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EXTRANS GLOBAL - Air Freight News - Week 48


1. Air Cargo General

  1. T'way Air - Inaugural European Flight, Launching Croatia Route

    • T'way Air is actively pursuing the launch of its Croatia route. Initially postponed indefinitely due to external factors such as COVID-19 and the Russia-Ukraine conflict, the airline has resumed plans for the route.
    • Ahead of the planned routes to Paris, Rome, and others due to the merger of Korean Air and Asiana Airlines, T'way Air's Croatia route will mark its first flight to Europe.
    • The airline is considering operating an A330-300 from Incheon, stopping in Bishkek, Kyrgyzstan, before reaching Zagreb, Croatia. The detour through Bishkek is to avoid conflict zones, as the A330-300, while a large aircraft, has a relatively short range of 9,500 km for a long-haul route.
    • T'way Air is exploring the possibility of introducing a direct flight from Zagreb to Incheon, which could benefit from tailwinds and reduce fuel costs on the return journey.
    • The airline is diversifying its routes to become a 'hybrid' carrier, with plans to increase its fleet by seven aircraft next year, including B737-800s, B737-8s, and A330-300s.
    • Depending on the progress of the Korean Air and Asiana Airlines merger, additional aircraft may be introduced, with plans to launch European routes starting with Paris in the first half of next year.
    • T'way Air has achieved significant financial success, with record-breaking revenues of 34.51 billion won and an operating profit of 34.6 billion won in the third quarter. Cumulative results up to the third quarter show revenues of 98.98 billion won and an operating profit of 137.1 billion won.
    • The airline ranks second in the LCC industry in terms of passenger transport, carrying 8.26 million passengers from January to October, a 25% increase compared to 2019.
    • T'way Air has diversified its long-haul routes, especially after introducing the A330 aircraft last year, with new routes like Incheon-Sydney, Singapore, Bishkek, and Ulaanbaatar in the third quarter alone.
    • The airline is considering operating the Croatia route independently of its planned European routes in response to the Korean Air-Asiana merger.
  1. Indonesia Routes - Regulatory Differences Cause LCC Route Deployment Challenges

    • LCCs are facing challenges in deploying routes to Indonesia due to differences in regulatory stances between the Indonesian and Korean governments.
    • Jeju Air operated its first chartered flight to Indonesia in May, targeting high passenger demand. The flight to Batam Island in northern Indonesia achieved a 76% occupancy rate, catering to golf travel enthusiasts.
    • LCCs are interested in Indonesian routes because their medium-haul aircraft, such as the B737-8 recently introduced by Jeju Air, can reach the country effectively. However, regulatory differences regarding route permissions pose obstacles.
    • Indonesia aims to develop new tourism destinations beyond Jakarta and Bali, emphasizing creating ten new destinations similar to Bali. This vision conflicts with Korea's desire to increase flight frequencies to popular routes like Jakarta and Bali.
    • Differences in opinion led to the breakdown of bilateral aviation talks between the two countries in June.
    • The profitability of routes is a challenge, as seen when Jin Air, in December, initially planned a chartered flight to Batam but later canceled, redirecting the aircraft to a more profitable route in Japan.
    • Stringent tourism visa issuance procedures for Indonesian citizens make travel to Korea difficult, contributing to LCCs hesitating to operate routes.
  1. European Cargo (Freight Carrier): Additional Routes Between the UK and China to Meet E-commerce Demand

    • European Cargo, a UK-based freight carrier, is expanding its existing cargo routes connecting Bournemouth Airport in the UK and Chongqing Airport in China.
    • Since May, the airline has been operating three weekly A340 cargo flights, increasing to six flights per week in September, providing a total weekly capacity of over 700 tons.
    • With the introduction of a third aircraft, the airline plans to further expand cargo supply in the first quarter of the next year.
    • The services are facilitated through a partnership with Shenzhen Sharing Express Logistic-Tech Ltd in China, and Cargo First handles cargo processing at Bournemouth Airport.
    • The cargo flights focus on transporting e-commerce goods between the UK and China, with the aim of enhancing cargo efficiency and expanding destination/flight frequencies through a potential cargo joint venture.


  1. Asiana Cargo Business Sale Stagnates - Blamed on High Acquisition Costs?

    • The sale of Asiana Airlines' cargo business faces challenges, with potential buyers narrowing down to Eastar Jet, Air Incheon, and Air Premia. Interpretations suggest that the high acquisition costs are a significant hurdle.
    • Leading candidates like Jeju Air and T'way Air chose not to participate in the preliminary bidding, leaving a gap in the involvement of top-ranking domestic LCCs.
    • For LCCs, acquiring Asiana Airlines' cargo business offers a rapid expansion opportunity and a means to secure stable cash flow. Asiana Airlines' annual cargo revenue ranged from 1.3 trillion to 1.4 trillion won between 2017 and 2019.
    • However, potential buyers would have to contend with a substantial sale amount of 500 billion to 700 billion won and assume approximately 1 trillion won in related debt.
    • Industry insiders suggest that if the licensing conditions for the airline industry are relaxed, private equity funds (PEFs) are the most likely candidates for acquisition, with Air Premia showing the most proactive interest.
    • Considering the financial condition of potential LCC buyers, even if they were successful in the acquisition, the lack of experience in operating Asiana Airlines' cargo business poses challenges in ensuring smooth operations.


  1. Airlines/GSA Event Update
    • US-China: Accelerated Expansion of Flights
      • Following the summit between President Joe Biden and Chinese President Xi Jinping, both countries have agreed to significantly increase flights between them. Direct flights between the US and China have been reduced due to the ongoing pandemic, economic issues, and geopolitical tensions.
      • Negotiations in August resulted in an increase from 12 to 18 weekly flights after the first half of the year, and from November 29th, it further expanded to 24 flights per week. Both countries are considering further increases, possibly reaching levels close to the pre-pandemic frequency of 340 flights per week.
      • The shortage of US-China direct flights has led to increased demand for transfer flights at Incheon International Airport, impacting freight rates on the Incheon-US routes.
    • LOT Polish (LO): Increased Summer Flights Between Warsaw and Incheon in 2024
      • LOT Polish Airlines plans to increase flights between Warsaw and Incheon from 3 times a week to 6 times a week from the summer of 2024. Flights to Budapest (4 times a week) and Wroclaw (1 time a week) will be maintained.
    • Vietjet Air (VJ): Direct Flights from Ho Chi Minh to Perth and Adelaide
      • Vietjet Air is opening new direct routes from Ho Chi Minh to Perth and Adelaide. This expansion will more than double Vietjet Air's weekly flights to Australia, reaching a total of 58 flights. Vietjet Air began operating in the Australian market in April 2023 with routes to Adelaide, Brisbane, Melbourne, Perth, and Sydney.
    • Turkish Airlines (TK) and Vietnam Airlines (VN): Joint Venture for Cargo Operations on November 30
      • Turkish Airlines and Vietnam Airlines signed an agreement on November 30 to operate a joint venture specifically for cargo operations. The integration of cargo resources aims to improve supply efficiency, expand destinations, and increase flight frequencies. The possibility of launching a cargo joint venture is under consideration.
    • Chinese Airlines: Significant Expansion of Long-Haul Routes
      • Chinese airlines are planning substantial increases in long-haul routes, with additional flights to Istanbul (IST), Sydney (SYD), and Dubai (DXB). Shanghai-based China Eastern Airlines (MU) will increase its weekly flights to Istanbul from 3 to 7, and to Sydney from 14 to 21. Juneyao Airlines (HO) will add one more weekly flight from Shanghai to Helsinki, making it 4 times a week.
      • Additionally, China Southern Airlines (CZ) will increase its flights from Guangzhou to Nairobi (CANNBO) via Changsha from 2 to 3 times a week starting December 21. Air China (CA) will resume the Beijing (PEK) to New York (JFK) route with 1 flight every 2 days from January 4, 2024.
      • Xiamen Airlines (MF) will expand its Xiamen to Amsterdam (AMS) route from 3 times a week to 4 times a week starting December 26. However, the frequency will be reduced to 5 times a week from February 12, 2024.
    • T'way Air (TW): Resumption of Incheon to Taichung Flights
      • T'way Air will resume flights from Incheon to Taichung starting on January 4, 2024, with flight number TW669 operated by a B737 aircraft departing at 14:10 and arriving in Taichung at 16:20.




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