The U.S. Air Transport Association got a facelift in December when it rebranded as Airlines for America. The new name better conveyed the aviation sector’s vital role in connecting the U.S. to the global economy, A4A officials said. No one can better attest to this fact than Elizabeth Shaver, who was named director of cargo services during the makeover process. read more
Air Cargo World Magazine - Departments
Weakened economies around the world haven’t impaired freight carriers’ Valentine’s Day flower volumes, according to several reports. Numerous airlines have actually experienced a boom in operations and have had to deploy additional aircraft.
IAG Cargo, for instance, transported more than 700 tonnes of Valentine’s flowers on behalf of Iberia Cargo and British Airways World Cargo. Although BA is simply on par to repeat its 2011 Valentine’s performance, Iberia has already seen a 6.7 percent, year-over-year, surge in flora volumes this year.
Most of the flowers transported on Iberia’s flights were grown in Colombia, Ecuador, Costa Rica and Guatemala and sold to florists in Spain, the Netherlands and the UK, according to a press release. Colombia is by far the top flower exporter, however, with Central American destinations ranking among the main exporters of bouquet foliage. Not surprisingly, roses remain the most-transported flower, followed by carnations.
On the import side, Japan has emerged as a key consumer of Valentine’s flowers. Carmen Taylor, managing director of sales for American Airlines Cargo’s Latin American sector, said AA’s Bogota-Narita trade lane, which was launched in 2011, has been inundated with flower traffic this year.
“[Despite the recession], we’ve actually seen an increase of luxurious products on flights,” Taylor said. “I guess flowers are something that is still key in people’s lives.”
Flowers also have unique cold-chain requirements, which is one of the reasons why AA Cargo is launching a perishables facility at Dallas/Fort Worth International Airport in the second quarter of 2012. Taylor said the carrier established a similar facility at Miami International Airport in October 2006. And although both facilities are located in the U.S, Taylor said America is not AA Cargo’s top concern. “Most of our focus is on flowers beyond our U.S. gateways,” she said.
Unfortunately, Taylor added, the European market has been slightly disappointing in terms of flower demand. Spain has been especially weak. “Spain is going through a recession like a few other countries in Europe, so we’ve seen less flowers going to Spain,” she said. Taylor admits that AA Cargo has also witnessed lower demand among some nations, particularly European ones, for foreign-grown flowers.
Lufthansa Cargo has reported strong Valentine’s Day flower volumes on its routes from South America and Africa to Frankfurt. In fact, the German freight carrier said flew 1,100 tonnes of flowers to its Frankfurt Airport hub in preparation for Valentine’s Day 2012. This volume, which is equivalent to 13 full MD-11 freighters, is consistent with 2011 levels, Lufthansa Cargo’s Michael Göntgens said.
Valentine’s Day 2010 was a different story, he said. Weakened markets resulting from the global recession led to 30-percent to 40-percent lower flower volumes in 2010 than in 2011. 2010 also presented challenges to FedEx, a spokeswoman for the logistics provider said. Since Valentine’s Day 2010 fell on a Sunday, FedEx partnered with ProFlowers to coordinate overnight deliveries.
Even though Valentine’s Day 2012 occured on a Tuesday, the FedEx spokeswoman said this year has been just as taxing for FedEx. “The weeks leading up to Valentine’s Day continue to remain some of the busiest of the year for FedEx,” she said. “The number of Valentine’s Day deliveries from e-commerce florists and retailers continues to grow each year. And due to the perishable nature of flowers, airfreight is often the preferred mode for flower transportation.”
Increasing demand for flower transportation is also why Tampa Cargo tasked the now-insolvent World Airways with providing charter flights in late January and early February. According to a press release, World Airways flew hundreds of tonnes of flowers from Latin America to North America on Boeing 747-400 freighters on behalf of Tampa Cargo to meet the Valentine’s Day rush.
Korean Air wasted no time pursuing Chinese production of electronics made for export to the country’s interior. In September, the airline mounted twice-weekly B747 freighter service to Chengdu, and plans are afoot to enter other up-and-coming production centers in central China, according to Brandon Yoon, assistant manager of the airline’s cargo strategy and alliance team.
At the same time, the carrier has been blazing a trail to the emerging markets in the interior of Asia, under the arc of the trade lanes between China and Europe. Expanding the network to rising new markets is part of KAL Cargo’s strategy of navigating through the turbulence that has hit its trunk routes to North America and Europe.
Its push into Central Asia is concentrating on Navoi airport in Uzbekistan. Like Almaty, Karagandy and Astana in neighboring Kazakhstan, the airport has been vying for freighter traffic stopping for fuel between northeastern Asia and Europe. Its fuel storage tank that was completed in 2010 can feed 27 747-400 freighters.
For most operators that was all they need. “All these points make good tech stops, but what are you going to load there? There is no demand for export capacity,” said Dirk Steiger, managing director of Frankfurt-based airfreight research and consulting firm Aviainform. Some carriers eschew a Central Asia transit altogether. Cathay Pacific prefers to route its European freighters over India and the Middle East to boost cargo loads and revenues.
KAL’s engagement at Navoi started off with transits for freighters serving Brussels and Milan, but management signaled early on that it was envisaging a regional hub operation at the airport. A key piece in these plans was the cargo terminal equipped with refrigerated storage area, a vault and quarantine stations that KAL parent Hanjin Group opened in 2010. Modeled on KAL’s cargo facilities at Seoul, it can handle 100,000 tonnes a year, which can be expanded to 500,000 tonnes.
Aside from the long-haul freighters that it slots through Navoi, KAL has inaugurated regional all-cargo service with A300-600 freighters. At this point, the A300s serve nine Asian points, including Delhi, Mumbai, Istanbul and Dubai. Yoon remarked that a number of other routes are under consideration, such as Moscow, Almaty, Shanghai and Guangzhou.
Stan Wraight, managing partner of the Hong Kong-based consulting firm Strategic Aviation Solutions International, sees good potential for cargo growth in Central Asia. Above all, he pointed to the oil and gas sector and mining, adding that the governments in the region have shown a desire to diversify their economies, which should fuel investment and cargo flows.
The Uzbek government has established a free-trade zone at Navoi, bestowing a range of benefits on companies that set up export-oriented facilities there. For these efforts to turn Navoi into a regional hub to bear fruit, one additional step is necessary, though, commented Larry Coyne, chief executive of Coyne Airways. “Navoi as a hub only makes sense if airlines are allowed to fly in with open skies,” he said.
So far, the Uzbek authorities have shown little inclination to embrace such a policy. KAL has circumnavigated the issue by dry leasing its two A300 freighters to Uzbekistan Airways, which interlines traffic with the Korean partner at Navoi.
A second plank in the Korean hub plans for Navoi is a multimodal perspective. Rather than rely purely on airfreight, the Hanjin Group is developing surface routes to truck cargo within the region as well as to Russia, Belarus, Ukraine and Turkey.
On the air cargo side, the KAL-Uzbekistan Airways tandem faces competition; last November, recently launched Uzbekistan-based all-cargo carrier Silk Road Cargo Business took to the skies with an A300-600 freighter.
Another contender for airfreight in Central Asia is Silk Way Airlines. The carrier from Azerbaijan recently teamed up with World Airways to provide lift for outsize cargo. World Airways joins a string of carriers like Cargolux and Lufthansa Cargo that have been interlining freight with Silk Way. In addition to a clutch of IL-76 and AN-12 aircraft, Silk Way has been operating two 747-400Fs and three AN-12s. Last year, it underlined its ambitions in the longer-haul segment with the launch of flights to Hong Kong, which go east over its Baku home base to Istanbul and Milan.
Over in Kazakhstan, Air Astana signaled its expansion plans in February with an order worth more than $1 billion for 15 aircraft, which includes four B767s and three B787s. The country’s three international transit points have been handling a number of freighter flights between China and Europe, but none has a direct link to North America. That crown will most likely go to Krasnoyarsk in Siberia, which the Russian authorities have been pushing as a stop-over between Europe and Asia. AirBridgeCargo Airlines has been talking for a few years about a transpolar freighter route that would allow it to feed freight from its flights out of China to U.S.-bound departures. However, at this point, the Russian cargo airline does not have enough planes to mount U.S. flights across the North Pole, said Robert Song, the carrier’s vice president and regional director, Asia Pacific.
The accelerated drawdown of U.S. and other combat forces in Afghanistan is expected to lead to a heavy demand for airlift as vast amounts of military equipment begins to be moved out of theater. But contrasting attitudes to the use of commercial cargo capacity is likely to mean a difference in millions of dollars in the cost to the individual defense departments of the countries involved in the staged withdrawal.
Those best placed to immediately benefit from this reverse surge will be operators who have already been closely involved in the build-up and continued support of military operations in Afghanistan. UK-based Coyne Airways describes itself as a non-asset-based airline with the understated mandate of serving “difficult-to-reach” destinations — none more so than Afghanistan. But today, Coyne Airways has built up its services to the extent of operating two weekly B747-400F flights to Bagram, Kandahar and Kabul out of its Dubai hub.
“The upgrade to B747-400F capacity demonstrates the demand we are having to meet on these routes,” said Larry Coyne of Coyne Airways. “We also supplement these services with IL-76F flights to points such as Camp Bastion and Camp Leatherneck, allowing us greater flexibility and the ability to provide direct service to other forward-operating bases.”
Up until now, it has virtually all been one-way traffic into Afghanistan. But with the recent U.S. announcement that a military drawdown will start as early as next year, instead of 2014, as originally planned, that traffic flow could soon switch to reverse.
“We obviously keep a close watch on what is happening in this market, and we have had what could be some early indications of this policy change,” Coyne said. “Some of our B747-400F flights are now beginning to return with full loads of what the U.S. military term ‘retrograde’ traffic to Dubai, from where it can easily be transported by ocean.”
The given word was that the U.S. military exit strategy from Afghanistan would likely see it dump most of its equipment in the desert. That is not how it works these days, and “retrograde” is likely to quickly become the watchword for operators in the Afghanistan market. “This equipment is far too valuable and sophisticated to leave to rust,” Coyne said. “Besides, the U.S. Defense Department has become very wise and savvy to making the best use of the commercial market to provide its logistic support at competitive rates.”
According to Coyne, the U.S. Defense Department has an annual transportation budget of $3 billion, 70 percent of which is allocated to the private sector. “I heard a top U.S. general recently comment that they would not be able to move a fraction of the equipment they would want to if it were not for the use [the military] makes of the commercial market,” he said.
Contrast the stance in the U.S. with the UK’s Ministry of Defense, which insists that it directly handles all defense-related transport business, a policy shared by most other European defense departments. “It is a policy you could possibly understand if it related to a strategic build-up in a war zone,” Coyne said. “But we are now talking about a much more measured withdrawal — yet they insist on sticking to the same policy.”
This is clearly an issue that riles Coyne — not because of the loss of possible business to his airline, but for the sheer non-commercial inanity of such a policy. “Instead of going to the forwarders or operators like us, they go to the charter market and pay through the nose for each single charter,” Coyne said. “Worse still, they keep the business in-house and use military C-17 lift to facilitate their needs.”
According to Coyne, C-17 capacity costs 300 percent more than commercial freighter lift. He said this means the military is paying about $10 per kilogram of freight, whereas a commercial business would most likely charge somewhere in the neighborhood of $3 per kilogram.
Coyne Airways is still closely involved with another depleted war zone, Iraq, which it also serves from its Dubai hub. Still unable to mount its own services due to the monopoly in the market held by RUS Aviation, Coyne has swallowed the pill and makes use of the capacity offered by RUS Aviation. “It is a situation which has worked out well for us,” Coyne said. “In addition to offering a couple of weekly IL-76 freighter services to Baghdad, Erbil and Sulaimaniyah, it means we can also serve other points, such as Basra, Kirkuk and Mosul on request.” RUS Aviation is also probably quite happy with the cooperative, as Coyne Airways is its main client and provides upward of 70 percent of the cargo on most flights.
The Caspian Sea region may not be classified as a war zone, but it certainly falls under the Coyne Airways difficult-to-reach criteria. But again, by subjugating other firms’ capacity, the non-asset-based British airline has secured a very strong position in this oddball market. In this instance, Coyne has been able to access block space on a weekly British Airways World Cargo B747-8F flight from London Stansted via Cologne to Tbilisi, Georgia.
About 80 percent of that traffic, which is a mix of oil-related freight and consumer goods, is then routed to Kazakhstan, Armenia, Turkmenistan and Azerbaijan, according to Coyne.
But Coyne Airways has hit something of a buffer more recently with the decision by BAWC Airways to reschedule its flight from a Monday to a Thursday departure.
“The Monday operation was ideal for us and our customers,” Coyne said. “We are now seriously looking at the option of starting a second service on a Monday out of a European point; if there are eastbound freighter operators out there, we would like to hear from them.” Coyne Airways previously experienced difficulties on the route when it added a supplementary B747-400F service out of Frankfurt flown by Jade Cargo. That proved to be an unpopular originating point and was ended.
The carrier now gets a strong traffic feed from the U.S. across its network. Coyne Airways, although an independently owned concern, acts as an exclusive general sales agent. “Sales in the U.S. have climbed by more than 60 percent in the last year,” Coyne said. “That has been generated from a mix of defense work, oil and gas business and general cargo.”
It would seem that Coyne can’t stay out of a war zone for long. He’s currently assessing the start-up of services in Libya. “We are looking to help get the oil industry going again by providing internal cargo capacity to move equipment inland to the oil fields,” Coyne said. “We would be working with a Libyan partner on the project, with initial thoughts pointing to the use of AN-12 capacity.”