According to a new regulation of the Civil Aviation Administration of China (CAAC), starting from January 1, 2022, aircraft passenger cabins will only be allowed to carry anti-epidemic-related items, not other freight. As the number of passenger flights dropped sharply since the start of the epidemic, many passenger cabins had been converted to carry cargo, but this will no longer be allowed. Market insiders predict that the new regulations will further tighten air cargo capacity, pushing up international air cargo fees. The new regulations also prohibit cabin seats to be removed to increase cargo space. Airlines that have removed passenger seats to carry more cargo are required to restore the airplanes to their original configuration. Market watchers said that the introduction of the new regulations is mainly due to safety considerations as an automatic fire extinguishing system is lacking in passenger cabins.
The “passenger-to-cargo” aircraft mainly refer to planes which have been modified to fit more cargos by removing passenger seats. This is a temporary modification with seats able to be refitted based on demand. Because the cabin floor has a low load-bearing capacity, it is generally used for large and light goods, including e-commerce packages. The new regulation is only applicable to domestic airlines, with overseas airlines yet to receive guidance on the matter. “It will defiantly push up cargo fees,” Lin Zhijie, an independent market watcher, told the Global Times, as the move will inevitably reduce cargo capacity. Global cargo transport has been stretched over recent months, and air freight rates have been running at near historic highs. Taking the routes of Hong Kong-North America, Hong Kong-Europe, and Frankfurt-North America as an example, average freight rates from January to July 2021 increased by 106.9%, 65.4% and 90.6% respectively compared with the same period in 2019, according to Essence Securities.
Airlines have been mobilizing a large number of idle passenger planes using the “passenger-to-cargo” method to offset the huge losses in passenger travel. In the third quarter, the total losses of eight domestically listed passenger airlines reached CNY11.114 billion. Except for Spring Airlines, which recorded a modest profit, China's remaining seven airlines all recorded losses. Among them, total losses of the country's three state-owned airlines exceeded CNY7.9 billion.