1. Air Cargo General

1) Global Air Cargo Rates Rise 3% – Driven by Shift to Air Transport Amid Disrupted Sea Freight from China

Global air cargo rates continued their upward trend last week, coinciding with the onset of the peak season and a surge in demand for air transport as an alternative to disrupted sea freight.

As of October 20th, the Baltic Air Cargo Index (BAI00), which tracks global air cargo rates, rose 3.0% week-on-week (WoW). Although this remains 3.0% lower than the same period last year, the moderate upward momentum of recent weeks has become more pronounced.

The rate increase was widespread across major routes originating from Asia and Europe, with only routes from the U.S. bucking the trend and declining.

Analysis suggests that besides the usual year-end peak season factors, the rate hike was partially influenced by disrupted sea freight. In response to the U.S. increasing port entry fees, China imposed new charges on U.S.-flagged vessels at its ports, causing sea freight disruptions. Consequently, some sea freight shipments—particularly on routes to the Americas—are believed to have shifted to air transport.

Rates for routes from China to Europe and the U.S. both rose WoW, while rates from North Asia to Australia, India, and Mexico also increased.

Spot rates for routes from Hong Kong to Europe and the Americas also trended upward. The composite index for all Hong Kong-origin routes (BAI30) rose 0.7% WoW, narrowing its year-on-year (YoY) decline to 2.0%. Rates for Shanghai-origin routes surged 6.9% WoW, reducing the YoY drop to 5.2%.

Rates for routes from Vietnam to Europe and the Americas also rose WoW but remained low YoY. Both directions of Seoul-origin routes in South Korea showed upward trends, while rates from Taiwan rose for Europe-bound shipments but fell for Americas-bound ones.

Notably, recent disputes over U.S.-China port costs have disrupted sea freight schedules, leading some shippers to switch to air transport. The recovery in rates for China-to-Americas routes appears to reflect these short-term factors.

However, the continued weakness of U.S.-origin routes indicates that regional imbalances in the air cargo market are still deepening. Whether rates will rise further after November—when year-end peak season demand fully kicks in—will be crucial to the market’s recovery.

2) Chinese Airlines Oppose; U.S. Airlines Applaud

Chinese airlines have strongly opposed the U.S. ban on Chinese carriers operating U.S.-bound routes via Russian airspace.

Six Chinese airlines, including Air China (CA)—the country’s largest state-owned airline—recently submitted a petition to the U.S. Department of Transportation (DOT). They stated that the U.S. measure would not only inconvenience air passengers between the two countries but also drive up air fares, and thus demanded the immediate revocation of the policy.

In contrast, U.S. airlines expressed strong support. United Airlines (UA) even called for expanding the ban to include Hong Kong-based Cathay Pacific Airways (CX).

Chinese airlines currently operate 81 weekly flights to the U.S., mainly to destinations such as Los Angeles (LAX), New York (JFK), and San Francisco (SFO).

**3) “Next-Gen AI ‘Agentic AI*’ to Transform the Logistics Industry”**

Amid fears that “falling behind now could threaten survival,” representatives of South Korea’s logistics companies gathered for the 53rd Logistics Committee meeting, hosted by the Korea Chamber of Commerce and Industry (KCCI, chaired by Choi Tae-won) on September 30th at the Lotte Hotel Seoul. The meeting, themed “AI Transformation and the Future of the Logistics Industry,” aimed to address the industry’s direction amid AI integration.

Attendees included Shin Young-soo (Chair of KCCI’s Logistics Committee), Park Il-jun (Senior Vice Chairman of KCCI), Lee Yong-ho (CEO of LX Pantos), Lee Jun-hwan (Vice Chairman of KCTC), Shim Chung-sik (Vice Chairman of Sun Kwang), Lee Sang-geun (CEO of Samyoung Logistics), and Yang Jae-hoon (CEO of Asin).

Kim Seung-hwan, Head of the Applied AI Research Group at LG AI Research Institute, noted: “The core of next-generation AI is Agentic AI—AI that can define problems on its own and follow through with planning and execution. The logistics industry, in particular, involves complex variables such as demand forecasting, inventory management, and delivery route optimization, making it a sector where AI can deliver significant benefits.”

He emphasized: “Agentic AI has already proven effective in manufacturing and distribution, such as in defective product detection, customer service, and plant operation optimization. In logistics, it can go beyond simple efficiency improvements to drive real-time decision-making and operational innovation.”

Professor Park Min-young of Inha University (Chair of the Korean Logistics Society) stated: “AI is not just a tool for efficiency—it is reshaping logistics operations themselves. Technologies like AI-based real-time monitoring, automated loading/unloading systems, and vehicle-based shared logistics networks are becoming core infrastructure. They not only reduce costs and boost productivity but also meet new demands such as fresh produce logistics, O2O (Online-to-Offline) services, and last-mile delivery.”

However, Professor Park warned: “Socially, the spread of AI could widen gaps—between urban and rural areas, large and small enterprises, and regular and non-regular workers. The government must take the lead in investing in AI logistics demonstration projects, and expand inclusive logistics infrastructure such as shared logistics centers that small businesses can use at low cost.”

Park Il-jun, Senior Vice Chairman of KCCI, added: “AI transformation (AX) is an essential strategy for the survival and growth of all enterprises, including logistics companies. It is crucial for the government and industry to cooperate to accelerate the widespread adoption of AI in logistics through AI-based logistics infrastructure, legal and institutional improvements, and R&D.”

4) Eastar Jet to Remain Under VIG’s Control for the Foreseeable Future

Eastar Jet—long mired in sale rumors—is expected to continue operating under the ownership of private equity firm (PEF) VIG Partners for the time being. This decision comes as the airline, while showing improved performance and expanding its fleet and routes, has not yet stabilized on a growth trajectory.

According to investment banking (IB) industry sources on the 16th, VIG Partners has no plans to put Eastar Jet up for sale in the near term. Recent sale rumors were reportedly a “misunderstanding” among sell-side advisors: “Advisors routinely proposed exploring potential buyers, and VIG gave a theoretical response that ‘we could sell if a good buyer emerges’—this was exaggerated into sale rumors.”

In fact, VIG Partners considers the current timing inopportune for selling Eastar Jet. While the airline has bottomed out and started to recover, it has not yet met market expectations. Eastar Jet still faces capital erosion, with accumulated losses exceeding its capital.

VIG Partners acquired Eastar Jet for 40 billion won in 2023 through its fourth blind fund. As of now, the airline has a net loss of 14.9 billion won, with a capital erosion rate of 199.4%. By the end of last year, total capital exceeded 200 billion won due to equity increases, but the airline still has a long way to go toward stability.

Uncertainty about returning to profitability also persists. Airline profitability is highly sensitive to factors such as oil prices, exchange rates, demand recovery, and competition intensity—these variables are unlikely to align favorably for a sale in the short term, and the risk of cutthroat competition remains. While the total supply of domestic low-cost carriers (LCCs) is increasing, passenger demand is growing more slowly, intensifying competition.

Last month, Parata Airlines (formerly Fly Gangwon) obtained an Air Operator’s Certificate (AOC) from South Korea’s Ministry of Land, Infrastructure and Transport and launched ticket sales. With the number of domestic LCCs now reaching 9 (matching the U.S.), the industry could potentially enter a “chicken game,” putting downward pressure on fares.

Additionally, the aviation industry is in a period of restructuring—including LCC consolidation following the merger of Korean Air and Asiana Airlines. Investors have little incentive to take bold positions in assets with high uncertainty amid such upheaval. Thus, Eastar Jet is likely to focus on growth under VIG Partners for the foreseeable future.

An IB industry source explained: “There are doubts about whether Eastar Jet’s performance momentum is sufficient to justify the rumored valuation of 50-60 billion won. After acquisition, burdens such as debt, competitive pressure, route approval, and regulations remain significant, making it difficult for potential buyers to step forward.”

5) Airlines Movement

Parata Airlines (WE): Launched daily flights on the Gimpo-Jeju route starting October 26th (aircraft model: A330-200).
T'way Air (TW): Held an event on October 3rd to mark the 1st anniversary of its Incheon-Frankfurt route launch.
Turkish Airlines (TK): Announced plans to add 75 Boeing aircraft to its fleet by 2034.
Korean Air (KE): Hosted an advisory meeting for agents on October 17th.