Delta says good riddance to its final freighter ‘wart’

DELTA Air Lines is relieved to cut off the “wart” of freighter operations, according to vice-president cargo, Neel Shah.As the carrier prepared to ground the last of its once 14-strong B747-200F fleet at the end of 2009, Shah questioned the viability of operating cargo aircraft.The decision to pull out of the maindeck business was not easy, especially in light of the fact that Delta’s 747-200F fleet was written down, but it was in the best interest of the airline, Shah said.“Given where this industry is in its ability to make money running freighters, it’s going to be very difficult going forward,” he declared.The downturn exposed the “wart of freighters” in the economics of combination carriers, revealing that all-cargo activities had to be subsidised by the belly business, he continued.Shah sees no hope that the current peak surge might carry on into 2010. Moreover, he expects the mode shift to ocean in the intercontinental arena to continue, as margins of electronics producers and other shippers shrink further.“This begs the question, how viable are freighters? With the bellies you have different economics. With freighters, if your yield falls below a certain level, you’re burning cash.”“Yields will be under pressure in 2010. If you don’t have a flexible cost base, you’re going to be in trouble,” he warned.He questioned how many operators might be willing in the present market conditions to take the risk of investing hundreds of millions of dollars in new cargo aircraft. “We’re going to see a bit of a shift how aggressive companies get with freighters,” he predicted, adding, “there’s going to be a fundamental shift to bellies.”He cited a recent statement by AF-KLM Cargo head, Michael Wisbrun, that 90 per cent of global cargo could fly in bellies.“We’re going to concentrate on the 90 per cent. As for the rest, good luck to them,” Shah commented.
For the full story read the latest issue of Air Cargo News, dated 18 December. To subscribe, click on ‘Subscribe’ above.