New CAPA analysis suggests clouds of uncertainty forming for cargo operations in the US

A new research publication from CAPA – Centre for Aviation notes the growing momentum of US passenger airlines entering the cargo business. Just recently, Southwest formally launched international cargo operations and Delta Air Lines and Korean are working to maximise the benefits of their JV to include each airline’s cargo business.


Summary:

  • Southwest is making its first inroads into international cargo operations with freight offerings to Mexico.
  • The US Big 3 log impressive growth in cargo revenues during 2Q2018.

Southwest Airlines’ cargo revenues were flat year-on-year during 2Q2018, at USD44 million. The airline’s AFTKs are projected to jump 13% year-on-year in 2018, after increasing 10.4% in 2017.

In Jul-2018 Southwest officially launched international cargo operations from Houston Hobby to Mexico City, and later in 2018 the airline is planning to offer shipping to Puerto Vallarta and Cabo San Lucas. The move is a natural extension for Southwest, which has expanded its passenger network to those destinations during the past two to three years. Mexico is Southwest’s largest international country served, measured by weekly departing frequencies.

The US Big 3 log impressive growth in cargo revenues during 2Q2018 

Each of the large three global US network airlines posted double digit growth in their cargo revenues during 2Q2018 after growing cargo capacity during the past couple of years. American Airlines believes its cargo revenues could reach USD1 billion in 2018.

For a more detailed analysis of Southwest’s freight operations, the US cargo market and revenue outlook, please visit: US airlines chart solid cargo revenues, but clouds of uncertainty form

It remains to be seen how long the momentum in cargo revenue will last for the US’ largest airlines. Cargo traffic in both North America and Latin America was strong in 1H2018; however, IATA is warning growing global trade tensions could change its cargo outlook.

For the full year, American is forecasting revenue growth in its cargo business of 13%, and estimates its cargo revenues will break the USD1 billion mark for the first time in the company’s history.

United’s cargo revenues increased 15% year-on-year, and company management recently concluded that the results mark several years of improving results. The airline’s AFTKs fell 4.4% in 2016 before growing nearly 3% in 2017. For 2018, United’s AFTKs are forecast to grow 5.7%.

For now, there are promising prospects for cargo in North America, and US passenger airlines are opting to increase their cargo capacity for 2018. Revenues are likely to continue growing throughout the year, but repercussions from global trade uncertainty will no doubt cloud global cargo forecasts for 2019.