,” Clark said.
“Because we had the 777-300 ER, which is a hugely capable aircraft for both medium and long-haul operations, and because we had opted for the large cargo door at the rear of the aircraft, we were able to put 14 pallets into the hold and we’d also taken seats out etc.”