(Updated Oct. 8, 6:50 P.M. with new photo, number of 737s in DHL fleet)
Mesa Air Group (NASDAQ: MESA), a regional carrier for American Airlines and United Airlines, announced it operated its first revenue-generating cargo flight for DHL Express on Monday from its hub at Cincinnati/Northern Kentucky International Airport.
Cargo is a new line of business for Mesa, which is operating two Boeing 737-400 converted freighters under a five-year contract with the express delivery company. The second aircraft is scheduled to enter service in November.
Flying 737s is also new to Mesa Airlines, which operates Embraer E175 and Bombardier CRJ-900 airplanes under the American Eagle and United Express brands. Mesa said it is the first regional airline to operate narrow-body aircraft as large as the 737.
“This is an exciting day for Mesa and an important step forward in our partnership with DHL,” said Chairman and CEO Jonathan Ornstein. “Cargo is more important to our livelihoods than ever, and we look forward to playing a role in this growing sector on behalf of DHL.”
Ornstein said in August that Mesa anticipates growing the cargo business to a 10-jet operation by 2022
DHL, which has about 40 737s in its global fleet, is providing the aircraft under the crewing and maintenance arrangement.
Phoenix-based Mesa is diversifying its business so it’s not completely dependent on big mainline carriers, which is turning out to be doubly important while the coronavirus pandemic closed down flights, and DHL is diversifying its roster of contract air providers.
737 freighters are increasingly in demand for e-commerce operations because of their flexibility to operate more frequently, which helps meet customer expectations for fast fulfillment of their online orders.
A new Airbus A321 converted freighter is just entering the market as a tailored solution for e-commerce operators. It is expected to compete against the 737-800. Although the airplane offers a larger hold that can carry containerized freight, the 737-800 has a three-year head start in customer awareness and three times as many available candidates for conversion from passenger configuration.
Second quarter e-commerce sales grew more than 44% compared to the same period in 2019, and online sales jumped six points to 16% in market share for total retail sales, according to the U.S. Department of Commerce. eMarketer estimates e-commerce will make up 14.5% of U.S. retail sales this year, up from 11% last year
“If the cargo market keeps growing, especially in e-commerce and express, [as it did] even before COVID, then the larger narrow-body planes, where the B757s are flying now, will prevail,” said Roy Linkner, chief commercial officer for 21 Air, another DHL contractor.