PROJECT BACKGROUND
- Canada is the second largest country in the world in terms of land area. It is vast and sparsely populated. It has the best air transportation industry-investment ratio. In recent years, it has become the fastest growing developed country in the global air transportation industry.
- In the Canadian domestic market, there are two main national passenger and cargo airlines (Air Canada and WestJet) and one pure cargo airline – Cargo Jet.
- There are currently no local airlines participating in the operation of Canada’s trans-Pacific cargo routes, and the international air cargo market relies heavily on foreign air transport capacity.
Air cargo demand is bullish in the long term.
Boeing expects air cargo demand to grow at least 4% annually through 2030
Before the epidemic, the bellyhold capacity of passenger aircraft accounted for approximately 50% of global air cargo capacity. After the epidemic, the sharp reduction in passenger flights caused a structural supply and demand imbalance in the air cargo market.Among them, the e-commerce market will grow by 111% from 2019 to 2024. Air cargo to benefit from e-commerce growth
80% of cross-border e-commerce is transported by air
E-commerce accounts for 15% of air cargo volumes
73% of global retail e-commerce is generated in China and the United States
(Source: Boeing World Air Cargo Forecast, IATA E-Commerce Monitor (Q1 2022))Canadian air cargo market is growing fast
The growth rate of Canada’s local market far exceeds that of the world. Taking CargoJet, the leader in the local aviation industry, as an example, in the past ten years from 2012 to 2021, its business volume has increased from CAD150M to CAD750M, a full five-fold increase, with an average annual growth rate of 50%
Serious imbalance between supply and demand of global freighter capacity
The COVID-19 epidemic has caused long-term structural harm to the air cargo market – a continued imbalance between supply and demand.
The COVID-19 epidemic has caused a significant reduction in passenger travel. Passenger flights have been unable to return to pre-epidemic levels for a long time. Bellyhold capacity has been significantly reduced, and a large amount of demand has been forced to shift to cargo aircraft.
The top 40 cargo airlines in the world have a total of approximately 2,200 freighter aircraft, while the average global production of new freighter aircraft is less than 30 aircraft per year. The growth rate of new freighter aircraft is less than 1.5%, which is less than half of the growth rate of freighter demand (4%). The structure Serious sexual imbalance
Due to new emission requirements, the B767 freighter will be completely discontinued in 2026, which will make the supply of wide-body aircraft even worse.
Although passenger-converted freighters will fill part of the supply gap, they will only have an impact on the supply of large wide-body aircraft, as passenger-converted freighters for the 777 and 747 will gradually increase over the next 10 years, while passenger-converted freighters for the 767 Freighter fleet to be reduced as prototypes run out
- Canada’s domestic air transport capacity is in short supply and Cargojet has an exclusive monopoly on the cargo aircraft market
- International air transport capacity is in short supply and relies heavily on foreign transport capacity
- The Canadian market is relatively small. There is a conflict between load factor and frequency of wide-body freighters that restrict each other. Intercontinental trunk lines rely on transit in the United States.
- Asia-Pacific freighter routes generally require technical stops in Anchorage. The route operating conditions are poor and lack economic benefits. Optimization solutions have always puzzled operating airlines.
- The contradiction between the tariff barriers in the China-US trade war and the market demands of both sides is increasing day by day.
- Difficulties in capacity extension are restricting the rapid growth of the Asia-Central and South America air cargo market
- Air Canada Cargo was established to alleviate the contradiction between supply and demand of Canadian air transport capacity and break Cargojet’s exclusive monopoly.
- Air Canada Cargo is the first cargo airline founded by Chinese in North America. The founder’s strong background and rich connections have made full preparations for the expansion and introduction of Canadian international routes, and came to solve the shortage of international transportation capacity.
- Air Canada Cargo’s strategic plan to build an aviation hub on the West Coast will effectively solve the conflict between the load factor and frequency of wide-body freighter direct flights to Canada, changing the original “transit from the United States” to “transit to the United States”, in order to control the Asia-Pacific Intercontinental trunk lines take the initiative.
- Air Canada Cargo’s West Coast hub diversion plan has found a solution for confused Asia-Pacific airlines that can replace the technical stop in Anchorage and increase operator business opportunities. It will stimulate Canada’s geographical advantages and create a cooperative and shared future. Win and promote the healthy development of North American freight routes.
- With the advancement of Canada’s West Coast hub, Canada’s advantage in becoming an “entrepot trade and transfer processing base” for Sino-US trade has become increasingly mature. It not only effectively alleviates trade war conflicts but also promotes the return of Canadian manufacturing. We are here to boost the economic and trade among China, Canada and the United States.
- Air Canada Cargo’s route network plan of “based on the local area, covering the east and west, connecting the Asia-Pacific, and connecting South America” will provide the most scientific and economical operation plan for extending the Asia-North America route to Central and South America, and is here to expand the South American market.