News / Air France KLM Martinair Cargo revenue plummets amid soft demand

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Air France KLM Martinair Cargo’s revenues declined almost 34% in the second quarter, to Є606m ($667m), compared with Q2 22, as cargo demand remained sluggish.

A financial statement released by the Air France KLM group today highlights the takeaways from the quarter: the French-Dutch combined carrier said the resumption of passenger travel had resulted in an increase in available tonne-km (ATK) of 6.5% on Q2 2022.

But cargo traffic, measured in revenue tonne km (RTK) was down 8.5%, as “the second quarter (of last year) still showed strong demand”.

“As global economic growth is slowing down, container prices for sea freight declined and therefore demand for air cargo softened.” said the statement. “The load factor was 7.3 points below 2022 (at 44.6%) and due to the increased belly capacity, the yield declined as well, resulting in a decrease in unit revenue per ATK of 42.1% against a constant currency.”

Air France KLM Group’s global Q2 revenues were up 14.1%, at constant currency, at more than Є7.6bn, driven by an 8.2% increase in passenger numbers.

In a recent interview with STAT Trade Times, GertJan Roelands, SVP Commercial at Air France KLM Martinair Cargo, said: “It’s a challenging period at the moment. The favourable supply-demand dynamic of 2022 is actually the opposite of what we are seeing right now. The passenger side of the airline industry is very strong and, given current market conditions, there is surplus belly cargo capacity, meaning yields are under pressure.

“I think there are regional variations when it comes to yields. On the transatlantic, in particular, we see that capacity is still being added, so we do expect yields to come under further pressure. However, we also see geographical regions where we have quite a stable situation, for example, Africa, which is quite important to us (as a market). Demand is still relatively strong and yields quite stable versus last year.”

On the customer side, Mr Roelands noted that the current market was becoming one where shippers were trying to negotiate lower rates on a spot basis to a backdrop of overcapacity.

“However, we are seeing that some shippers would like to move back again … to longer term contracts. There are only a few cases of this for now but it could mean that slowly, the market is leveling and bottoming out and bringing a bit more stability. But, for sure, the spot market continues to have a very prominent place.”

As to the prospect of a peak season in Q4, he said: “There’s likely to be some sort of uptick in the last quarter of the year, but if you ask me ‘will there be a significant change in terms of market dynamics?’ – looking at all the indicators at the moment there is no reason to believe that that will happen.”

Reflecting on the jv with CMA CGM and its cargo airline, CMA CGM Air Cargo, Mr Roelands said its launch during a declining market had not been ideal.

But he added: “On the other hand, there is an opportunity to really leverage the partnership based on a few drivers; firstly, network expansion. In Asia, AF-KLM hardly had any freighter capacity. Now, with CMA CGM, we’re able to operate fully into China – Shanghai and Guangzhou – and also to Hong Kong and Abu Dhabi, and most recently, Mumbai. So that gives far more choice for our customers.

“But apart from that, we are really back into the charter market. At Air France KLM we only had five freighters and they were fully-utilised. Through the co-operation with CMA CGM, we are able to really focus on specific full-freighter products which we could not accommodate previously. For example, oil and gas and moving cars, etc. So we will put much more emphasis on this.”

The jv currently operates a fleet of 12 freighters, made up of A330Fs, B777Fs and B747Fs, and this is expected to rise to around 20 aircraft in the next four to five years, with a mix of B777s and A350Fs, Mr Roelands added.