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Eva Airways to Cut Cargo Fleet as Apple Spurs Product Shift

Nov. 15 (Bloomberg) -- Eva Airways Corp., Taiwan’s second-biggest carrier, will reduce its freighter fleet by more than a third as electronic products become smaller because of the popularity of handheld devices, President Austin Cheng said.

The carrier plans to cut the number of cargo planes it operates to fewer than 10 from 15 by 2017, Cheng said in an interview in Hong Kong. It plans to drop all six of its MD-11 planes, he said.

Eva’s comments echo the woes of Taiwanese computer makers, as consumers desert desktops for smartphones from Apple Inc. and Samsung Electronics Inc. Hong Kong’s Cathay Pacific Airways Ltd. yesterday said peak cargo demand kicked in later than usual this season and wasn’t as strong as expected.

“Apple not only changed consumers’ pattern, but also changed air cargo transportation,” Cheng said. “Electronic products are becoming smaller, while we charge by weight. The whole pattern for cargo transportation has changed.”

Eva Air rose 0.9 percent to close at NT$16.40, narrowing the year’s decline to 3.5 percent. The benchmark index in Taiwan has gained 6.2 percent this year.

Six of the world’s 10 biggest freight airlines are in Asia, and slowing traffic has led to rate competition. Cargo demand for carriers in the region fell 3.1 percent in September, continuing a monthly decline since February, according to the International Air Transportation Association.

Fierce Competition

Weekly cargo revenue is 25 percent lower than it was three years ago, Cathay Pacific Chief Executive Officer John Slosar said in the company’s in-house magazine yesterday.

“The cargo volume for the peak season is there, but the rate is still low as competition is quite fierce,” Ivan Chu, Cathay Pacific’s chief operating officer, said today.

Shipments from Asia typically gain in the third quarter as factories send the latest smartphones and gadgets to U.S. retailers for the Christmas shopping season.

To cope with the changes in cargo shipments, Asian carriers are buying more fuel-efficient planes and focusing on passenger demand.

Eva Air plans to boost the number of passenger planes it operates to 70 in five years, from 61 now, Cheng said. The passenger business has been a “bright spot” this year for Cathay Pacific, Chu said.

“We are relatively conservative toward air cargo freight,” Cheng said. “I think this will be a trend for everybody because it’s very difficult to find cargoes to fill a freighter.”

To contact the reporter on this story: Jasmine Wang in Hong Kong at jwang513@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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