Seattle-based Alaska Air Cargo is often thought of for its unique, but vital, role in bridging air cargo flows between the state of Alaska, and the contiguous U.S. – a role that facilitates summer salmon barbecues in the Midwest, and stocks supermarket shelves throughout the state of Alaska.
But this year, the carrier has taken bold steps beyond the confines of its niche. Alaska Air Cargo has recently introduced three next-generation 737-700 freighters and, on June 19, began integration of the Airbus belly capacity on the former Virgin America fleet, which the cargo arm’s parent company acquired in 2016.
Just before the Virgin integration began, Air Cargo World stopped by the company’s cargo facility in Seattle for a glimpse of the new freighters and a chat about the ramifications of Alaska’s new capacity with Jason Berry, Alaska Air’s managing director of cargo.
Q: What is your outlook for the U.S. air cargo market this year? What factors are driving growth?
Jason Berry: We are definitely bullish on the U.S. domestic industry this year and for the next few years. There has been huge growth in the air cargo sector, which really stems from a shift of modes. As customer expectations continue to grow, we’re seeing a lot of cargo come off other modes and go back to air because of the need to get it there quickly and on time.
Q: Is this ‘need for speed’ another way of saying ‘e-commerce’?
JB: E-commerce has definitely been a catalyst, but it’s not just e-commerce. We are seeing that one vertical grow, obviously, and I think that’s been a huge growth opportunity, but it has also raised the bar for many other sectors and industries. It’s not just e-commerce. There is a desire to build your business around what the e-commerce world has done, so a lot of people are switching back to a quick-movement, next-day type of service, where in the past, you could defer movement of cargo to different routes.
Q: How is the recent acquisition of Virgin America impacting Alaska Air’s cargo operations?
JB: It’s monumental. To be honest, I think it’s historic. It’s not often that a large, established legacy carrier gets to turn on 70 new airplanes overnight — and these are good-sized airplanes, mostly Airbus 320s and 321 Neos, and some 319s, as well. It adds 200 million more pounds of capacity to the U.S. contiguous lower-48 market. It diversifies our network greatly and improves our quality of schedule ten-fold. We now have a massive and substantial presence in San Francisco, Los Angeles, and the eastern seaboard, and we’ve created a more robust mid-con presence as well. We’re excited to offer these premium cargo lanes up for sale. For the first time in a long time, new capacity is coming in. The market is always looking for great options, and it’s kind of fun to come into an established market and bring a little bit of a new approach toward it.
Q: Apart from the additional Virgin belly capacity, Alaska has also recently added a significant amount of maindeck capacity with the redelivery of three freighter-converted 737-700Fs. What plans do you have in store for these aircraft?
JB: We’ve been flying the 737-700Fs for three months in their current schedule, and we’re still learning how to maximize these and apply the best schedule we can for our customers. With regards to the freighters, the focus is still really the state of Alaska – our connection between Seattle to Alaska is one of the best out there. We now have three flights a day from Seattle that go north, and that’s exciting. The state of Alaska has remained our focus, not just the “milk run” [which supplies groceries and other vital goods to many remote Alaska towns each week], but flights to Anchorage, and then beyond. That’s our focus right now.
Q: How has this additional freighter capacity been received in the state of Alaska?
JB: It has actually opened doors to clients who previously never thought of using us because of how our now-retired 737-400 combis constrained us in some locations. In introducing the freighters, we’ve also worked on changing our rate structure to make airfreight affordable in the state, and that’s big, considering that we have a next-generation fleet. The 737-700Fs represent a great investment that we’ve put into the state. But what’s exciting is that they are also super-efficient. After just three months, we’re now running at a 99 percent schedule reliability. We always knew we’d get there, but we’re pleased to be there after just three months.
Q: What are your prospects for additional freighters?
JB: We’d love to do more of these airplanes in the future, and we think there are more opportunities outside the Pacific Northwest and Alaska. Today our focus is maximizing these in the state and really ensuring that we’re covering all of these communities that we’ve served for 85+ years.9 - Readers Like This Post