Air Cargo Leaders: Lise-Marie Turpin, Neel Shah
Neel Shah: Striving for cargo equality
Neel Shah always has a seat at the main table. As senior vice president and chief cargo officer at Delta Air Lines, Shah says he is on the same level as Delta’s passenger executives. This ensures that cargo is considered in every aspect of the carrier’s day-to-day business, which also means that freight can easily influence routes and aircraft type.
“There are some routes we’re flying just because of cargo. We fly from LA to Sydney because we make a lot of money on cargo. It’s one of several examples where cargo makes the difference in us being able to offer or not offer that route as an airline,” he says.
Shah has worked hard to get on equal footing with his passenger brethren. When he jointed Delta in 2008, the reporting structure for cargo was different, and passenger services were the main driving force at the carrier. Chief cargo officer wasn’t even a position. Now, Shah reports to the president of the company, and while he admits some decisions still don’t work out for cargo, much of the talk centers around how passenger and cargo services can drive revenue as partners.
“At a lot of carriers, the passenger guys are just like, ‘Ah, the cargo thing; I’ll make an assumption, and we’ll just go from there,’” he says. “That’s absolutely the way it used to be at Delta, and now we’re equals.”
Statistics for the last few months of 2011 are depressing: no peak season in Asia coupled with rampant capacity growth in the area, a reeling Japanese industry still recovering from natural disasters, and ever-climbing oil prices. But Delta’s strategy of equality seems to be working well, as Shah says the cargo department keeps stealing bits of market share, even in these tough times. He says that in September, volumes were up 8 percent to 10 percent, year to date, and revenue had risen by 23 percent.
Much of this increase, Shah says, is due to a push toward premium products. “We’ve seen a steady increase there, and next year we’re trying to position ourselves so that we continue to sell more and more premium products,” he says. “We’re trying to do, let’s say, six or seven products, but do them well, and you won’t see us expand well beyond that. I frankly don’t feel there’s a market for it.”
This summer, the opening of a new international terminal at Hartsfield-Jackson Atlanta International Airport will only help Delta achieve better numbers. One aspect of the new terminal that Shah is especially thrilled to discuss is the inclusion of coolers in the development. This will enable handlers to wheel temperature-sensitive freight off the plane and directly into a cool environment. According to Shah, two large perishable shippers based in Los Angeles have already been through to tour the new facility.
Even with these improvements, Shah knows that 2012 will be no economic cakewalk. On top of the sour economy, Shah is looking out for a challenge that will affect everyone at Delta. The European Union’s emissions trading scheme, which is to be applied to airlines starting in January, is currently a large thundercloud on the horizon. “It’s just goofy, and the fact that people want to continue to beat up an industry that barely produces positive margins on a year-over-year basis just boggles my mind,” he says. “Air travel is shut down and the world goes into chaos. Why do we get the brunt of everything?”
While there is a bit of uncertainty moving into the new year, Shah knows that at Delta, the air cargo business has a strong voice and will be able to help create effective solutions to new challenges.