John Lloyd: Virgin Atlantic’s ties with U.S. pay off

Virgin Atlantic & DubaiVirgin Atlantic Cargo maintains more than 350 forwarding destinations worldwide, but for the past 12 months, few have been as important as the 11 routes developed in the United States over the last few years, said John Lloyd, the carrier’s senior vice president, cargo. The most recent – 16 tonnes of A330 belly space between Detroit and Heathrow, launched in June – may have completed the puzzle that maximizes cargo connections to most key regions of the American market.

Virgin Atlantic now offers cargo service to Atlanta, Boston, Chicago, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando, San Francisco and Washington, D.C. During the West Coast port slowdown earlier this year, these connections paid off handsomely with 2,400 tonnes of cargo moved through Virgin Atlantic’s connection in Dubai in the first half of 2015, nearly a third more than the previous first half.

This year has been generally a good one for the British carrier, but as 2016 nears, Virgin Atlantic Cargo is preparing for a major expansion of its joint venture with Delta Air Lines, which involves an extensive overhaul of its IT system. With so much attention being paid to cargo in recent months, Air Cargo World spoke with Lloyd to discuss the IT system overhaul, the coming JV expansion and the carrier’s plans to keep 2015’s momentum going.

How has the Virgin Atlantic Cargo expansion into the North American market progressed?

The trans-Atlantic market has been our biggest focus since Virgin Atlantic first commenced operations to New York over 30 years ago. In the last 12 months, Atlanta and Detroit joined our network, and we’ve gained strong support on both routes. We serve Atlanta from both London and Manchester, while Detroit gives us a stronger presence in the U.S. Midwest market alongside Chicago, which is a really good cargo route for us. In addition, we added frequencies on Atlanta, New York, Los Angeles and San Francisco. The trans-Atlantic market is obviously highly competitive, but we have a smooth trans-shipment operation in London to connect with other parts of our network, such as India and South Africa, and deliveries to more than 50 cities across Europe with our road feeder network. We have no immediate plans for other new routes.

How will the Virgin Atlantic/Delta JV expansion succeed where others have had mixed success?

Notably, our joint venture includes antitrust immunity between the U.S. and the U.K., so we’re able to synergize our schedules in a joint program to give our customers the best possible choice of destinations and frequencies. Another big advantage is that Delta has experience of being part of another successful cargo joint venture, so they’ve already been though the big learning curve of what works and what doesn’t. I think some other previous alliances in the industry haven’t realized their potential from a cargo perspective because they haven’t maybe had the right level of trust and commitment from both parties to put the necessary building blocks in place. That means they haven’t added sufficient value for customers or brought anything new to the table. What we are doing with Delta demonstrates that both airlines are determined to make this work.

What problems do you hope to solve with the IT system overhaul?

It’s important that our systems can talk to each other because we want to be able to offer our customers a seamless way of doing business with us. It is a big project, and a lot more complex than linking passenger booking systems. It takes time, but our customers understand that we won’t go live with anything that is not fully tested and proven. The IT interface is important, but so is the physical cargo handling process, and that’s why we’ve been busy co-locating our handling operations [with Delta’s] in Boston, Las Vegas, Miami, Newark, New York JKF, Orlando and Washington. It makes it easier for customers delivering or collecting their cargo and is the most efficient way to connect our capacity offering. We’re now working on co-location in Chicago and San Francisco, as well as in London.

How do you explain the 30 percent jump in ex-Dubai traffic?

We’re very pleased to be performing well in Dubai because it is such a competitive market. Obviously our growth is down to a variety of factors, from the effects of the U.S. West Coast port disruption and our new destinations in the U.S. to a more proactive sales approach. Our increased capacity to the U.S. has made a big difference and was particularly important during this period as customers looked for alternative routes into the U.S. to avoid the port disruptions there. We have also seen improvements in our service levels this year after they were impacted towards the end of 2014, during our ground handler’s relocation in Dubai.

Do you have any predictions for this peak season and cargo traffic for early 2016?

Over the last four to five years, our business has been very stable and consistent, despite the volatile market conditions, and our load factors remain well above the industry average. We don’t expect a big increase in traffic as a result of the peak season. I am sure most people would agree that the air cargo market overall is much more difficult to predict these days because so many different factors can impact the movement of goods, but I am confident we can maintain our share of the market.

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