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Controlling TNT
By all rights, TNT Express takes to the air freely if a bit reluctantly across Europe
By Roger Turney
 he arguments over the legal efficacy of Deutsche Post's "sponsorship" of DHL Airways in the United States may have some way to run yet. But in Europe, the relationship between express operator and client airline is a little clearer. At least it is for TNT Airways, which provides the airborne lift for TNT Express within the continent.
There is no doubt over the citizenship of TNT Express in Europe since the company became a subsidiary of the Dutch-owned TPG Group, which along with its Dutch government stake also runs the Netherlands' postal services. TNT Airways is therefore a fully paid-up European carrier operating a fleet of around 25 of its own aircraft, plus substantial contracted lift out of the main hub of TNT Express at Liege airport in Belgium.
The surprise is that TNT Airways in fact holds its own doubts about the rationale for its own existence.
"We never wanted to get into the airline business in the first place," says Niky Terzakis, managing director of TNT Airways. "We now have a very intense and integrated express air network covering Europe. But even today, we question the use of air to deliver our express product."
According to Greece-born Terzakis, a former executive jet pilot, TNT Express moves around 70 percent of its express business by truck within Europe, with the remaining 30 percent moving by air. "It may be interesting to note that the percentages for our main competitor in Europe are exactly the reverse," he says. "But our strategy is based on the concept of using trucks whenever possible and only using air as a last resort."
It may be some tribute to the success or failure of TNT then that its airline operation has grown to what it is today. The capacity of the TNT Airways network in Europe exceeds 600 tonnes per night, with nearly 200,000 consignments carried each week. More than 2,500 flights are flown over 10 million kilometers per month by company-owned or chartered aircraft.
The mainstay of the fleet has been the BAE-146QT, of which 17 are still operated. But more lately capacity has been boosted with the introduction of six A300 freighters. In addition TNT Airways leases in the services of an Atlas Air 747-400F to provide trans-Atlantic lift between Liege and New York six times a week. A 747F is also provides TNT with lift between its European hub and China on a twice-weekly rotation.
TNT Airways has more recently extended its own fleet variation with the introduction of 737-300F capacity for the first time. The first aircraft is being used to fly between Liege and Nantes in France and then operating on to Vitoria and Madrid in Spain.
Terzakis is unapologetic about the cosmopolitan mix of aircraft under his control, a mix that belies conventional airline strategies that preach the cost benefits of fleet commonality.
"The best decision we ever made was not to make a decision about standardizing our fleet. We use the most effective aircraft for the job required," he insists.
He does admit, however, that the time is coming when some order will have to be given to the carrier's own fleet choice. There will always be a little more flexibility when it comes to using the capacity of contract carriers.
"Here we really can match capacity to specific routes to achieve the best production margin," says Terzakis.
That sounds as if Terzakis uses his sub-charter contracts to press for some really keen deals. Nothing could be further from the truth, he argues.
"There is a lot of discussion going on at the moment about the so-called control the express operators can exert over a contract carrier, particularly if it is a major source of income for that airline company."
Rather than control, Terzakis aims to nurture the contract carriers. "We need the additional lift they can provide, often at short notice. We therefore want them to survive. We appreciate that the nature of our busy demands very low production in terms of flying hours, perhaps two to three times less than normal, but with very high demands on service levels," he says.
On those terms, insists Terzakis, TNT Airways, is willing to pay premium rates for its contracted lift. "We are also very careful to ensure that any single contract carrier is not unnecessarily over-exposed to our market position. By the same token, we need to ensure that we are not held hostage to the fortunes of these carriers and be able to make decisions about ending a contract, without threatening the viability of the contractor."
Split Service
By rights, TNT Airways as an authenticated European carrier should have Europe and the ever-expanding European Union at its feet. It is not quite that simple, even for TNT.
In theory, most European aviation policies and directives are these days issued from the European Union headquarters in Brussels for all member states to embrace in a firm bond of community.
"It does not always work like that, as we have discovered," says Terzakis. "TNT Airways is the airline of TNT Express in Europe, except in Spain where we have to maintain a separate airline operation called, PanAir. Even though these EU member states are working to the same directives issued from Brussels, each still puts a different interpretation on them. The result is we have a separate, although fully-owned, carrier in Spain."
The prospect of the European Union expanding to take in many of the former East Bloc countries also holds no great prospect for TNT. "The fact of the matter is that all these new member states will be protected from open competition, even within the EU, for an initial period," Terzakis notes.
He says the situation isn't much better on the surface, where the promise of efficient, timely delivery across standardized rail links remains little more than talk. "The notion of an integrated rail network in Europe has always been something of a myth and I can report to you today that it is still firmly a myth," explains Terzakis.
Nonetheless, TNT Express continues to evaluate the prospects of using rail to enhance its European network. "The reality of TNT using rail services within Europe may still be two to three years away," reports Terzakis. "But do not hold your breath for TNT becoming a major rail operator."
Maybe not. But then, TNT never planned to become a major airline operator in Europe, did it?
… Briefly
British Airways' freight hub at London Heathrow Airport was shut down for six days after an going labor dispute with ground handlers and ticket handlers flared into a surprise walkout last month. Cargo traffic was backed up a couple of days as trans-Atlantic flights were among those grounded. ... The European Commission was prepared to cut its formal 2003 growth forecast for the euro-zone from 1 percent to 0.7 percent. … The European Court of Human Rights threw out a complaint by anti-noise activists seeking to ban night flights at London Heathrow Airport. … ACP Worldwide won accreditation as a cargo general sales and service agency under a new IATA program for GSAs. … Atlas Air picked Israel Aircraft Industries for a multi-year contract to perform "D" checks on Atlas' 747-400 freighter fleet. … Freight traffic at Frankfurt Airport grew 3.3 percent in the first half of 2003 but freight fell 2.7 percent in June as the German economy weakened and a stronger euro cut into export demand. … Alitalia Cargo added a fourth stop in India with weekly 747 freighter service to Calcutta.
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