You have to be in it to win it. That mantra of Asia’s air freight industry is more apparent after Thai Airways’ late Mar-2015 exit from the sector. Thai confronted many challenges and its exit of only two dedicated freight aircraft is small but underscores changes in Asian air cargo.
Thai only operated converted 747 freighters, which provided a quick fix during the last cargo boom but have inherent inefficiency, and peers are phasing the type out. Thai lacked the advantageous North Asia geography and hub power of Cathay Pacific and Korean Air. This is important for the North America market, which Asian freighters focus on with some lift from passenger bellies.
Thai's core long-haul passenger market is between Europe and Asia, but supplementing this with freighters is difficult as Gulf carriers are strong competitors. Gulf carrier flights to Asia have increased from 28 a day in 2010 to 52 in 2015, compared to Western Europe-Southeast Asia flights increasing only from 57 a day to 61.
Bangkok Suvarnabhumi sees declining cargo volume
Thai's freighter services ended 29-Mar-2015. In 2014, Thai's dedicated freighter network only covered the long-haul points of Amsterdam and Frankfurt. Stopovers, most commonly in Delhi, allowed other cargo to be picked up, but Thai mostly operated a point-to-point cargo network that heavily overlapped with its business passenger business.
After Frankfurt Thai's most common freight points were Taipei and Tokyo. Thai in recent times has heavily expanded its passenger business to Japan, creating more belly capacity.
Thai's home airport of Bangkok has lost momentum as a cargo hub with 2014 and 2013 volumes down compared to growth at Hong Kong and Seoul Incheon. There is little impact on cargo volumes from the rapid growth at Bangkok Don Mueang, which now handles most LCC traffic in Bangkok, as almost all movements at Don Mueang come from narrowobody aircraft.
Bangkok Suvarnabhumi International Airport annual cargo volume (Tonnes): 2008-2014
Source: CAPA - Centre for Aviation and Airports of Thailand PLC
Hong Kong International Airport annual cargo volume (Tonnes): 2008-2014
Source: CAPA - Centre for Aviation and HKIA
Seoul Incheon International Airport annual cargo volume (Tonnes): 2008-2014
Source: CAPA - Centre for Aviation and IIAC
Singapore Changi long ago has lost cargo momentum with flat performance since 2008. But perhaps some credit is due that Changi has been able to maintain volumes rather than see them shrink, as occurred at Bangkok.
Singapore Changi International Airport annual cargo volume (Tonnes): 2008-2014
Source: CAPA - Centre for Aviation and Changi
Thai Airways lacked geography to be a strong cargo hub
Asia’s dedicated freighters mostly concentrate on the market to North America with regional Asian services. These intra-Asia flights largely support feeding a cargo hub for onward North American traffic or the flights help move components around as they become assembled, with this latter activity concentrated around North Asia, making Thai’s Bangkok hub circuitous for this.
As for long-haul cargo markets, Thai has a minimal presence in North America with four weekly flights to Los Angeles (via Seoul Incheon). Regional peer Singapore Airlines operates more dedicated freighters and also has a much larger presence with passenger flights.
The effectiveness of SIA’s cargo division is certainly questionable as SIA Cargo continues to post losses. But there should be some caution with the figures as the precise accounting depends how revenue and costs are shared with the larger passenger aircraft operation.
SIA, through early and extensive liberalisation, has been able to have significant access to North America. Anchorage, Dallas and Los Angeles feature in its top 10 ports for dedicated freighter service based on ATKs. Singapore has a notable network through India and the Middle East with some presence in Europe.
Singapore Airlines Cargo top 10 destinations based on ATKs: 2015
Source: CAPA - Centre for Aviation and OAG
The only other main cargo division at a Southeast Asian carrier is Malaysia Airlines. Its MASkargo division primarily uses A330s, with the type's shorter range reflecting its more regional focus whereas SIA is more intercontinental.
MASkargo top 10 destinations based on ATKs: 2015
Source: CAPA - Centre for Aviation and OAG
North America is key for Asia’s freight carriers – Europe is not
North Asian freight divisions are not reporting enviable results, but their steadiness and optimism contrasts to Thai’s freighter withdrawal. A key difference is that those North Asian carriers have the North America market.
Korean Air in 4Q2014 reported 47% of cargo revenue came from the Americas. Europe was a smaller 25%.
Korean Air cargo revenue by route operation: 4Q2014
Source: Korean Air
Cathay Pacific and China Airlines see various North American ports as their top cargo destinations based on AFTKs, according to OAG data. (This includ