Record cargo revenue motivates investment in dedicated aircraft, cold storage and IT systems
Eight cargo jets are only the beginning for Air Canada.
The first carrier in North America to return to a combination passenger-and-freighter fleet intends to invest in more all-cargo aircraft as logistics contributes more to long-term profitability, the company’s cargo chief says.
Air Canada began flying its first Boeing 767-300 converted freighter in late December and the arrival of a second aircraft is imminent. Israel Aircraft Industries is remodeling older Air Canada passenger jets to carry heavy freight. Six more will be produced between now and the end of 2023, according to airline executives.
The stand-alone freighter operations will help feed the globally connected passenger network to get goods to more destinations.
During an Investor’s Day presentation last Wednesday, Jason Berry, vice president of cargo, said the airline is already pursuing additional freighters. A spokesperson declined to elaborate.
Owning or leasing freighters carries risk in market downturns and adds operational complexity for pure passenger carriers, but also increases flexibility and cargo capacity. Shippers don’t have to rely only on passenger flights where routes and schedules are usually dictated by travel demand. Air Canada (OTCUS: ACDVF) officials say they are precisely injecting the freighters in lanes that can benefit the most from cargo-only operations and complement the passenger network.
“As the first to market [with a freighter fleet], we not only believe this provides us with a running start, but a new base of revenue and a moat that will help us defend market share while simultaneously unlocking opportunities for incremental revenue,” Berry said.
Deploying freighters in key cargo trade lanes diversifies revenue and minimizes seasonal effects when airlines adjust the size of passenger aircraft based on traffic patterns.
“Most importantly, eliminating seasonality from our cargo capacity gives Air Canada the ability to attract a broader customer base, contributing to revenue for both passenger and freighter operations year-round,” he added.
