German airline Lufthansa plans to slash cargo capacity across it’s network thanks to falling passenger numbers. All airlines are feeling the pinch and taking robust steps to protect their business. Lufthansa is making it clear just how serious this threat is.
The German airline is considering grounding its entire fleet of A380 superjumbo’s. When we say it’s entire fleet this affects all airlines they own. Swiss International and Austrian airlines will also be affected. The grounding of it’s 14 biggest aircraft is temporary but the time period will be determined by passenger numbers.
Is the Lufthansa group just grounding A380’s
The straight forward answer is certainly not. In April the plan is to cut upto half their flights worldwide. This a drastic response to the way that travel has been disrupted worldwide.
Lufthansa had already announced that it was grounding around 20% of it’s fleet and had experienced cancellations across it’s network. There are already daily cancellations, Yesterday (06th March) Flightaware reported Lufthansa cancelled 8% of all flights. On the same day Swiss cancelled 4% and Austrian 7%. What we are now seeing is a clear jump. Tomorrow Flightaware is already reporting 283 flight cancellations worldwide. Kuwait airways is showing as cancelled 29% of all their flights.
The aircraft type makes a difference
Above we discuss Lufthansa group’s flight cancellations. What makes the announcement of half it’s fleet increasinly important is the aircraft type. The airline operates a lot of inter-european flights which carry small amounts of cargo. The grounding of it’s larger inter-continental aircraft directly hits cargo in a big way.
Will this affect cargo rates
Cargo rates are driven by capacity. Even more so as more airlines move to dynamic pricing models. You remove capacity and rates rise. Simple market forces. In the UK a lot of airlines have cancelled their “PROMO” rates and pressure is placed on their “General” cargo rates. These rate increases are being seen across the board. Not just to the hardest hit areas of the world. China was the first to see rate increases. The Far-East followed, especially Singapore. Then the Middle East and the USA followed suit. As airlines reduce capacity in the face of falling passenger numbers this will continue to increase.
We thought “BREXIT” would hit UK trade hard but this virus provides a stark reminder of how easy market forces can be affected by outside influences.