Air Freight News

Air Canada Cargo’s freighter feeder to passenger jet strategy is powering growth

Canadians typically are not drumbeating self-promoters and Air Canada’s management rarely deviates from that description, but the airline’s aggressive, standalone cargo operation recently captured the spotlight for exceptional performance and earned the right to take a few bows on the global stage.

In February, Air Canada Cargo won the sought after accolade of 2024 Cargo Operator of the year as part of the 50th annual Air Transport World Airline Industry Achievement Awards, the first Canadian carrier to ever take home the honor. That same month, Canada’s largest air freight carrier was singled out for Exceptional Cargo Service at the 2024 Aviation Achievement Awards in Dubai.

In an industry driven by dramatic change, Air Canada Cargo stood out in the competition by creating a digital environment giving shippers direct access to computerized route searching, scheduling, booking and tracking tools plus consistently increasing worldwide capacity with a growing freighter fleet and an ever-expanding passenger widebody network.

An Air Canada Cargo 767-300F making a delviery.

Combination Carrier

But the Canadian air carrier did not suddenly become boldly innovative overnight. Launched in 1937, as TransCanada Airlines, its first flight was 15-minutes long with two passengers and mail. In 1977, Air Canada, by then the country’s national airline, established a formal cargo department which was not just an afterthought to fill empty lower-deck passenger airplane space with packages. The focus went deeper than that.

“We are North America’s only combination carrier with a passenger fleet and a dedicated freighter fleet,” Mark Galardo, executive vice president of network and revenue planning, told the American Journal of Transportation (AJOT) in an exclusive interview. “When you talk to other North American airlines, cargo is never a major part of their fundamental strategy or how central cargo is to their overall revenue. Along with our international footprint, we see tremendous synergies in having both fleets separate but together. In fact, cargo is gaining more and more momentum internally.”

As a company, Air Canada has enviable imagination and flexibility. Post COVID, when it, like many other airlines, had to ground aircraft when people suddenly stopped flying, the carrier innovatively created “Charlies” by removing the seats from 11 widebody passenger jets, a mix of Boeing 777s and Airbus A330s. Air Canada was the industry’s first airline to produce these instant freighters.

Looking ahead, Air Canada is launching significant route expansions in the next few months. New three-times-a-week Boeing 787-9 Dreamliner service from Montreal and twice weekly service from Toronto to Stockholm will provide belly capacity to Sweden’s capital city. A new route from Montreal to Madrid is being added. Galardo says the carrier is targeting Asia for fresh revenue in mid-year that includes new service from Vancouver to Singapore, Toronto to Osaka and Montreal to Seoul. “There is a big, big focus on cargo to make these routes viable,” he adds.

Mark Galardo, Air Canada

Indeed, Air Canada returned to Singapore’s Changi International Airport for the first time in over 30 years. A B-789-9 took off on a four-flight-a-week schedule from Vancouver on April 3, making it the only non-stop service from Canada to Singapore. Air Canada awarded a passenger, ramp and cargo handling contract to SATS and Worldwide Flight Service (WFS).

In March, Air Canada increased capacity to major world markets including Copenhagen (4X weekly), Dublin (7X weekly) London (49X weekly), Los Angeles (21X weekly) Newark (7X weekly) Orlando (15X weekly) Phoenix (7X weekly) and Vienna (5X weekly).

Meanwhile, Air Canada Cargo has an extensive pure freighter network in the Americas connecting Toronto with Atlanta, Dallas/Fort Worth, Miami, Guadalajara, Mexico City, San Jose (Costa Rica), San Juan, Bogota, Lima and Quito plus Liege, Frankfurt, Basel and Madrid in Europe. The carrier has built a reputation for moving heavy and outsized cargoes including live and exotic animals on its cargo jets.

As this is written, Air Canada Cargo has no plans to add to its freighter fleet, Galardo says. Six of its eight 767-300Fs were converted passenger jets and two were brand new right off the Boeing assembly line. “We will stay there for a bit given the kind of cargo dynamics we are seeing in the market,” he says. “Eight freighter aircraft is sufficient.”

Cargo Feeds Passenger

However, Air Canada is adding belly lift. Galardo says two B-787-9s and two leased Airbus A330-300s, both widebody passenger jets, will join the fleet. “Plus, we have on order eighteen 787-10 (Dreamliners) from Boeing that will be coming starting in the fourth quarter of 2025. It’s an excellent cargo plane. It has two more pallet positions versus the 787 -7, 8, and 9. Its impressive cargo capability was a big part of the decision-making process in why we selected that aircraft.”

During his interview, Galardo did not spell out where in the world the new passenger planes, with their substantial cargo lift, will be assigned. But it would seem likely that South American routes could see some new cargo capacity, possibly on a seasonal basis if not year-round. For example, Air Canada operates a seasonal flight to Santiago, Chile, he notes. It also has daily flights linking Sao Paulo and Buenos Aires.

In the past, it had a passenger flight from Canada to Lima, Peru, says Galardo. “But we had some civil unrest and political uncertainty last year that forced us to cancel (the service) but we would be looking to go back at some point.”

Air Canada and Air Canada Cargo has a very definable strategy when it comes to freight and Galardo discusses it quite candidly. “Canada is a relatively weak export market and a relatively strong import market,” he explains. “We have no trouble filling our bellies westbound into Canada but eastbound, out of Canada, those bellies become quite perishable when you don’t fill them.”

Hence, the Air Canada Cargo freighters are used to “pick up freight in relatively big markets like South America, and USA markets like Atlanta, Dallas-Fort Worth and Miami and even Caribbean and Latin destinations like Puerto Rico and Mexico City,” Galardo continues, “[they] bring the freight up to our hub in Toronto and transit it onto the bellies of our global passenger network.”

In short, the Air Canada Cargo freighters are feeding the Air Canada passenger fleet.

Within that “feeder” approach, the carrier has a number of specific cargo “programs” ranging from the aforementioned transporting of certain live animals to temperature-controlled pharmaceuticals to perishables and other high value, time sensitive commodities that fit within Air Canada’s total air freight strategy.

What about cargo that does not fit into Air Canada’s well-defined air freight parameters?

“We are expanding quite a bit into some very interesting [air cargo] on-demand flights,” says Galardo. “We feel there is a lot of opportunity to fly some unique city pairs on an ad hoc basis. While we are sticking to our regularly scheduled cargo lanes, we are also increasingly open to on-demand cargo freighter operations.”

The Air Canada executive vice president told AJOT he is convinced the carrier can expand into on-demand flights at this point without having to add to its freighter fleet. “Our 767 fleet is not being pushed that hard yet,” he says.

Overall, the airline’s chief planning and revenue official is optimistic about the future. He says the first four months of 2023 were “generally robust but then it fell precipitously and then it corrected nicely above 2019 tonnage and yield levels. We outperformed most of our peers from a revenue perspective. It was a year of normalization.”

For 2024, Galardo says the airline is “seeing growth in Asia and starting to see some improvements in South America. But 2024 and 2025 are going to be years where Air Canada is really going to be executing that feeder-transit cargo strategy.”

A statistical snapshot of the carrier says it best. Air Canada including its Rouge leisure airline has 248 aircraft flying to 168 destinations on six continents. The fleet has 82 wide bodied passenger planes with large belly freight capacities. Its Air Canada Cargo fleet is eight Boeing 767-330F freighters.

Chris Barnett
Chris Barnett

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Chris Barnett is a seasoned San Francisco-based freelance journalist who has been covering world trade, transportation, air freight and business travel for 54 years.He has written regularly for the Journal of Commerce, Copley News Service, Los Angeles Times, airline inflight magazines and JoeSentMe,com, a private website for global business travelers.

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