The "March of Hardship" in the Aviation Industry... Active Niche Strategies Such as Cargo Sales

The departure hall of Terminal 1 at Incheon International Airport is quiet on the 29th, ahead of the golden holiday weekend. Photo by Moon Honam munonam@

[Asia Economy Reporter Yu Je-hoon] The aviation industry, pushed to the brink by the novel coronavirus disease (COVID-19) crisis, is desperately striving to secure profitability for survival. National airlines are focusing on the booming cargo business due to improved supply and demand, while also putting effort into resuming passenger services to reduce costs and generate cash flow.

According to Incheon International Airport Corporation on the 15th, air cargo (direct cargo, transit cargo, mail) volume from January to April increased by 0.53% year-on-year to 881,600 tons. This sharply contrasts with the passenger count during the same period, which dropped by 55.8% to 10,454,031. The cargo performance of national airlines by weight also grew despite the adverse effects of COVID-19. Korean Air transported 395,406 tons, up 7.5% year-on-year from January to April, and Asiana Airlines carried 208,568 tons, an increase of 5.2%.

This is interpreted as a result of increased demand for urgent shipments such as medical supplies following the COVID-19 pandemic (global outbreak). The corporation explained, "Each airline is increasing supply, and the temporary rise in urgent cargo transportation demand is also a factor."

The aviation industry, facing a crisis due to the shutdown of passenger transport, is also focusing on cargo operations. Passenger flights, which accounted for about 30% of existing air cargo transport, have been suspended, causing freight rates to surge. In fact, both Korean Air and Asiana Airlines have been operating belly cargo services using the lower space of empty passenger aircraft since the beginning of the year. An industry insider said, "Unlike the passenger sector, which is struggling due to lack of work, the cargo sector is short-handed," adding, "Some airlines that have focused on cargo operations have significantly reduced their deficit."

It is not only national airlines that are strengthening cargo operations. Delta Air Lines recently decided to operate cargo flights daily on routes between Incheon and Shanghai, Atlanta, Detroit, and Los Angeles. Some countries and airlines also increase loading capacity by allowing cargo to be carried in passenger seats.

However, overcoming the crisis through cargo operations alone is not easy, as air cargo contributes only about 20% of total revenue. Therefore, airlines appear to be taking all possible measures to secure profitability. The industry expects additional restructuring, fare increases, and prepaid ticket sales to continue until demand recovers from the impact of COVID-19.

Furthermore, airlines are proactively considering resuming international flights. Korean Air and Asiana Airlines will each double their international flight supply next month. Although demand has not yet been secured, this is a preemptive response considering business and cargo demand.

A senior official from a national airline explained, "When the COVID-19 situation in each country enters a stabilization phase, demand for urgent shipments such as medical supplies will naturally decrease," adding, "However, it does not seem that passenger demand will recover immediately. This gap will be the most difficult period for airlines."

This content was produced with the assistance of AI translation services.