The Civil Aviation Administration of China (CAAC) said it will end “passenger-to-cargo” flights, and cabins will now be limited to carrying “anti-epidemic” items. Market insiders predict that the new regulations will further reduce capacity by pushing up already high international air cargo rates.
The Chinese regulator announced that as of January 1, 2022, passenger cabins will only be able to transport items that are used “to combat the pandemic,” without specifying further details. The new regulations will also prohibit removing the seats from the cabin to increase cargo space. This practice has been used extensively during the pandemic: due to the hundreds of airliners in storage waiting for the demand for international travel to return, airlines began to remove the seats from the passenger cabin and use this space as capacity for passengers. additional charge. Since the floor of the passenger cabin is not designed to withstand the forces of cargo transport in the same way as the warehouse, it is generally used for low-density cargo such as face masks, protective equipment or e-commerce products.
The Global Times notes that the new measures only apply, at the moment, to Chinese domestic airlines. Foreign airlines have not yet received directives in this regard.
The CAAC affirms that the introduction of the new regulations is mainly due to “security considerations”, with the risk of fire being of particular concern. Modern aircraft have advanced fire detection and suppression systems installed in the cargo hold, something that passenger cabins do not have. For this reason, the elements transported in the cabin normally need to be supervised by members of the crew.
The impact on rates is almost certain
According to industry analysts, this move could boost the already inflated price of air freight. The Global Times points to three examples that clearly demonstrate the state of the current market: routes between Hong Kong and North America, Hong Kong and Europe, and Frankfurt and North America have seen freight rates rise 106.9%, 65, 4% and 90.6% respectively, when comparing the months of June 2021 and 2019. China Southern Airlines pointed out that the price per kilogram from Guangzhou, in southern China, to Los Angeles was 15.2 dollars, “a lot higher than before the appearance of COVID-19 ».
Customers accuse airlines of unfair practices
Customers of the main airlines operating in China point out that since August “many of them have engaged in unfair practices in an attempt to increase their rates up to five times.” While the forwarders They recognize that the price increases and additional surcharges “are reasonable in today’s market”, are much less comprehensive with certain practices carried out by carriers.
«The main clients reach Block Space Agreement agreements (a contract by which they acquire cargo space to use during a certain period of time, which gives predictability to the businesses of both the carrier and the forwarder. However, these contracts to often mean that forwarders lose money during the low season, as they have more capacity contracted than necessary, which they then recover during the high season) ”, explained Christos Spyrou, founder of Neutral Air Partner, to The Load Star. “However,” added Spyrou, “airlines escape these contracts by canceling their scheduled flights and loading another with the same origin and destination but a different flight number.” The manager points out that airlines thus cover themselves from any accusation of breach of contract. And he adds that «as forwarders need to transport their products, they have to reserve space in this new flight«. However, transportation now “instead of costing $ 5 per kilogram costs $ 15,” Spyrou noted.
The other practice that airlines are doing is delaying flights. Because “rates change weekly, some carriers cancel a flight that was scheduled to take place on a weekend and put it in place on a Tuesday, updating the price to the rates for that week,” Spyrou pointed out. “This is not a normal price increase but a disguised price increase.” Although the executive did not name particular airlines, he noted that this practice is “normal” among companies in the Middle East and Asia.
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