(Updated: Feb. 8, 1:40 A.M. ET)
All Nippon Airways, the seventeenth largest carrier of air cargo by volume, has decided to consolidate freighter operations in Tokyo and eliminate freighter service to the large island of Okinawa, as part of a heightened focus on profitability.
The airline recently reported a $2.8 billion loss for the first three quarters of its fiscal year, with operating revenues falling by two-thirds due to the clamp down on flying caused by the coronavirus pandemic. International passenger revenue fell 94% and planes operated at a fifth of their capacity.
Similar to U.S. airlines, a recovery in domestic travel during the fall reversed course with the increase in coronavirus infections.
Cargo was a bright spot financially, with international cargo revenue jumping 30% to $932 million despite a 36% drop in tonnage and chargeable volume as high rates compensated for the loss of cargo carried on suspended passenger flights. (On Monday, ANA reported December figures that showed cargo volume exceeded the 2019 level for the first time all year.)
In December 2020, ANA had a total of 1,349 cargo-only flights, bringing its total for the year to 3,349. Another 2,400 passenger-freighter flights are scheduled for the first two months of this year. “Demand for cargo transportation continues to be strong, and we plan to maximize our operations to meet our customers’ needs as much as possible,” a spokesperson said via email.
ANA operates a fleet of 11 Boeing 777 and 767 freighters.
Automotive parts, semiconductors and electronic equipment were a strong component of ANA’s cargo business since August. ANA added Boeing 777 freighter routes between Tokyo and Frankfurt, Germany, in October and between Tokyo and Bangkok in December, while also significantly increasing the number of scheduled cargo flights using passenger planes.
The Japanese airline said Friday it will pull freighter operations out of Haneda Airport and fly exclusively through Narita Airport to contain costs and improve profitability. New destinations and routes, and further use of passenger aircraft as quasi-freighters during the ongoing travel downturn, will depend on demand forecasts and profitability.
Last week, ANA also announced that it will rely exclusively on passenger aircraft operated by subsidiary Peach Aviation and other international airlines to meet growing demand for e-commerce and other goods in Okinawa, where it has operated an international logistics hub since 2009.
ANA Cargo President Toshiaki Toyama said the new network model in Okinawa will enable the company to take advantage of the frequencies offered by scheduled passenger service and put all-cargo aircraft to better use in its network.
Okinawa’s exports have grown in recent years due to the popularity of agricultural, seafood and industrial products from the island and across Japan, while the rise in e-commerce shipments with short delivery windows has increased the need for more frequent service that can be offered by passenger aircraft at Naha Airport.
The new model will also allow delivery of smaller shipments, which is better for time-sensitive products than waiting to fill a large dedicated cargo jet.
ANA Group offers 20 domestic routes to Naha Airport. Under ANA’s model, Tokyo is the primary connection point between North America and Europe, and Okinawa is the hub for shipments to and from major cities in Asia. ANA provides ground support at Naha Airport for cargo carried by other airlines.
ANA said it has increased the amount of temperature-controlled containers and thermal blankets at the Okinawa logistics hub to support increased transport of perishable goods.
ANA said it will continue to operate freighters between Okinawa and Tokyo until COVID-19 restrictions on international passenger flights are lifted.