In this exclusive article, Glenn Hogben (GH), CEO of The Air Charter Association (ACA), takes a look at the current capacity issues within the air cargo industry, and answers CFG’s question regarding the risk of overcapacity once these crises are over.
Impending capacity issues
Over the last two years, the air charter cargo market has seen a rejuvenation. Chartering cargo by air offers speed and flexibility, and this enabled it to play a major role in supporting the
global response to the Covid 19 pandemic.
High levels of demand have continued in 2022, as businesses are trying to ramp up production again as the worst of the Pandemic restrictions are lifted. However, COVID has continued to impact the
logistics industry, with large outbreaks in China and their continued zero tolerance policy, which saw large areas of the country return to lockdown. This has disrupted supply chains and
deliveries to shipping ports and airports. There also remain significant backlogs which are greater than the marine and aviation cargo industries can quickly dissipate. These factors combined
have created an ongoing high demand for capacity which is likely to last well past the end of 2022.
Compounding the high demand levels, there are various limitations on aircraft availability, with the Ukraine / Russia conflict removing a large number of aircraft from the market, as well as
increasing demand as a result of urgent humanitarian supply deliveries. There is also an impending reduction in market capacity when the EASA approvals for ‘Preighters’ (passenger aircraft with
seat removed operating as freighters), granted on a short-term basis during the height of the Pandemic, come to an end in July this year, as that will also remove these aircraft from the European
market. There are currently long waiting lists at maintenance facilities for full freighter conversions, so the capacity issues look likely to remain too.

How it also is exacerbated by Russia/Ukraine
The Russian war in Ukraine has further impacted the sector and led to increased capacity constraints. The overall impact on global cargo from the Russian invasion of Ukraine should have been
relatively low, as Russia only accounted for 0.6% of the global cargo carried by air last year. However, it has had a significant impact on available capacity and several sources indicate there
was a fall of more than 20% capacity from Asia to Europe in the first week of the conflict.
There have been new demands on the humanitarian side to transport medical supplies and aid to neighbouring countries. However, capacity has been further reduced due to sanctions and airspace
restrictions. The heavy transport aircraft have been particularly affected as Russian operators such as AirBridgeCargo’s 17 x Boeing 747’s, and Volga-Dnepr’s 15 x Antonov 124 & Ilyushin 76s,
have all been taken out of the market.
Furthermore, for outsize cargo, the destruction of the Antonov AN225 Mriya, the largest cargo aircraft in the world, capable of carrying 250 tons of cargo, has been a major loss. Antonov Airlines
has been significantly disrupted in the initial period of the war as the company’s home base was the scene of heavy fighting. Fortunately, it has now established a new base of operations at
Leipzig airport, enabling the return of some of its fleet to the market.
Alongside the lost physical aircraft capacity, flight distances, flight times, fuel burn, and costs have all risen as airlines reroute flights, particularly between Asia and Europe, to avoid
Russian air space. The average flight times on six key trade routes from Asia to Northern Europe increased by 3.4% within days of Russia’s invasion, and for some operators, the longer routes can
extend flights by 3-4 hours. This not only increases costs, but further reduces cargo capacity as fuel payload increases.
CFG: What about the increase in "rogue" charter operators over the past 2 years? And is there a risk of overcapacity with the rise of the number of charter operators currently –
especially when these crises are over?
All operators and brokers who are members of The ACA commit to work to the highest standards in the industry, so clients should always make sure they are working with a verified partner who is a
member of the Association for their flights.
The risk of overcapacity is a possibility in coming years, but aviation is a cyclical business and has always had peaks and troughs in demand and, as an industry, we are quite well practiced at
handling these.
However, personally I don’t think overcapacity will cause major issues as there will be a point where we reach the cost benefit balance for many older aircraft operating cargo flights,
particularly as fuel prices have risen so much. These older aircraft will simply then be retired from service and parted out for spares. A large overriding factor for this capacity change is
likely to be the rising demands of sustainable aviation with emissions offsetting and reaching emissions targets. As the older, less efficient, aircraft are retired demand for capacity will be
driven to newer more efficient and sustainable aircraft coming into the air cargo charter market and this will naturally help align market capacity with demand.
Glenn Hogben is CEO of The Air Charter Association (ACA), which was founded in 1949, and which supports the air cargo industry in a number of ways such as lobbying on key industry affairs,
providing members with continuous updates on developments impacting the cargo market, developing new talent and encouraging young people to consider a career in the industry, educating on and
developing sustainability resources to reduce carbon emissions, and providing Broker Qualification courses to ensure standards in the industry.
Brigitte Gledhill
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