For airlines, pandemic has meant nothing but profits

Big Korean airlines beat expectations in the first quarter thanks to strong cargo revenue. Korean Air Lines reported a record operating profit of 788.4 billion won ($628 million) in the first quarter, a 533 percent increase from the previous year ..

Cargo is loaded onto a Korean Air Lines plane destined to Frankfurt, Germany, last January. [YONHAP]

Big Korean airlines beat expectations in the first quarter thanks to strong cargo revenue.

Korean Air Lines reported a record operating profit of 788.4 billion won ($628 million) in the first quarter, a 533 percent increase from the previous year, while Asiana Airlines, which will soon announce its earnings, is expected to record strong profit at the 100-billion-won level.

Despite plunging demand for passenger flights, the two carriers were able to keep afloat by transforming passenger planes into cargo-only planes, often referred to as passenger-to-freight (P2F) conversion.

Currently, Korean Air Lines and Asiana Airlines own 154 and 81 aircraft, respectively.

The two carriers converted 10 percent of their fleets, 16 and 7 flights respectively, to freighters during the Covid-19 pandemic.

While P2F conversion can be done both temporarily and permanently, Korean Air Lines and Asiana Airlines chose temporary conversions and will reverse the conversions when passenger demand recovers.

“We will respond swiftly to the recovery by putting the seats back on six aircraft from the 16 cargo planes that we converted,” said a spokesperson from Korean Air Lines.

A permanent conversion is a more radical transformation and the passenger cabin space disappears in the process.

Another contributing factor to the companies’ strong profits was the operation of long-distance routes for cargo services in response to the rising demand for international freight during the pandemic.

One of the cargo routes operated by Korean Air Lines involves four countries in North and South America. The three-day route departs from Incheon and goes to Anchorage, Miami, Sao Paulo, Lima and Los Angeles.

Asiana Airlines also operates a 40-hour route for cargo, which flies around the globe from Incheon to Anchorage, New York, and then to Brussel.

Long-haul cargo flights are preferred by many pilots as they can earn more on long flights and not have to deal with customer complaints.

As cargo fares surged during the pandemic, the P2F conversion business has been booming. IBA, an advisory company for the aviation market, forecasts the P2F conversion business will continue to grow for a while.

The conversion of large aircraft such as B777-300 and A330-300 costs from 6.6 billion won to 46 billion won. Lower-cost carriers such as T'way Air are considering adding large aircrafts to expand their cargo business.

Incheon International Airport Corporation also signed an agreement with Israel Aerospace Industries, Israel’s state-owned aerospace and aviation manufacturer, to build conversion centers at the airport last year.

BY KANG KI-HEON [cho.jungwoo1@joongang.co.kr]