During times of dwindling worldwide demand for goods and falling airfreight rates, Japan Airlines (JAL) has ambitious intentions to strengthen its position in the competitive airfreight sector. After suspending its freighter operations more than ten years ago, the passenger carrier is now preparing to reinstate a dedicated cargo fleet in an effort to develop its domestic and international e-commerce business, on important trade corridors.
The Tokyo-based airline announced plans to introduce three new Boeing 767-300ER specialized freight aircraft as part of this move. The carrier, in collaboration with Yamato Holdings Co Ltd, has already begun the conversion of its passenger aircraft to dedicated freighter aircraft in May 2023, which is projected to be completed by mid-September, with a ferry voyage to Japan slated for late October.
This effort represents a big step forward for both firms as they prepare to deploy dedicated cargo aircraft into their operations by April 2024. Another potential factor for the carrier to start offering domestic airfreight service is the impending overtime restrictions for truck drivers and couriers that are set to go into effect in April. JAL signaled a more overt indication to specialize in air freight operations when it announced plans to introduce a low-cost subsidiary Spring Airlines to provide domestic flight services to the logistics provider, Yamato Transport in December 2022.
The carrier’s EBIT for FY2022, as reported in its most recent financial report, was 64.5bn yen, above the prior estimate of 50bn yen, and its net profit was 34.4bn yen. Additionally, based on the most recent cargo business conditions and the ongoing gradual recovery of passenger demand, Japan Airlines anticipates EBIT of 100bn yen, and net profits of 55bn yen by the end of FY2023.
Although there is a declining tendency in air freight rates across major trade lanes, JAL claims that rates are still higher than pre-pandemic levels. Therefore, compared to pre-pandemic levels, revenue is dramatically increasing. Additionally, despite the fact that the demand for air freight as a whole has started to decline after the summer schedule, JAL notes that its demand for air freight is still high, particularly on the Transpacific trade lane where the carrier was able to meet as much of the demand as possible by using passenger aircraft for cargo flights and cargo flights operated by third-party providers.
Source: Ti Insights
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