How air freight fits into the aviation capacity debate - with charts

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We've blogged before about the interest manufacturers have in the aviation capacity debate. This blog looks in a bit more detail about how air freight fits into the UK aviation system highlighting some figures that could make a difference to the final Airports Commission recommendation.

In our previous blog we highlighted that around 40% of the UK's (non-EU) trade (both imports and exports) by value is sent by air (by weight the equivalent is just 1%).

Around 66% of this non-EU trade is shipped as bellyhold cargo, essentially within the hold of scheduled passenger flights.

Looking more broadly at all forms of air freight by weight, 79% of all air freight arrives from or heads to non-EU destinations with a further 17% going to the EU and the remaining 4% going as domestic.

Source: CAA and EEF analysis

To put some context to this, the total amount of non-EU freight that arrives or departs bellyhold via Heathrow alone is around three and a half times that of the total combined freight (bellyhold and cargo freighter, scheduled and chartered) that arrives or departs to EU airports.

Bellyhold cargo plays an important role in making routes viable for airlines as the chart below showing average revenues per departing passenger shows.

For so called ‘legacy' carriers the hub and spoke model is alive and well with bellyhold freight supporting the viability of return routes (where passenger demand may not be as high) back to the respective ‘hub' (from each 'spoke') for a number of international airlines.

Over the last decade as margins on air freight have been squeezed, the market for both bellyhold and charter have consolidated into three main hubs.

Heathrow for bellyhold on scheduled passenger flights and East Midlands airport and Stansted for cargo aircraft. There are signs that some airlines with separate cargo functions are looking to move away from this 'cargo freighter' market due to the high capital intensity and high risk of operating a freight only route.

Source: CAA and EEF analysis

Source: CAA and EEF analysis

Looking at total air freight, Heathrow dominates in terms of volume of both types.

Source: CAA and EEF analysis

This consolidation has seen considerable decline in the amount of freight handled by other airports such as Manchester and Gatwick.

Freight forwarders have helped to drive this change as they seek to make their networks more efficient.

Source: CAA and EEF analysis

For low cost carriers, turnaround times and the size of aircraft generally means that freight does not play a large part in their business model.

Instead, charges for services and extras help to support routes.

What the charts above show is that air freight is an important aspect of the aviation market.

The Airports Commission will need to consider how this side of the market fits into the wider debate around where airport expansion should be allowed. At the end of the day, airlines will only fly where routes are financially viable.

Author

Head of Business Environment Policy

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