Atlas is predominantly focused on cargo, with a much smaller footprint in the passenger business. What type of cargo does Atlas specialize in?
Atlas is the world's largest aviation outsourcing provider. We invest in aircraft and provide turnkey solutions to our customers, which include the aircraft itself, resources, and the ability to operate on routes worldwide. Our services focus predominantly on cargo. We are the second largest freighter operator globally using wide-body aircraft like the 747s and 777s. Our global footprint spans over 70 countries and 300 destinations. We touch every part of the global supply chain, offering geographical diversification.
Companies like HP, Inditex, MSC, and CMA CGM lease our aircraft, integrating us into their global operations. Additionally, we work with leading express carriers like FedEx, UPS, DHL, and SF Express, as well as freight forwarders, providing critical capacity. A notable example is Formula One, where we transport around 30% of their cargo, including cars and media equipment. Similarly, when entertainers like Taylor Swift go on tour, we dedicate aircraft for their stage and equipment.
Given the variety and sensitivity of cargo Atlas is transporting, how do you maintain optimal conditions?
Aviation is the safest mode of transport globally. Safety is our core value and top priority, and we invest heavily in safety protocols, working closely with regulators like the FAA to ensure our operations meet the highest standards. We maintain our aircraft through a combination of in-house and outsourced services, collaborating with original equipment manufacturers for both engines and airframes.
Maintaining these assets is a complex and highly regulated process, and we take great care to ensure our aircraft remain productive throughout their lifespan. We make significant investments in acquiring new, highly-efficient aircraft, and also invest in maintaining older aircraft in our fleet to ensure they remain as efficient as possible. We invest in maintenance technologies and practices that improve fuel efficiency, contributing to both safety and sustainability.
Passenger travel took a huge dive during the pandemic, but cargo experienced far more continuity. How does the demand for cargo operations in 2024 compare to previous years?
Cargo demand has remained crucial to the global economy, especially during crises like COVID-19. Without air freight, the world would have struggled even more to receive essential items like PPE and pharmaceuticals. Air freight only represents 1.5% of global freight volume, but 35% of its value, typically handling higher-value goods. During the height of the COVID pandemic and after, e-commerce grew significantly, driving demand. In 2024, we are seeing continued growth in air freight demand.
Although historically, air freight grows at 3-4% annually, post-COVID, demand remains robust. E-commerce, which now accounts for 18% of total retail sales, is a major driver, with more consumers relying on online shopping. We expect to see sustained growth of 3.5-5% annually over the next decade, although supply constraints may pose challenges.
Are companies investing more in cargo operations as a way to protect against potential future disruptions?
We haven’t seen a widespread shift in companies diversifying into cargo, largely because it’s not easy to establish a large-scale air cargo operation. Acquiring and operating aircraft requires immense resources, and companies that are already positioned in the market have continued to invest. However, there are strategic moves by certain players, particularly to secure capacity in case of another disruption.
In terms of capacity, the global fleet is aging, and we’re seeing a bottleneck in the supply of aircraft. Many of the aircraft we rely on for conversions, such as the Boeing 777, are still in high demand as passenger aircraft, so there’s a delay in converting them to freighters. This, combined with supply chain challenges, is limiting the availability of new freighter aircraft.
How does Atlas Air’s current fleet size compare to the capacity required, especially given the problem of ageing aircraft?
Currently, Atlas operates 121 aircraft, including the world’s largest fleet of 747 freighter aircraft. Capacity is a growing concern in the industry, freighter capacity is limited, particularly as aircraft age and reach the end of their service life. The 747 and 777F are the two leading production freighter types and will be supplemented with 777-300ER’s, which will be converted in the future from passenger to freighter at around 15 years of age (the conversion prototype has not yet been certified). These converted freighters can operate for another 15-20 years, meaning their total lifespan is up to 35 years. However, there are only 650 wide-body freighters in the world, and Atlas operates about 12% of that fleet.
The challenge is that roughly 125 aircraft in the global wide-body freighter fleet s are approaching 30 years of age and will soon need to be retired. While demand for air freight is growing by 3.5-5% annually, freighter capacity is only projected to grow by 1% per year over the next decade. This gap between demand and supply will put significant pressure on the industry, especially as delays in new aircraft deliveries and conversions persist due to supply chain constraints.
Given that air cargo reflects broader trends in the global economy, what are your main observations?
We’ve observed several trends that align with economic growth and consumer behavior. After the pandemic, there was a lot of speculation that manufacturing would move closer to home, but that hasn’t happened on a large scale. The global supply chain remains deeply integrated, with countries like China, Vietnam, and India continuing to play crucial roles in production.
India, in particular, is emerging as a significant player in both manufacturing and consumption, and we expect to see continued growth in air freight volume there. Similarly, South America is becoming a key market for consumer goods and e-commerce, with products flowing southbound and perishables like seafood being exported northbound.
