A shift to cargo over passenger services enabled China Airlines to stay profitable despite the prolonged impact of the coronavirus pandemic on travel demand. In a year marked by border restrictions and strict quarantine measures which decimated much of the passenger business, the Taiwanese-based carrier turned to its cargo division for much needed revenue to eke out a profit.
In 2020, cargo revenue was up 87.06 percent compared to 2019. Cargo demand, measured in freight revenue tonne kilometres (FRTK), jumped 18.7 percent year on year, whilst capacity, measure in freight available tonne kilometres( FATK), climbed 10.3 percent. Cargo load factor was up 5.1 percentage points at 72.1 percent, whilst cargo yield in 2020 jumped 58.5 percent.
“In the cargo business, the global supply of cargo slots was significantly reduced due to canceled passenger flights. China Airlines adapted to the imbalance in supply and demand by using our eighteen 747F and the newly introduced 777F freighters to maximize cargo revenues; in the fourth quarter, we took advantage of the traditional peak season and hit a new record for single-quarter cargo revenue,” the company stated.
The Taiwanese-based carrier posted US$4 billion (TWD115 billion) in revenue for 2020, down 32 percent versus 2019, whilst operating profit dropped 18 percent to US$76 million (TWD2.18 billion).
Chairman Su-Chien Hsieh stated that the global airline industry was dealt a ‘severe blow by Covid-19 in 2020, with the latest results achieved ‘in the face of very difficult business conditions.’ Despite a 77 percent plunge in passenger revenue for the year, Hsieh remained upbeat in his forecast for this year citing the ongoing rollout of vaccinations as a precursor for relaxed borders and new travel bubbles. The carrier said it is actively planning and competing for seasonal, themed and other types of charter flights, zones and cabins, along with a new Airbus A321neo set to operate this year.
On the cargo front, the airline sees continued demand as shippers look an alternative to sea freight. Along with steady growth in the stay-at-home economy, e-commerce and related communications equipment, China Airlines said it will continue to optimise its freighter routes to the central US and the US east coast.
“The business will be expanded by adding more services to increase the supply of cargo slots; the European market is showing signs of recovery so China Airlines is planning to increase services on European routes.
The airlines is also looking to tap into India’s market potential and boost revenue with its stopovers in Delhi and Mumbai. The company is also planning to open new cargo routes to Ningbo and Tianjin in China to take advantage of market developments.
“China Airlines is continuing to optimize its fleet and a total of 21 freighters will be available this year, including three 777F and the existing 18 747Fs,” the carrier said in a statement. In December, it received its first Boeing 777 freighter order out of the six announced during the 2019 Paris Air Show, as the airline looks to increase freight capacity by 15 percent in 2021.