eel Shah is a man on a mission. Delta Air Lines new vice president of cargo comes from United Airlines with a bag full of ideas and a mandate to turn the moribund cargo division into a successful profit center.

With issues hanging over the airline that go far beyond filling aircraft bellies, Shah has his work cut out for him.

His new employer has been suggested as a possible merger candidate with Northwest Airlines or his old employer at United, which is unsettling for any new manager. And he faces the challenge of rebuilding the cargo division in the midst of a significant, perhaps permanent drop in the domestic air freight business. He also has to regain the trust of unhappy shippers and undo the damage caused by Delta's flight through bankruptcy protection, which he believes cut too deeply into the cargo operation to achieve savings.

"All the carriers that went through bankruptcy cut too deeply on the cargo side," Shah said. "At Delta, some rebuilding will be necessary."

In a letter to shippers shortly after assuming his new post, Shah was more blunt: "The years prior to Delta's bankruptcy severy undermined the cargo operation," he wrote.

Shah was responsible for the revenue side of United's $765 million cargo business and he sees some parallels between the two carriers. "Cargo at United was an asterisk," he said. "No one really integrated cargo into our overall decision making."

But United Cargo eventually gained a seat at the management table as well as a voice in route choices. United's Hong Kong-Los Angeles route was initiated mainly because of the revenue potential for cargo, Neel said. He expects to follow the same playbook in Atlanta and brought an assistant couch with him. United veteran Ray Curtis is the new director of sales for the Americas and strategic accounts for Delta Cargo.

Repair Job

But before initiating new plans, Shah needs to improve the existing operation, beginning with the carrier's main hub, Atlanta Hartsfield-Jackson International Airport.

Said Shah: "So goes Atlanta, so goes the system."

He said customers would see dramatic improvement in freight moving through Atlanta in the next few months. He's included vendors and the airline's airport operations group into the transformation plan.

Delta will invest heavily in the cargo-specific Strategic Partner Program, which calls for incentive agreements with top shippers and includes forwarders in the airline's network cargo sales strategy.

But don't count on alliance-based initiatives to gain market share. That Delta is a founding member of the Skyteam Alliance, which has a significant cargo component, is a course Shah prefers not to navigate. "Cargo alliances have been difficult to pull off," he said, citing cultural differences and operational incompatibility.

It didn't work at United Cargo, which competed vigorously with the Star Alliance co-founder Lufthansa, he said, but never joined the cargo-only WOW alliance.

Adopting an freighter operation to boost revenue is another idea of which Shah is not enamored.

The idea would only be considered after the belly freight operation is running smoothly and "only after all belly cargo revenue has been squeezed from the belly turnip," he said. "And we are far from that state."

Questions, Questions

In a lengthy interview, Shah answered numerous questions pertaining to the future direction for Delta Cargo, including revenue forecasting, role for domestic and international cargo and investment technology.

On revenue and traffic forecasting, Shah was short on specifics. Delta posted around $482 million in cargo revenue last year, "and my plan is to significantly exceed that level," he said.

Delta is one of several large combination carriers that realized some time ago that the international arena would result in greater revenue growth and operational performance than domestic flying.

But the downside is, "you compromise your ability in certain markets to carry domestic freight," Shah said.

Shah sees some earnings opportunities in long-haul domestic services, but outsourcing mid-range and short-haul domestic cargo "is not in the cards, he said." How much of the domestic service Delta will keep remains unanswered.

Some international routes have been very successful carrying cargo. Seoul-Atlanta is performing "extremely well, close to 100 percent [cargo] load factor daily," Shah said, as has Seoul-San Paolo and Tokyo-Atlanta. Lima-Atlanta is one the "best in the system," as is Santiago, Chile, to Atlanta, where a lot of fish is transported.

Expansion for Delta will be to Africa, Middle East and Asia, as well as second-tier markets in the U.S. and Europe, Shah said.

Atlanta to Shanghai service begins this month, and is the first nonstop flight into China for Delta. Shah predicts the route will carry "between seven tons and 10 tons of effective cargo lift" daily on the route. Shah said he's talked with a "half-dozen large shippers" who indicate a desire to ship on the flight.

Delta will soon commence combination service between Atlanta and Stockholm; New York's John F. Kennedy International and Malaga, Spain; JFK to Lyon; and Salt Lake City to Paris. Classifying these markets as second-tier is debatable, but their cargo carrying potential is not.

To better track capacity, Shah's predecessor, Ben Darnell, put into motion a reorganization plan that included upgrading Delta Cargo's capacity and revenue management IT systems. Shah said the airline is in the final stages of installing the Unisys-based revenue management system. By August, all the IT modules will be implemented.

It appears Delta Cargo prefers to change now, rather than wait for a merger partner.

… Briefly

Air freight trucker Forward Air ended a troublesome 2007 with a strong fourth quarter, boosting revenue 22.8 percent in the last three months of the year to $114.5 million behind strong improvement in logistics business. Still, the net profit was almost flat in the final quarter and the operating revenue for the full year grew only 11.9 percent, to $392.7 million, and the $44.9 million net profit for 2007 was down 8.2 percent from the year before. Airport-to-airport revenue grew 3.9 percent for the full year. ... Airgroup, a subsidiary of Radiant Logistics, formed an alliance with Omni Air International in which Airgroup provides freight forwarding and logistics support to the U.S. Department of Defense as a participant in the Civil Reserve Air Fleet. … Cargo traffic at Memphis International Airport grew 4 percent in 2007 despite a 3 percent slide in December. ... Forwarder Pilot Freight Services gross revenue grew 5.3 percent in 2007 to $340.7 million. ... Forwarder AIT Worldwide counted gross revenue of $327 million in 2007. ... Cargojet, a Canadian freighter operator, will add two 767-200 extended-range freighters, expanding beyond the airline's narrowbody focus. … Singapore Airlines will begin four-times-weekly Singapore/Moscow/Houston flights in late March, using 777-300 extended-range aircraft. ... Continental Airlines will start twice-daily 777 passenger flights from Houston and New York to London Heathrow Airport in March. ... Forwarder SEKO says its gross revenue reached $270 million in 2007, including $90 million in international sales. ... The U.S. Postal Service added a larger Priority Mail flat-rate box to its shipping options. … ICAT Logistics bought Right Way Logistics, a Columbus, Ohio-based home delivery specialist that counts large retailers among its customers. ... Valley Transportation, a California-based air freight trucker, leased a 22,500-square-foot facility at the International Trade and Transportation Center in Shafter, Calif., in the state's Inland Empire region. ... Boeing selected Telair International to supply the cargo-handling system for the new 747-8 freighter. … Cargo traffic at Miami International Airport grew 5 percent in 2007, topping 2.1 million tons. International traffic, which makes up 86 percent of the airport's cargo, grew 5.8 percent while domestic traffic edged up 1.3 percent. ... Ypsilanti, Mich.-based Kalitta Air said it was negotiating with Japan Airlines to buy an as-yet-undetermined number of JAL's 747-400 converted freighters. … Amerijet International's 10,300- square-foot perishables facility at Miami International Airport is open for business, providing multiple pre-cooling facilities, refrigerated storage space and 24-hour surveillance. … Freighter Feeder Aircraft, an equipment designer 25 percent owned by New Mexico-based Utilicraft Aerospace Industries, will upgrade its planned freight feeder aircraft, the FF5000, by widening the cargo bay to accommodate six larger 96-by-125-inch main deck standard containers and pallets. … Same-day specialist courier American Expediting opened stations in Roanoke, Va., and Indianapolis, Ind. … Air Canada started using the Lufthansa Systems LoadControl weight-and-balance system for load planning at all 125 of the airline's stations.