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Air Passenger Travel is Climbing, so is Capacity Relief on the Way?

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Air Passenger Travel is Climbing, so is Capacity Relief on the Way?

A new era of air transportation trends is emerging to create a confusing outlook for shippers.

Air freight has been in nonstop peak-season mode despite pandemic-induced capacity decline, while other disruptions, such as the Suez Canal blockage, drove even more demand to air. This is all happening while the Transportation Security Administration is reporting a 1000%+ increase in passenger travel in April 2021, compared to April 2020, with the vaccine fueling hopes of getting back to a sense of “normalcy.”

Though vaccine distribution is increasing, and we are seeing a spike in passenger travel, capacity relief is not on the horizon. Why not? Most current air travel is domestic, meaning that planes are still not populating major global trade lanes.

In fact, numerous commercial flights are being canceled a few weeks before takeoff because passenger demand is not there. For passenger travel to have an impact on air capacity, business travel will need to return to pre-pandemic levels, That’s not likely to happen anytime soon. Right now, cargo is king and leading routing decisions for most airlines.

With this in mind, there are three tactics that you can bring into your shipping strategy to navigate the current capacity constraints in the air market.

1. Prepare for the permanent changes that will impact the future of air travel

While cargo planes and charters seemed like temporary fixes for shippers in a pinch, they’re quickly becoming necessary for the long term. Even with business travel becoming more viable, it is estimated that business travel will not reach 2019 levels until 2025. Plus, tight budgets and the newfound appreciation for virtual communication may keep many international planes grounded.

Therefore, depending on the slight uptick in commercial travel is not wise. Global shippers will need to look at how cargo planes and charters fit into their shipping strategies long term. Finding the correct partners and resources will be more important than ever as these modes of shipping continue to be needed.

2. Flex your creative muscles

Consider the new level of creativity that these air freight challenges are requiring and how you can do things a new way. For example, to get a timely shipment out for a global customer, we removed the seats from a passenger aircraft to make room for important shipments. Additionally, the plane was routed to a non-traditional cargo hub to avoid the additional delays and congestion found at more popular airports.

That may not be the right muscle to flex in your supply chain, but thinking outside the box is crucial. Depending on your goals, the end strategy will look different.

3. Consider using a mix of modes and ensure you have a partner that can accommodate

A mix of modes doesn’t just mean putting things on a ship when there is no room on aircrafts. Sometimes, it means using a mix of transportation modes for one shipment and being flexible to change on a dime. It all depends on your unique situation, but you must be agile and find the right partner to guide you in the correct direction.

We used this strategy on a recent project with Thomas Scientific, a laboratory equipment provider. We helped them work through the extreme ramp up of demand for COVID-19 related items such as masks, gloves, PPE, and testing supplies.

Prior to the pandemic, most of their business was domestic, requiring only a handful of ocean containers each year to accommodate their international shipping needs. However, they faced a sharp increase in demand in 2020 for COVID-19 test kits and needed to develop an international shipping strategy quickly.

Through our global suite of service offerings and information advantage, we worked with them to create tailored solutions to secure the capacity they needed. We focused on a multimodal distribution strategy based on time and needs. Shipments have since gone directly to customers through less than truckload, truckload, ocean, and air charter.

Once inventory levels are stable and demand shifts as we expect it to, we’ll help them move some COVID-19 test kits to ocean. As warehousing space is tight, making this switch will not only promote cost savings, but also help avoid storage backlogs.

Together, we have implemented strategies that have given Thomas Scientific the ability to quickly change directions as needed.

Despite the challenges that are currently present in the air market, rest assured that there are new ways to get creative and work with your logistics partner to create a long-term plan that navigates capacity constraints.

To stay updated on market trends and how they will impact capacity and pricing, visit our Global Forwarding Insights page.

To dig even deeper, connect with a logistics provider.

Norwegian Air Denied Temporary US Service Application

Washington, DC – The US Department of Transportation (DOT) has rejected a ‘procedural application’ from discount air carrier Norwegian Air International (NAI) to temporarily operate in the US.

The decision is seen as a victory for US air carriers and their unions, which had vocally opposed the application, but the DOT said that while the temporary bid had been rejected, the agency would continue to “review the extensive record and deliberate on the application for longer-term operating authority.”

According to aviation industry analysts, the final determination by DOT probably won’t be announced until after the November mid-term elections.

Norwegian Air’s campaign to enter the US market became a magnet for opposition, not only from domestic US air carriers and their employee unions, but from a broad coalition of lawmakers from both parties on Capitol Hill.

More than 40 senators and 100 House members signed letters expressing their “concerns” about the deal with the House recently passing an amendment to the 2014 Transportation, Housing and Urban Development (THUD) appropriations bill in an effort to derail the airline’s efforts.

The Air Line Pilots Association (ALPA), which has labeled NAI as “the wolf at the door,” praised the DOT’s decision, saying that, “The US Department of Transportation took an important stand for fair competition today by denying Norwegian Air International’s request for temporary authorization to fly to and from the United States.”

NAI – which is certified in Ireland and hires its pilots from Singapore – has said that the opposition to its application is protectionism, driven by the major airlines who control more than three-quarters of the highly profitable transatlantic market.

On the company’s existing US routes operated under a separate company called Norwegian Long Haul, tickets are, according to several sources, often more than $100 cheaper than the closest competitors’ fares.

NAI said in a statement it still expected to win final approval from DOT, but it was disappointed with the ruling.

“While we think it is unfortunate that DOT feels the need to further delay issuance of our permit, which has been pending now for over six months, Norwegian Air International stands behind its business — from its pilots and cabin crew to its affordable fare model to its desire to bring competition to the transatlantic market — and looks forward to receiving approval to operate without further delay,” said NAI CEO Asgeir Nyseth.


Norwegian Air International Files Comments with USDOT

Washington, DC – Norwegian Air International (NAI) has filed comments with the US Department of Transportation (USDOT) confirming its support for the European Commission’s views that parties to the US-EU Open Skies Agreement cannot unilaterally deny NAI’s application to serve the US on the basis of Article 17 of the agreement.

The Commission’s views were expressed in a high level meeting between the US government and Commission officials, where the Commission was asked its views on “whether a party to the Open Skies Agreement could unilaterally deny an application of the other party based on the so-called ‘social dimension’ provision of the agreement.”

That stance is a key argument by NAI’s opponents who have been urging the USDOT to deny NAI’s application.

“We commend Secretary Foxx in seeking the Commission’s comments on this pertinent issue – and the Commission for its sound judgment that is consistent with established legal norms of treaty interpretation, the Joint Declaration of the Chairmen of the US and EU delegations who led the negotiation of the historic Open Skies Agreement, and international law,” said Asgeir Nyseth, CEO of Norwegian Air International.

“We look forward to DOT promptly granting NAI’s application to bring air service to the US, so consumers can finally begin realizing the benefits of competition – including lower fares,” he said.

NAI’s application for authority to fly to the US has reportedly been pending with DOT for almost six months.


Air China’s New DC-Beijing Service Unveiled

Washington, DC – Dulles International Airport is celebrating the launch of Air China’s new service linking Washington, DC and Beijing.

State-owned Air China plans service four times a week between the two cities with new-generation Boeing 777-300ER featuring three-class cabins: first class (Forbidden Pavilion), business (Capital Pavilion) and economy class.

First class cabins feature luxury suites; business class cabins boast 180-degree flatbed seats, while all cabins have individual TV screens with audio-video-on-demand (AVOD).

Air China’s new nonstop service (CA 818) departs from Washington Dulles International to Beijing at 5:00 pm local time on Mondays, Tuesdays, Thursdays and Saturdays.

It arrives in Beijing the next day at 6:40 pm local time. CA 817 departs Beijing on Mondays, Tuesdays, Thursdays and Saturdays at 12:45 pm local time and arrives at IAD on the same day at 2:35 pm local time. Beijing is 13 hours ahead of Washington, DC.

Washington Dulles International is Air China’s seventh gateway in North America. Other hubs are Los Angeles, San Francisco, New York, Houston, Honolulu, and Vancouver.

Air China is currently the world’s largest airline by market capitalization, according to the International Air Transport Association.

The carrier operates a fleet of 461 Boeing and Airbus aircraft operating on 284 global routes thoughout Asia, Oceania, the Middle East, Europe, South and North America from its main hub at Beijing’s Capital International Airport.