Delta ditches NWAs freighter fleet

DELTA Air Lines’ spell as a freighter operator is proving short-lived. By the end of this year the airline, which inherited Northwest’s transpacific freighter activities, will be an all-bellyhold carrier. Management has decided to terminate all freighter activities before the end of the year and get rid of its entire fleet of B747-200Fs.

“From an operational perspective, Delta’s B747-200 fleet, which includes our freighters, is reaching the end of its viable, economic life and will be retired from service by the end of 2009. As a result, Delta Cargo will adjust freighter schedules beginning this spring and suspend those freighter operations by the end of 2009,” declared Neel Shah, vice-president of cargo.

At its peak two years ago, Northwest had a fleet of 14 B747-200Fs. For this spring Delta had planned an operation with six cargo aircraft.

The winding down of transpac freighter activities will commence in earnest in June with the suspension of overnight freighters to Tokyo and Shanghai. The airline’s core routes from Tokyo, Osaka and Shanghai to Anchorage, continuing to Los Angeles, Chicago and Atlanta will remain in place through to the end of the year.

The announcement of Delta’s withdrawal from the freighter business came in the wake of the airline’s first quarter result, which showed a US$794 million net loss. Cargo revenue dropped 44 per cent in the period to $185 million. The freighter operation was suffering from the downturn in transpacific traffic, notably from a slump in exports from Japan. Moreover, it took a substantial hit from the end of the DHL linehaul contract across the Pacific, which shifted to Polar Air Cargo in October.

In December Northwest’s cargo ton-miles slumped 54.6 per cent.

Observers had long questioned the viability of the freighter operation. Shawn McWhorter, president of Nippon Cargo Airlines for the Americas and a former senior manager with NWA Cargo, called the decision “wise and overdue from an operational standpoint”, adding that Delta is not alone in this predicament. Flying 747-200Fs on Pacific routes has become increasingly challenging, given fuel and maintenance costs and increasing pressure from airports to constrain older aircraft.

George Hamlin, president of Washington-based aviation consultants ACA Associates, reckoned that Delta’s withdrawal from the freighter scene had been coming a long time. “Years ago Northwest subconsciously made the decision to get out of the freighter business when they failed to convert to 747-400s,” he said. “If you fail to invest in the cargo business on an ongoing basis, sooner or later you get to a point where the investment becomes a vertical wall.”

The demise of Delta’s freighters will have an big  impact on the market, said McWhorter. They constitute a significant amount of capacity, he said, adding that other large carriers in the region – Polar, JAL, KAL, Singapore Airlines and Cathay – have all reduced their lift.

On the other hand, export demand has shrunk drastically. According to the Japanese finance ministry, the country’s exports in February and March were half of the levels seen a year earlier.

“The market is down about 30 per cent year-on-year in tonnage. The capacity reduction balances that,” said McWhorter.

“We have seen a tremendous amount of capacity come out of global freighter networks, but the market has gone soft

so quickly (the airlines) can’t take capacity down quickly enough,” remarked Hugh Cutler, vice-president, sales and marketing for IJS Global. The US-based forwarder has used the Delta freighters, but not on a block space allocation basis, so Cutler anticipates little impact from the end of Delta’s run as a freighter operator.