The Surprising Upside of Declining Airline Cargo Revenue

Airlines such as Delta, United, and American are experiencing a significant decline in cargo revenue, with year-over-year declines of about 40% in the second quarter. However, this decline is actually good news for the travel industry as it indicates a strong recovery in travel demand. During the pandemic, cargo revenue helped prop up airlines' revenue, but as travel demand rebounds, the business impact of cargo has faded. The increase in passenger capacity and the resurgence of travel have prompted airlines to add back service, which in turn boosts the supply of space to fly cargo. This, combined with waning demand for air cargo, has led to a decrease in shipping rates. Airlines are planning to expand flights to capitalize on the strong international travel demand, potentially further driving down cargo revenue.