Canada’s air cargo market presents a paradox: vast distances and a growing e-commerce sector drive demand, but the country’s low population density and regional cost pressures sometimes hinder dedicated freighter viability. For Air Canada, which has carefully built out a cargo division with dedicated widebodies since the pandemic, the time has come to strategically recalibrate.
Fuelling the conversation is a question of balance: can bellyhold capacity, already baked into passenger schedules, carry the load in a market as complex as Canada’s? Or is there still a viable case for freighters, even with underutilised capacity and increased operating costs?
Fleet shifts and financial signals
Air Canada’s Ambitious freighter program began by converting Boeing 767-300ERs for cargo and launching new services across the Americas and Europe during the pandemic-induced demand spike. But in 2024, as global cargo volumes softened, the carrier quietly took their foot off the gas and reduced its freighter fleet from eight aircraft to six, reintegrating two 767s back into passenger service and taking a C$20 million charge related to the adjustment.
Despite the cuts, cargo revenues remain resilient. In 2024, Air Canada Cargo recorded a 7 percent year-on-year revenue increase, totalling C$991 million, according to Stat Times. The majority of that growth came not from freighters but from bellyhold cargo, especially across transpacific and U.S. transborder lanes. So it’s safe to say, this pivot isn’t a retreat; it’s a recalibration.
Why belly cargo works in Canada
As we recently reported, Canada’s airfreight environment remains promising, but nuanced. With urban hubs like Toronto, Vancouver, and Montreal acting as volume drivers, and thin demand outside those metros, bellyhold space on scheduled passenger flights provides a cost-effective way to maintain frequency without adding lift.
“There’s no denying the economics of belly cargo in a market like Canada,” says one Toronto-based analyst. “You’re flying those aircraft anyway for passengers. Adding revenue-generating freight underneath is just smart business, especially when domestic yields are under pressure.”
Air Canada is also betting on future bellyhold capacity. Between 2024 and 2029, it plans to take delivery of 90 new passenger aircraft, which will boost both route flexibility and underfloor freight space.
Competition heats up
While Air Canada adjusts its fleet, competitors are also sharpening their cargo strategies. WestJet had ambitious plans to scale up its cargo division through dedicated 737-800 freighters and direct relationships with forwarders. But in March of 2024, the programme was shelved, raising questions about long-term strategy alignment within the airline’s cargo operations.
Meanwhile, integrators like Cargojet are forging ahead. In late 2023, Cargojet signed a three-year deal with Great Vision HK Express to operate at least three B767-300F flights per week between Hangzhou and Vancouver, tapping into growing Chinese e-commerce volumes. That deal alone is projected to generate more than C$160 million in revenue.
e-commerce fuelling hybrid strategies
Canada’s e-commerce market, while smaller than the US, is on the rise. According to a Deloitte report, Canadian air cargo volumes are projected to grow more than 30 percent between 2020 and 2025. But that growth is highly centralised around major cities, making full freighter networks harder to access for secondary markets.
Air Canada’s hybrid strategy, flying freighters on high-volume international and regional lanes, while leveraging belly space for domestic and transborder operations, offers the best of both worlds. It also aligns with broader ESG commitments.
Environmental and economic incentives
Beyond economics, environmental goals also favor belly cargo. Air Canada has committed to reducing greenhouse gas emissions by 20 percent from air operations and 30 percent from ground operations by 2030. Bellyhold transport, which maximizes space on existing flights, provides a more sustainable way to move goods compared to operating dedicated freighters with uncertain loads.
Freighters remain critical for oversized cargo, pharma, and lanes requiring schedule control. But for most of Canada’s internal market, belly capacity is a leaner, greener, and often more profitable alternative.
On the Horizon
Canada’s air cargo industry is undergoing a strategic recalibration, one favouring agility over scale. The shift away from dedicated freighters toward optimized bellyhold capacity highlights a broader industry consensus: in a market defined by thin domestic density and cyclical global demand, flexibility is key.
Modern passenger aircraft offer enhanced cargo lift in their belly compartments, allowing carriers to meet e-commerce and express demand without the overhead of full freighter operations. Digitalisation is also playing a key role, improving booking efficiency, cargo visibility, and route planning.
Rather than competing with major freighter-driven markets, Canadian carriers are increasingly embracing a hybrid approach, leveraging bellyhold when practical, forming strategic alliances, and targeting high-yield, time-sensitive cargo flows. It’s a model tuned to Canada’s geography, trade profile, and ever-evolving logistics needs.
