Geography, and aggressive expansion of freighter capacity, lies at the heart of the extraordinary rate of growth Saudi Airlines Cargo continues to maintain. Speaking to Air Cargo World a few days before the launch of the carrier’s new corporate logo, Peter Scholten, VP commercial for the cargo operation, said the tagline “perfectly placed” explained why Saudi’s performance is in such stark contrast to that of its competitors in almost every other global market.
Saudi Airlines Cargo achieved volume growth of 19 percent in 2012 without suffering any impact on yield. Indeed, revenue was up by 20 percent.
Underlining the geographical advantage from which the carrier benefits–and will continue to do so as markets recover¬, in Scholten’s view–he pointed out that Saudi had increased its scheduled freighter capacity out of Shanghai, Guangzhou and Hong Kong last year. Most Asian and European carriers, and even most of the domestic Chinese operators, have been forced to cull services out of these major gateways in response to the manufacturing slowdown.
The key, as carriers such as Emirates, Qatar Airways, Etihad and Turkish Airlines have also discovered, is to transship over your Middle Eastern hub and offer connecting services to markets such as West Africa.
“For example, we were operating two freighters a week to Lagos and now it’s seven,” Scholten said. “If you’re based in the Far East and you want to go to Lagos, where do you go from there? You probably have to go back empty, while we can stop in Nairobi and pick up flowers.
“Saudi Arabia is the biggest economy in the region, with 27 million people. It’s growing massively. There is some turmoil in the region but economically speaking, things are really happening here. There are huge investments in all sorts of infrastructure projects here and in the UAE and Qatar.”
The sheer size of Saudi Arabia makes it practicable for the flag carrier, to operate out of three hubs. Jeddah, in the west, is close to the religious sites such as Mecca and therefore important to the passenger department as a base for religious pilgrimages.
But it works from the cargo perspective too, Scholten pointed out–hence his comments about the flowers. “I look across the Red Sea from my window in Jeddah and can see Africa,” he said.
The capital, Riyadh, in the center of the country, brings its own demand from business travellers and shippers of goods, while Dammam in the east is the main base of the petrochemical industry.
Scarcely surprising, then, that Saudi is projecting further growth of 10 to 15 percent this year, even if globally Scholten expects believe the airfreight market to stay flat.
No significant passenger capacity was added in 2012. All the growth was on the freighter side, where capacity growth was 26 percent. This pattern will continue through 2013, as the carrier builds on the 13 freighters that currently ply its scheduled network.
“We have two new 747-8 freighters arriving this year, the first one hopefully in May and the second in September, and we may add more later,” Scholten said.
The charter arm of Saudi Airlines Cargo outperformed even the scheduled operation last year, according to Steve Manser, director – charter sales. “We grew the business 55 percent and exceeded our budget by 12 percent. This year, we’re budgeting 22 percent growth,” he said.
The scheduled freighter fleet is available for ad-hoc charters, but Saudi also operates two 747-200s dedicated to charter work. A third of the type will join them by September, and the charter division is also mulling a 747-400.
Again, yield is good. “Charter by its nature is just-in-time and scheduled capacity is not meeting market requirements,” Manser said.
He commented that oil and gas exploration and project development in markets such as Chad, Gabon, Congo and Angola was driving charter growth, with Uganda and Kenya also beginning to emerge following new oil finds in east Africa.