Cathay continues to idle part of its freight fleet
February 27, 2014 Category Airlines and airports, Logistics
Cathay Pacific Airways plans to keep part of its freighter fleet in the hangar this year amid a protracted slump in the cargo market. The airline’s cargo tonnage fell 1.4% year-on-year last month, following a 5% drop in December. Cathay, the second-largest air-cargo operator behind Emirates SkyCargo, saw growth in shipments in only two of the past 12 months. “Freight rates are under pressure because of overcapacity in the market,” James Woodrow, Cathay’s Cargo Director, said. The freight business of Hong Kong’s biggest airline has been hit by overcapacity in the market, compounded by weak demand in the United States and Europe since last year. Recovery in demand this year would hinge on the strength of the U.S. economy, Woodrow said. Cathay took five of its 26 freighters out of service last year. It also agreed to sell six Boeing 747-400 freighters to Boeing, with the aircraft leaving the fleet between now and 2016. Aside from overcapacity in the industry, the scattering of production lines in China for Apple’s iPhones and iPads has added to Cathay’s woes. “In the past, we could wait here for the products to be trucked down from the production lines in the Pearl River Delta; now we have to fly to new production centers in Chongqing and Zhengzhou,” Woodrow said. Chief Executive John Slosar said about 50% of the carrier’s cargo tonnage was transshipments from the mainland. The airline’s share of the market in carrying technology products is under pressure as the competition in inland cities is much fiercer than that in its home base. Hong Kong airport handled 2.4% more cargo at 4.12 million tons last year while the volume carried by Cathay dropped 1.5%. To improve efficiency in handling transshipments, the carrier built its own cargo terminal in Hong Kong last year. The HKD5.9 billion facility has been in full operation since October. With 1,800 workers, it has handled 600,000 tons of cargo over the past year.
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