American Airlines 777 is loaded with cargo at Philadelphia International Airport.
Leslie Josephs/CNBC
Airline cargo revenues are declining. That is good news for post-travel recovery.
Delta, United AND American this month, they each saw year-on-year declines of around 40% in cargo revenue in the second quarter.
In the primary half of 2023, Delta’s cargo business generated $381 million, up from $561 million in the primary half of 2022, while American’s cargo unit generated $420 million, up from $692 million in the primary six months of last 12 months. United brought in $760 million in cargo this 12 months, up from $1.2 billion a 12 months earlier.
Meanwhile, airlines are posting record revenues, if not profits, because of a rebound in travel demand. This implies the impact of cargo on a business that when helped support airline revenues through the Covid-driven travel decline has diminished.
United’s cargo revenue, which generates nearly all of this activity among the many top three U.S. carriers, accounted for lower than 3% of a portion of the carrier’s $25.6 billion annual revenue in the primary half of 2023.
It is a much smaller proportion than in 2020, when cargo revenue accounted for greater than 10% of United’s sales.
By June, cargo revenue accounted for 1.3% and 1.6% of total Delta and American revenue, respectively, up from 3.5% and 12% in 2020.
But that is not all bad news.
Flying cargo all over the world has been a lifeline for passenger carriers through the pandemic as bookings dried up and travel restrictions forced airlines to scale back services overseas.
Typically, about half of the world’s air cargo is carried in the bellies of passenger planes. Reducing cargo capability through the pandemic has helped push shipping rates to record highs, together with strong e-commerce demand, supply chain issues and port congestion.
However the demand for travel has skyrocketed, especially for international travel, as customers rush to take holidays abroad that they’ve been pushing aside in recent years.
Renewed demand prompted airlines to revive service. Flights between the US and Europe alone are expected to be the very best in five years.
The extra passenger capability also increases the worldwide supply of cargo space while reducing the demand for air cargo.
The Baltic Air Freight Index, which tracks global air cargo rates, is down 47% from the previous 12 months. In response to the most recent available data from the International Air Transport Association, air cargo throughput increased by almost 15% in May in comparison with the identical month of 2022, while demand fell by 5%.
Airlines are also planning to expand flights this 12 months to benefit from strong demand for international travel, which could further reduce cargo revenue.
![How passenger planes get a second life as cargo planes](https://image.cnbcfm.com/api/v1/image/107251980-1686074095073-Cargo_thumb_2.jpg?v=1686232741&w=750&h=422&vtcrop=y)
Explanation: This story has been updated to make clear that half of the world’s air cargo flies in the bellies of airliners.