December 9, 2023

An American Airlines 777 is loaded with cargo at Philadelphia International Airport.

Leslie Josephs/CNBC

Cargo revenues for airlines are in decline. That’s good news for a recovery in travel.

delta, Unity and American This month, both companies reported a roughly 40% year-over-year decline in second-quarter freight revenue.

Delta’s cargo revenue in the first half of 2023 was $381 million, down from $561 million in the first half of 2022, while American’s cargo revenue was $420 million, compared with $692 million in the first six months of last year. So far this year, United’s cargo revenue was $760 million, down from $1.2 billion a year earlier.

Meanwhile, airlines are posting record revenues, if not profits, as travel demand rebounds. That means the business impact of cargo, which once helped prop up airline revenue during the travel slump during the pandemic, has faded.

United, whose cargo revenue accounts for the bulk of the business of the Big Three U.S. airlines, accounted for less than 3% of the company’s $25.6 billion year-to-date revenue in the first half of 2023.

That percentage is significantly smaller than in 2020, when cargo revenue accounted for more than 10% of United’s sales.

As of June, Delta and American’s cargo revenue represented 1.3% and 1.6%, respectively, of total revenue, down from 3.5% and 12% in 2020.

But it’s not all bad news.

Moving cargo around the world is a lifeline for passenger airlines as bookings dry up and travel restrictions force airlines to cut overseas flights during the pandemic.

Typically, about half of the world’s cargo is transported through the belly of passenger aircraft. The decline in freight capacity during the epidemic, combined with strong e-commerce demand, supply chain problems and port congestion, has led to record freight rates.

But demand for travel has rebounded sharply, especially international travel, as customers have postponed holidays abroad in recent years.

New demand has prompted airlines to add services again. Flights from the US to Europe alone are expected to be at their highest level in five years.

Increased passenger capacity has also increased the global supply of cargo space, while demand for air cargo is weakening.

The Baltic Air Freight Index, which tracks air freight rates around the world, is down 47% from a year earlier. In May, the latest figures from the International Air Travel Association said air cargo capacity was up almost 15% from the same month in 2022, while demand fell 5%.

Airlines are also planning to expand flights this year to take advantage of strong international travel demand, a trend that could further weigh on cargo revenue.

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