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EXTRANS GLOBAL - Air Freight News - Week 11 2024

Air Cargo General

1)  IATA World Symposium Hong Kong - Air Cargo Demand for East Asia-North America E-commerce             

  • The 2024 IATA World Symposium (WCS) opened in Hong Kong for a three-day schedule starting on the 12th. During the air cargo expert session held after the opening ceremony and other major official events, Marie Owens Thomsen, IATA's Chief Economist, pointed out that the cargo-ton-kilometer (CTK) figures for trade routes connecting the East Asia and North America markets showed an increase of more than 3%, which is attributed to the growth of e-commerce.

  •  Marie Owens Thomsen stated, "In simple terms, the direction and expansion of trade routes will continue to come from routes to North America. The demand driven by e-commerce will play a very important role in the future growth of the air cargo sector."

  •  She also mentioned that the air cargo market holds a unique position in the global trade market, as the growth rate of air cargo exceeds that of global merchandise trade. Based on this data, she pointed out that cargo will continue to account for a significant proportion of overall growth in the aviation sector.

  •  Despite the challenges, such as the increase in air cargo supply due to the return of passenger aircraft and concerns about stability in the general economic and financial markets, Marie Owens Thomsen expressed optimism that the air cargo market will continue to grow robustly, as its strategic importance has been proven.

  •  In the pandemic period, the proportion of cargo in the total revenue of airlines reached nearly 30%. Although it has currently regressed to around 12%, the strategic importance of air cargo has been proven, and it is expected to grow more robustly.

  •  However, there are still some challenges. The increase in the return of passenger aircraft may lead to an increase in air cargo supply, and doubts about stability in the general economic and financial markets, as well as political instability, may affect the air cargo trade market.

  •  Inflation has been higher than expected, borrowing costs have risen, and the postponement of nominal interest rate cuts by policy authorities continues to be a negative factor. This hampers the growth of the cargo market. In particular, the inflation and the strong dollar pose pressures on airlines, as fuel costs, which account for 30% of expenses, rise and the introduction and payment of jet fuel are affected by exchange rate fluctuations.

  •  This can create an effect where even if airlines' revenues recover, profitability decreases and market resilience is undermined. However, it is worth noting that the global GDP has achieved an impressive 3% growth, and the unemployment rates in major countries are at historically low levels, indicating that the market has not experienced the feared economic downturn.



2)  'Al.Ta.Shi' and other Chinese e-commerce companies have designated Incheon Airport as their primary destination for cargo shipments.







  • Incheon Airport has emerged as a key hub airport for shipping Chinese e-commerce cargo worldwide.
  • This is primarily due to Incheon Airport's logistics hub network, which connects 183 cities around the world. Incheon Airport is the third-largest cargo handling airport in the world. Recently, with the rapid growth of Chinese e-commerce companies such as Alibaba, Tmall, and Shein, Incheon Airport has become the center for their international shipments.
  • Sea and air combined transportation cargo processed through Incheon Airport reached 98,560 tons, a 43.1% increase compared to 68,780 tons in 2022. This is the highest record since the opening of Incheon Airport in 2001.
  • Sea-air combined transportation cargo involves sending goods by ship to the airport as the first transit point, then transferring them to an air flight for final delivery to the destination. Last year, 99.9% of the sea and air cargo processed at Incheon Airport consisted of e-commerce products originating from the northeastern region of China. Weihai, a major hub city for cross-border e-commerce logistics, is a significant departure point.
  • The Chinese e-commerce industry considers Incheon Airport as an optimal sea-air logistics hub due to its proximity to China's e-commerce special zones and its extensive network connecting 183 cities worldwide.
  • In reality, sea cargo originating from northeastern China is transported to Incheon Airport via ports such as Gunsan (40%), Incheon (38%), and Pyeongtaek (22%). It is known that using Incheon Airport for transit provides significant time and cost benefits compared to using mainland Chinese airports. Gunsan Port has the highest performance, despite being far from Incheon Airport, due to advantages in cargo transfer time, ship schedules, and shipping volumes.
  • Chinese cargo arriving at Incheon Airport is then shipped to distant countries such as North America (47%) and Europe (31%).
  • An Incheon Airport official stated, "E-commerce special zones in Yantai and Weihai, among others, prefer shipping their cargo to Incheon rather than Shanghai in China because it is faster and has better logistics connectivity. Many logistics companies are utilizing the passenger and cargo flight network with various schedules to use the China-Incheon Airport-North America/Europe route."



3)  The top three US airlines - postponement of resumption of China routes.   


  • American Airlines (AA), Delta Air Lines (DL), and United Airlines (UA) have postponed the resumption of their China routes, which were suspended during the COVID-19 period, until the end of October.
  • These airlines have reportedly received the authority from the US Department of Transportation (DOT) to further delay the normalization of approximately 100 weekly flights to China for another 90 days.
  • The airlines have the approval from the DOT to operate specific routes to China in accordance with the provisions stated in the air transportation agreements between China and the United States. The DOT has the authority to revoke the approval if airlines fail to operate the flights without valid reasons.
  • During the pandemic period, the DOT has been issuing exemptions in 90-day increments to allow airlines to maintain the suspension of operations. The DOT has issued a new exemption until October 26th, following the previous exemption issued in February.
  • The airlines are urging the DOT for an extension, as the demand for flights to China remains weak.
  • This 90-day exemption applies to American Airlines' 14 routes, Delta Air Lines' 32 routes, and United Airlines' 49 routes. Currently, all three airlines operate flights to China, but at significantly reduced frequencies compared to pre-pandemic levels.
  • According to data, passenger capacity between the US and China in March was 181,000 seats, which represents a 79% decrease from the 846,000 seats recorded in March 2019.



4)  The struggle of industry leaders Jeju Air and T'way Air - they cannot afford to lose to the mega low-cost carriers (LCCs).   


  • As the possibility of a merger between Korean Air and Asiana Airlines increases, significant changes are expected in the LCC industry. If the three LCC subsidiaries of Korean Air and Asiana Airlines (Jin Air, Air Seoul, and Air Busan) were to integrate, it would inevitably lead to a reshuffling of the long-established rankings in the LCC industry. Jeju Air and T'way Air, who have long held the top positions, have begun to seek ways to ensure their survival through different approaches.
  • T'way Air is set to operate European routes starting from May 16, with the launch of the Zagreb route in Croatia, followed by the Paris route in June.
  • T'way Air is the first among existing LCCs to operate European routes. T'way Air has been particularly focused on differentiating itself in long-haul routes among other LCCs. In addition to Japanese and Southeast Asian routes, they have also started operating routes to Bishkek in Kyrgyzstan, Ulaanbaatar in Mongolia, and Sydney in Australia.
  • Furthermore, with the recent approval of the merger between Korean Air and Asiana Airlines, which required the surrender of four overlapping routes in Europe to the EU executive commission, T'way Air's diversification of European routes has gained momentum. Starting from June, T'way Air will operate a total of four routes, including Paris, Frankfurt, Rome, and Barcelona, all of which will be transferred from Korean Air. T'way Air will also receive support from Korean Air, including the provision of five long-haul aircraft, pilots, and maintenance personnel.
  • Once all the European routes are transferred, T'way Air's presence in the LCC industry is expected to significantly expand. Especially in Europe, which is considered a challenging route even for established airlines like Asiana Airlines, T'way Air is expected to be one of the major beneficiaries of the merger between Korean Air and Asiana Airlines.
  • An industry insider stated, "Since T'way Air has no experience operating European routes, it may take some time to stabilize operations. However, once the operations in Europe stabilize, it is expected to secure average annual revenue of 400 to 500 billion KRW. The fact that Korean Air provides support ranging from aircraft to personnel is also a significant advantage."
  • As the leading LCC, Jeju Air has taken a different approach from T'way Air, which has focused on securing long-haul routes. Jeju Air continues to prioritize medium-haul passenger transport in its passenger business and instead aims to diversify its business through cargo operations.
  • Jeju Air has been operating cargo-focused operations, particularly in small cargo, and currently operates two dedicated cargo aircraft. Recently, Jeju Air has shown its intention to enter the cargo business by participating in the acquisition of Asiana Airlines' cargo business.
  • An industry insider stated, "Jeju Air is not as proactive as T'way Air or Air Premia in entering long-haul routes. It seems to reflect their stubbornness of being the 'original LCC' and the top-ranked LCC. They focus on the core business of medium-haul passenger transport and explore other business areas, with one of them being the acquisition of the cargo business."
  • As the acquisition process is still in its early stages, the price of Asiana Airlines' cargo business will be a determining factor in the success of Jeju Air's acquisition. The total cost of acquiring Asiana Airlines' cargo business is estimated to be between 1.5 to 1.7 trillion KRW, and if Jeju Air acquires Asiana Airlines' cargo business, it is expected to exceed an average of 1 trillion KRW in cargo revenue.
  • While it is expected to take a considerable amount of time to recover the investment costs and generate profits even with significant investment, it is considered a highly attractive opportunity that can bring in greater profits than the already saturated passenger business in the long run. Especially with the recent surge in overseas direct purchasing through Chinese online shopping apps, such as AliExpress and Tmall, Korean Air's cargo revenue from China has also significantly increased.



5)  Airline/GSA Event Update:


(1) Incheon Airport's SEA&AIR combined cargo volume has seen a significant increase of 43% compared to the previous year, reaching 98,560 tons in 2023, the highest record since the airport's opening.

Among the major origins, China stands out as a designated overseas direct purchasing logistics hub according to the Chinese government's policies. Cargo from this region is collected at logistics centers and then exported overseas. This indicates a positive outlook for further growth in cargo traffic at Incheon Airport.

The main destinations for cargo shipments are long-haul regions, with North America accounting for 47% and Europe for 31%. Leveraging Incheon Airport's competitive advantage as a logistics hub with a well-established network of passenger and cargo flights, many logistics companies are transporting SEA&AIR cargo along the China-Incheon Airport-North America/Europe route.


(2) Air Canada (AC) is launching a new route between Incheon and Montreal.

ICNYUL 3W(D146) AC068 1800/1830, YULICN AC067 D357 1235/1625+1 B789, starting from June 18.


(3) Korean Air (KE) is increasing its flights on the Vancouver route in Canada.

ICN/YVR 7W -> 10W additional flights AC8075 D146 2240/1645, YVRICN D256 KE8076 0100/0420+1 B789, from May 20 to July 6.

*Korea-originating Canada routes

AC: ICN-YVR 7W 77W, ICN-YYZ 7W 789, ICN-YUL 4W 789

WS: ICN-YYC 3W 789

KE: ICN-YVR 7W+3W 789, ICN-YYZ 7W 789


(4) China Southern Airlines (CZ) will begin operating direct flights between China and Mexico twice a week starting from April 17.

Currently, AeroMexico, a Mexican carrier, is the only airline operating direct flights between Mexico and Asia.


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