Pandemic has spurred demand at Canada’s largest dedicated express air freight hub.
“There’s a huge opportunity.”
It’s not often you hear those words in the midst of COVID-19, particularly in aviation. But Hamilton International Airport, an hour’s drive east ot Toronto, is uniquely positioned among Canadian airports to ride out the pandemic and perhaps come out the other side in a better position.
Passengers drive much of the revenue in aviation. For airports, they mean landing fees, airport improvement fees, and so much more an airport can commercialize.
“You’ve got car parking, you’ve got ground transportation, car rental, you’ve got a lot of food and beverage retail, duty free, those type of things that the passenger actually consumes as they’re travelling through your airport,” said Hamilton International President and Chief Executive Officer Cathie Puckering in a Zoom meeting from her office..
But in the age of COVID, it’s all about cargo, that often-ignored segment of the aviation market that has soared to prominence in this crisis as demand for on-line goods surges and the need to move critical medical gear redefines relationships between airlines and the boxes they carry.
“Pre COVID-19, the sector was growing,” said Puckering. “Hamilton probably lagged the growth that you were seeing around the world.”
The pandemic is changing the aviation business in unforeseen ways.
“What you’ve seen most recently is the trend to online shopping and e-commerce,” said Puckering. “The way the consumer is buying and shopping has just created an upward trend in the growth.”
More than eight in 10 Canadians shopped online in 2018, according to Statistics Canada, spending more than $57 billion in the process. But a majority of that was on digital streaming services that don’t need to be shipped. Puckering now sees online demand shifting to more tangible goods.
“We’re hopeful that some of that is being generated by new entrants to the market who shop online now because they have to,” said Puckering. “Our cargo partners are reaping the benefits today in that surge in the online segment.”
“From a cargo perspective, minutes matter,” she said. “It needs to go ground, truck to cross-dock facility, in and out of that facility and out off the runway, you have to make sure you make that experience as quick as possible.”
DHL, one of the world’s largest cargo companies, restarted work Wednesday on a 200,000 square foot cargo facility at Hamilton International, four times the size of its current Hamilton facility. The $100 million investment will create a plant able to handle 15,000 packages an hour.
DHL has also, for the first time, started dedicated cargo flights this week from London, England to Hamilton, for a four-month trial.
Hamilton handled 532-thousand metric tonnes of cargo last year, according to its 2019 annual report, an increase of almost seven per cent in the past two years.
“As the sun goes down, it’s all of a sudden all of these goods are being sorted and put into cargo containers that then go out to those planes and they just fly across the country,” said Puckering.
The airport handles 10-12 cargo flights a night plus inbound flights from Cincinnati and Louisville, two of the world’s largest cargo hubs. It has also seen an increase in flights from Asia headed to Southern Ontario as Cargojet shifted its fleet to add international deliveries.
Last week, Puckering toured one of the airport warehouses and found row after row of medical supplies flown in from China.
“What you’re seeing now with the online and the organizations moving to same-day deliveries and goods that are coming in from Europe, we’re seeing a lot more cargo activity during the day time,” said Puckering. “That’s a great opportunity for Cargojet to utilize its aircraft 24 hours a day as well because it normally does sit at those airports daytime until if flies out, and now it’s repurposing some of those aircraft to do other longer haul flights and fill in those downtimes when that aircraft is on the ground.”
On Thursday, Cargojet reported $123 million in first quarter earnings, 11% higher than the first three months of 2019.
“We moved swiftly to implement effective safety and security measures to protect our team as well as customers while ensuring that much needed Supply Chain continued the flow for urgent shipments,” said Cargojet President and CEO Ajay Virmani in a statement. “While the longer-term implications, and the full impact of COVID-19 remains unknown, Cargojet is working hard and is well positioned to successfully support this new environment both in the short as well as in the long run.”
Landings at Hamilton were projected to be split roughly 50/50 between passenger and cargo, even before the pandemic. The freighters offset some of the decrease in passenger traffic.
“This allows us to diversify our revenue,” said Puckering. “It allows us to operate 24/7 maximizing our airfield and our assets. Those cargo companies have actually invested hundreds of millions of dollars in Hamilton, and they create jobs.”
In 2018, the last full year for which data are available, Canadian airports generated $1.4 billion in non-aeronautical revenue according to figures compiled by Western Aviation News, roughly 33% of all the revenues they brought in.
“The cargo operation is very much complementary,” said Puckering. “Daytime passenger, nighttime cargo, making sure they’re connecting everything during the day by road then moving the good by air at night allows us to maintain our goal of maximizing our airport 24/7.”
“What COVID-19 has done is it’s very much elevated the importance – not only in Hamilton, Ontario, Canada, but around the world – of how aviation has played a role in supporting the movement of essential goods, critical supplies, and enabling society to live,” said Puckering.
Worldwide, passenger aircraft transport about half of all cargo in their bellies. With those planes grounded, emphasis has shifted to all-freighter operations. And Puckering feels her airport is well positioned to take advantage of the opportunity.
“The facilities are here; we’ve got sort facilities, we’ve got maintenance facilities,” she said. “Hamilton is very unique that we provide opportunities and facilities for [the Canada Border Services Agency] to centralize their operations here, key to the success of our cargo facilities.”