Air Canada (TSX: AC) on Monday announced the initial routes it plans to operate this fall when its first pure freighter converted from a passenger aircraft enters service. The news is the outcome of a major strategic decision to more aggressively pursue cargo business with dedicated aircraft.
The carrier said the remodeled Boeing 767-300 Extended Range jet will begin commercial flights in October with routes connecting Toronto to Miami; Quito, Ecuador; Lima, Peru; Mexico City; and Guadalajara.
Air Canada is building an all-cargo fleet of eight aircraft and plans to have two 767 freighters in service by the end of the year. The company is using 767s from its own fleet that have outlived their usefulness hauling passengers. More destinations will be served in early 2022 as extra freighters come online, including Halifax and St. Johns, Canada; Madrid; and Frankfurt.
The exact structure of the routes has yet to be determined, said spokesperson Johanne Cadorette.
“These freighters will provide long-term stability and growth for our cargo customers, in particular the freight forwarding community who require reliable air freight capacity year-round. They will allow us to continue building on the success of our cargo-only flights and are an important part of our future growth,” said Jason Berry, vice president of cargo, in a statement.
The medium-size wide-body aircraft are well suited for trans-Atlantic and Latin America flights.
Air Canada was quick to pivot to cargo operations during the pandemic. Since March 2020, Air Canada has operated more than 9,000 all-cargo flights using its wide-body passenger aircraft as well as several temporarily modified Boeing 777 and Airbus A330 aircraft, which have additional cargo space due to the removal of seats from the passenger cabin.
It posted cargo revenue of $215 million in the first quarter, an 89% increase versus the same period in 2020 and 59% more than in 2019.
Officials decided late last year to make Air Canada a combination carrier with separate passenger and all-cargo fleets after registering large gains in cargo revenue during the COVID pandemic even as most passenger service was taken down because of health restrictions. Temporary passenger-freighters served as a lifeline for shippers struggling to find capacity for their goods. The limited number of available freighters couldn’t make up for the loss of belly space, resulting in a shortage of cargo capacity and allowing airlines to substantially raise rates. Ongoing demand for airfreight as the global economy rebounds and projections for continued rapid growth in e-commerce shipments convinced Air Canada’s management to start a freighter fleet.
Industry officials say the COVID crisis has made airlines more attuned to the importance of cargo, which has generally been an afterthought at all but a few carriers.
“People [now] better appreciate the significant financial contribution cargo can make,” said Willie Walsh, director general of the International Air Transport Association and former head of International Airlines Group, during a media briefing last month.
Removing seats from an aircraft adds extra capacity for light boxes, but it doesn’t make it a freighter in the true sense. Passenger-freighters still have narrow doors and require hand-loading of the boxes. Full conversions allow huge containers and pallets to be loaded on the main deck using mechanical systems. During the process, all passenger seats are removed from the aircraft, a large door is cut into the fuselage, and the floor is reinforced to carry additional weight.
Israel Aircraft Industries in Tel Aviv is rebuilding the 767s for Air Canada. Air Canada sold the first two 767s to Cargo Aircraft Management Inc., the leasing arm of Air Transport Services Group (NASDAQ: ATSG), earlier this year. The ATSG subsidiary is outsourcing the engineering and mechanical work to IAI and then leasing back the aircraft to Air Canada.
Last fall, Air Canada successfully concluded a collective agreement amendment with its pilots represented by the Air Canada Pilots Association for contractual changes that enable it to competitively operate dedicated cargo aircraft. The new deal enables Montreal-based Air Canada to have lower pay scales for cargo pilots so it can compete with freighter operators.