Belly shift: EVA retires last combi

EVAJanuary 5 was a small watershed for EVA Air. The 747-400 used for flight BR868, which landed in Taipei that day, subsequently exited the carrier’s fleet, marking the demise of combi aircraft from the lineup. Its retirement leaves Asiana the lone operator of 747 combis in Asia.

Stan Wraight, executive director of Strategic Aviation Solutions International, said he sees no room for 747 combis down the road, given the mix of seats and cargo lift that the 777-300ER offers airlines. For EVA management, the 777-300ER certainly is the type to embrace. So far it has brought 18 into its fleet, replacing most of the 747-400 contingent, which is now down to three aircraft in passenger configuration. EVA has four more 777s on order, and has also been talking with Boeing about the 777X, signaling further interest in the 777 series.

The 747 is also on the wane in EVA’s freighter lineup – now down from ten to eight units – although the MD-11Fs are heading for the exit faster.

“We will gradually take some MD-11 freighters out of service over the course of this year but that won’t have a significant effect on our freighter network or schedule. We will accommodate our air cargo customers’ consistent space needs by making full use of bellyholds on our passenger aircraft,” said Glenn Chai, executive vice president, corporate planning division.

The 777s bring ample belly capacity into the fleet, but EVA’s maindeck space is shrinking. Last year the reductions in its all-cargo fleet led to the suspension of freighter service to Tokyo and New York.

At this point it is still unclear what the carrier’s future freighter lineup will look like when the 747 and MD-11 cargo planes are all gone. Senior executives have indicated over the past year that all the 747s and MD-11s will go, and hinted at the 777F as the likely future mainstay of the freighter fleet. How many? No announcement has been made, but a ten-unit fleet has been hinted at – which would be down from 15 freighters two years ago.

Chai labels the 777F “definitely a contender to replace existing freighters” but added that management is still evaluating its aircraft options and has not made a final decision.

What is clear is that maindeck capacity is going to play a lesser role in EVA’s strategy than it historically did. “The global cargo market landscape has evolved over the last five years due to a number of factors,” Chai said. “More goods are transported intermodally. Bellyhold capacities have grown. Electronic products have become smaller and smaller. And demand for the kind of capacity provided by full-cargo freighters has fallen. We accommodated these trends by adjusting our freighter fleet and long-term plans.”

Will this reduce the role of cargo in EVA’s overall strategy? Its monthly statistics show cargo revenues of US$987.3 million for last year, 26.7 percent of overall revenues. In 2013 cargo accounted for 28.9 percent of total revenues. Tonnage was down 4.1 percent from the year before, but load factors rose from 82.64 percent in 2013 to 85.07 percent and the yield was up 2.6 percent.

“Our cargo business improved significantly in 2014, thanks to falling oil prices and greater trade demand. Our profits increased in Q4 2014,” Chai remarked.

Rather than chase volumes, the focus appears to be shifting to ramping up load factors and targeting premium traffic more than before.

One target area is the e-commerce sector, which offers opportunities for express traffic solutions. EVA is beefing up its sales force to get a larger piece of this pie.

Temperature-controlled moves are another key focus. To that end, EVA is initiating a master lease agreement with Envirotainer, Chai revealed. “With this infrastructure in place, we will launch cold chain services to major cities worldwide, including Amsterdam, London and Paris in Europe, Los Angeles, San Francisco and Chicago in the USA, and Taipei, Singapore and Bangkok in Asia,” he said. “We expect to commence our cold-chain initiative around mid-2015.”

The mix of longhaul and intra-regional traffic is not likely to change this year, he indicated. The latter accounts for about 37 percent of EVA’s overall tonnage.

However, Chai is decidedly more bullish on the trans-Pacific market than the intra-Asian arena. “We expect cargo volume to and from the USA to remain strong but intra-Asia demand appears to have less momentum because China’s economy is not as robust as it was, and Japan has not regained strength,” he added.

EVA’s belly lift to the U.S. market is set to go up in June with the launch of 777-300ER service to Houston. On the sectors to Vancouver, Toronto and Seattle, the carrier said it intends to step up its frequencies this year. Next year, EVA plans to start passenger flights to Chicago. No word so far about the maindeck lift.

Ian Putzger

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