Latin American cargo capacity starts to return with passenger flights

Latin America is starting to see an increase in cargo capacity as carriers expand their networks and demand for passenger flights begins to return. Latin America faced the largest regional drop in cargo capacity with a 64.5% decrease in available cargo tonne kilometers (ACTKs) in April and a year-over-year traffic reduction of 43.7%, according to an analysis by the International Air Transport Association (IATA). Several Latin American airlines have faced financial hardship due to the decrease in passenger flights, and LATAM Airlines Group , Avianca and Aeromexico have all filed for Chapter 11 bankruptcy in the U.S. Now, as airlines share plans to expand international passenger and cargo flights to and from the region, cargo capacity has begun to increase. Latin America was the last region to be affected by COVID-19, explained Fredy Ramos, managing director for Latin America for Philadelphia-based logistics company BDP International, meaning governments were faster to limit passenger flights and close borders in response to the pandemic. In mid-March, major Latin American cargo hubs, including Bogota (BOG), Mexico City (MEX), Santiago (SCL) and Lima (LIM), banned international passenger flights, greatly reducing bellyhold capacity for cargo. In April, airlines began expanding their cargo networks to try and meet the demand to and from Latin America. For example, Chilean airline LATAM Cargo expanded its cargo network in April with direct routes to Mexico City (MEX) and Los Angeles (LAX) to meet demand for exports for commodities like Chilean salmon, Peruvian textiles and assorted Brazilian goods. Air Canada announced the expansion of its cargo-only flights into Lima (LIM) and Bogota (BOG) in May to meet perishable demand into Canada. LATAM has also increased flights from SCL to Miami (MIA) from six weekly flights to 31, in order to make up for the lack of bellyhold capacity. LATAM, Air Canada and several other airlines have also utilized passenger planes for cargo-only flights to help meet demand, utilizing seats and overhead compartment space to transport commodities. While carriers are looking to provide more flight options to and from Latin America, Ramos said it remains difficult to ship from Latin America to North America and forwarders are opting to fly through hubs and build different routes to keep costs down. Meanwhile, border regulations continue to limit international passenger flights, with the majority of South American nations still under strict quarantine. Recently, some airlines have restarted passenger services to select Latin American and Caribbean countries that have reopened borders, such as Barbados and Jamaica. Delta Airlines, which had suspended all Latin American flights in March, announced on July 7 the reinstatement of passenger flights to Mexico and the Caribbean for “travelers longing for a beach day,” according to a press release. United plans to resume passenger international flights to Latin and South America, adding 35 new routes for August and increasing frequencies to a total of 395 flights per week from the U.S. to Latin America. Summer months typically bring an increase in passenger flights to Latin America. Last July , 24 million passengers travelled to and from Latin America, a 6.3% growth year-over-year, and the second highest month of passenger travel for 2019 . It remains to be seen how current COVID-related travel restrictions will affect bellyhold capacity this season. Most domestic flights in South America remain grounded, Ramos said, continuing to reduce the available cargo capacity. “It’s very important from my point of view that [Latin American] governments open passenger movement and passenger aircrafts, because there are a lot of opportunities to impact the economy,” said Ramos.

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