In recent weeks the oil price has dropped from its record levels above US$140 per barrel, but the respite was too little, too late for struggling Gemini Air Cargo. Other carriers are scaling down or rethinking their strategy, indicating that the industry is not out of the woods yet.

Two months after Gemini had filed for Chapter 11 bankruptcy protection, the freighter leasing outfit abruptly shut down last month, after its quest for fresh financing or a buyer had proved futile. Gemini's line-up of four MD-11 and several DC-10-30 freighters has gone back to the owners.

Gemini was the only outright casualty on the freighter scene last month, following the demise of Ocean Airlines and severe headwinds for Cargoitalia and MNG at the outset of the summer. Other airlines remain in retrenchment mode, cutting or postponing sectors in an effort to alleviate the pain on their balance sheets.

Atlas Air Worldwide Holdings, parent of ACMI (aircraft, crew, maintenance and insurance) leasing outfit Atlas and scheduled carrier Polar Air Cargo, saw its net profit plummet 97 percent in the second quarter. Management, which blamed the cost of fuel as the chief culprit for the decline, insists that demand for its ACMI business remains strong.

With Polar headed into the embrace of DHL, which is going to take up a large chunk of the carrier's capacity, the vulnerability to the oil price should be largely eliminated, reckoned Atlas chief executive officer Bill Flynn.

Most airlines have no massive network deal with a large integrator to fall back on, so they are cutting back. Instead of expanding their transpacific operations as originally envisaged, the likes of Korean Air, JAL, China Airlines and EVA have pared down their US freighter flights.

Only a trickle of new capacity is entering the transpacific scene. Singapore Airlines Cargo is expected to start a new 747-400F service from its home base via Hong Kong to Dallas/Fort Worth, returning to Singapore over Osaka while Cathay Pacific plans to mount flights to Houston and Miami, flying three days a week with a 747 freighter.

Even the integrators are sending signals of cutting back. "If trade flows continue to change, we will adjust our network to ensure that it is properly aligned with volume and revenue growth patterns," warned Kurt Kuehn, chief financial officer of UPS.

FedEx boss Fred Smith declared that the integrator has no intention of boosting domestic air freight capacity, as he anticipates demand for domestic short-haul to decline further. In the international arena, "the traditional airport-to-airport freighter services are being reduced and coming down," he added.

In future, FedEx will concentrate more on integrating domestic and international flow, reflecting a trend towards smaller shipments being sent door-to-door.