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Japanese Airlines Accelerate Their Air Cargo Business in Hopes of Boosting Income

In a bid to tap into the growing demand for semiconductor chips and e-commerce products, Japanese airlines are ramping up their cargo operations. The surge in demand for these essential components and online shopping items is anticipated to play a pivotal role in bolstering the air cargo sector for major carriers like All Nippon Airways (ANA) and Japan Airlines (JAL). These airlines are strategically deploying cargo planes to capitalize on this market opportunity.

The prospects for the air cargo market in Japan are promising, with both All Nippon Airways and Japan Airlines eyeing long-term growth. Despite the setbacks caused by the COVID-19 pandemic, which resulted in a contraction of the aviation industry, these airlines are forging ahead with innovative strategies to revitalize their cargo businesses. Notably, All Nippon Airways is set to acquire Nippon Cargo Airlines (NCA) on October 1, marking a significant step forward. Similarly, Japan Airlines is set to make a milestone achievement by reintroducing owned cargo planes into its fleet after a hiatus of 13 years.

All Nippon Airways has taken a proactive step by entering into a share purchase agreement to acquire Nippon Cargo Airlines. This strategic move, initiated in July, will see the integration of Nippon Cargo Airlines’ operations into All Nippon Airways’ portfolio. Nippon Cargo Airlines is distinguished by its possession of eight large freighters and an extensive network of routes spanning Europe and the United States. In parallel, Japan Airlines is embarking on a fleet transformation by converting three midsize passenger planes into freighters. This visionary conversion is slated to commence operations in April of the forthcoming year.

The demand for air freight has witnessed a remarkable upswing, attributed in part to the exponential growth in e-commerce sales and the ongoing congestion in maritime logistics. This surge in air freight activity is playing a pivotal role in mitigating the substantial decline in passenger air travel revenue that was precipitated by the global pandemic.

Reflecting the upward trajectory of this industry, All Nippon Airways recorded cargo and parcel revenue of 3.617 billion yen during the fiscal year 2021, surpassing the pre-COVID-19 figures. This exceptional growth stands out, with the revenue for transporting goods and parcels by Japanese airlines surging to 2.25 times the figures from the fiscal year 2018. Meanwhile, Japan Airlines also experienced a substantial revenue increase, reaching 2.183 billion yen in the fiscal year 2021—2.18 times higher than its fiscal 2018 figures. As the momentum continues, this is projected to rise to 2.247 billion yen in fiscal year 2022.

In conclusion, the proactive measures taken by Japanese airlines, including All Nippon Airways and Japan Airlines, to bolster their cargo operations are poised to yield positive outcomes. By capitalizing on the surging demand for semiconductor chips and e-commerce products, these carriers are tapping into a lucrative market that holds the potential to significantly enhance their revenue streams. With visionary initiatives such as acquiring cargo airlines and converting passenger planes into freighters, these airlines are demonstrating adaptability and resilience in the face of evolving market dynamics. As air freight demand continues to ascend, the strategic decisions made by these Japanese carriers are likely to position them for sustained growth and profitability in the coming years.

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