ISTAT Jetrader - Winter 2021 - 38

FIGURE 2: AVERAGE GLOBAL CARGO LOAD FACTORS AND AVERAGE
HONG KONG-NORTH AMERICA FREIGHT RATES ($/KG)
Source: IATA Air Cargo Market Analysis and Statista
current high availability of passenger aircraft feedstock at
low acquisition costs and the overall attractiveness of the air
cargo market. Between May 2020 and February 2021, nearly
200 narrowbody and widebody freighters were added to the
world fleet, including new-build aircraft, new passengerto-freighter
( " P2F " ) conversions and existing freighters
re-entering service from storage.11
There are now three
separate announced programs to convert 777-300ERs into
freighters, with multiple conversion lines being established
to meet demand.
Outlook Going Forward
It is difficult to predict when the air cargo demand-supply
relationship will return to something approaching a " normal "
equilibrium, but it is clear that the pandemic has resulted
in lasting changes to the air cargo industry. Passenger
demand, particularly for long-haul flying, will likely remain
suppressed not only until the pandemic is considered truly
over but for some time after, resulting in belly capacity for
cargo remaining restrained. In addition, other parts of global
supply chains, most notably sea freight, are struggling
with massive bottlenecks that look likely to continue well
into the future, with significant positive implications for air
cargo demand.
10. IATA Cargo Chartbook, Q3 2021.
11. Forbes, " Israel Aerospace Industries And Etihad Tap Into The
Booming Market Of Converting Passenger Jets To Cargo Planes " ,
Cathy Buyck, 29 August 2021; referencing data from IBA.
38 * THE OF F I C I AL PUBL I CAT I ON OF ISTAT
Boeing projects that global passenger demand will not
return to 2019 levels until 2024.12
While domestic travel
has largely recovered, long-haul passenger travel continues
to lag, constrained in part by the slow pace of reopening
borders. In addition, higher-yield business travel is taking
longer to return than leisure and " VFR " (visiting friends and
relatives) traffic - hit simultaneously by increased business
sensitivity to controllable travel expenses, as well as the
widespread use of online videoconferencing as an effective
substitute for air travel during the pandemic. It is not at all
clear when business travel will fully return to the levels seen
prior to COVID-19, putting further pressure on passenger
airline revenue.
As long as passenger traffic and revenue remain below
pre-pandemic levels, there will continue to be a capacity
squeeze in air cargo, leading to continued strong load
factors and yields. We project as a consequence that
demand for freighters will continue to be strong for years
to come.
Air cargo volume demand growth is likely to remain
robust through much of this decade, driven by a rebounding
global economy as well as continued growth in e-commerce
demand. The IMF projects that real GDP will grow 5.9%
in 2021 followed by average yearly growth of 3.6%
through 2026.13
12 Barron's, " Boeing Sees Full Commercial Air Recovery By 2024 " ,
14 September, 2021.
13 IMF, World Economic Outlook, October 2021.
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