Will the road less traveled, as mentioned in the Robert Frost poem, make all the difference for Delta Air Lines’ cargo operation? That remains to be seen, but the two men charged with moving cargo forward at the Atlanta-based airline believe so.
With the retirement of Tony Charaf, Delta’s cargo chief, on Aug. 1, the carrier is realigning cargo, putting it under the passenger operations, or in Delta’s parlance, Airport Customer Service. Ray Curtis, Delta’s vice president global cargo sales, will head that side of the business while Scott Barkley, managing director, global cargo operations, will oversee operations. Curtis says Charaf’s retirement afforded Delta an opportunity to step back and assess its cargo operation.
“It was an opportunity to align our activities,” Curtis says. “Cargo has remained intact.”
Barkley says the change gives the airline an opportunity to improve synergies.
“When you have an operation that was kind of siloed and you convert it to an operation that is working toward common goals, it gives us a chance to look at how we can get better,” Barkley says. “Cargo operations and airport operations are now both taking on the same goal structure and working toward the same end. That wasn’t the case before.”
Curtis says it all fits in with Delta’s pattern of doing things differently, such as purchasing its own oil refinery. In fact, Delta CEO Richard Anderson read Frost’s poem, “The Road Not Taken,” during a recent company leadership conference, for emphasis.
“We are not doing things as a company that the rest of the industry is doing,” Curtis says.
Delta’s two cargo leaders say the changes will have no effect on its developing joint venture with Virgin Atlantic Cargo, nor its involvement with the SkyTeam Cargo alliance.
Curtis, who previously worked in cargo at Northwest and United, says cargo operations were structured similarly during part or all of his stints at those two airlines.
“I lived through very successful times for customers and employees,” he recalls.
As for Delta’s 2014 operations thus far, Curtis says after a sluggish first quarter due largely to difficult weather around the U.S., he is cautiously optimistic that the market is stabilizing and seeing growth in some areas, particularly in perishables. He says Delta has benefited from a strong cherry season in the Pacific Northwest and a strong salmon season in Alaska.
“The auto industry is seeing some strengthening with auto parts coming in from Japan and Europe,” Curtis says. “We are seeing opportunities to capitalize on strengths in this area.”
Delta’s joint venture partner, Virgin Atlantic, reports that 2014 got off to a positive start in the region with tonnage up 8 percent during the first four months, building on a 5 percent gain during 2013. John Lloyd, director of cargo, says yields for U.S.-Europe and Europe-U.S. are in line with 2013.
“The increase in passenger demand obviously brings extra belly-hold cargo capacity onto the market and this is putting more pressure on average yields, but our analysis shows we are continuing to out-perform the market,” Lloyd says. “I am confident we will have a good year in terms of our North American cargo business because we have a good quality service and customers that value the service reliability and network we offer.”
Virgin’s New York-London route has had strong load factors this year, above industry average. Lloyd says this has been buoyed by an increase in perishables bound for Amsterdam and Brussels.
“We have a very fast transfer service through London onto both connecting international flights and our road transport network into Europe, and that is a big advantage because for other carriers, London has a reputation for being a bottleneck. Outbound traffic from London has also been strong to JFK with revenue and tonnage up 13 percent so far this year and, again, a good percentage of this is cargo has originated in mainland Europe.”
Regarding the changes at Delta and the joint venture, Lloyd says, “We literally just started working with Tony [Charaf]. We’re sad to see him go. He’s retiring and that’s his choice. Good luck to him. It’s all systems go and we have some plans to implement…A lot of work is going on at the moment with them [Delta]. By the end of the year or early next, both of our systems will work together. It will be seamless to book on each other’s metal.”
Lise-Marie Turpin, Air Canada’s vice president, cargo, says the airline is performing well overall this year, particularly on the East and West coasts where perishables are driving business. On the West Coast, cherries are again giving a temporary boost.
“Central Canada, depending on the manufacturing sector, has had its ups and downs,” Turpin says. “Canada has lost some of its manufacturing the last few years and there has been a bit of a downturn in Ontario.”
Turpin anticipates continued growth into various Asian markets as well as from North Atlantic routes.
“There’s good demand going toward Asia in general and some good performers in the North Atlantic. We introduced a new route in mid-June to Milan and we’ve had very good response. It’s the only direct route between Canada and Milan, and we are very excited about it.”
Air Canada will soon unveil a plan to upgrade its cool chain facilities in its Toronto hub. Turpin says Air Canada needs to be in the perishables game in a big way.
“Everyone has conceded that we are under threat by other modes of transportation, so if we are to retain traffic, one of our better shots is retaining pharma. We need to elevate our game and provide higher levels of service.”
The start of 2014 saw the addition of five 787-800 aircraft to Aeromexico’s fleet, and that has given cargo a decided boost, says its new cargo chief.
“That made the start of the year interesting,” says Rafael Figueroa, CEO for Aeromexico Cargo. “Our capacity increased almost 40 percent for long-haul routes. They make a very reliable service. Mexico City is so high in altitude that we sometimes have problems with capacity for outbound products. This has improved our reliability and our customers have responded very well. We are above our yearly growth objectives. We grew 11 percent last year and are 7 percent above plan for this year.”
Aeromexico has expanded its frequencies to Europe and Asia. It also added a 737-700 flight to Quito, Ecuador, and added regular operations to Rio de Janeiro.
“Even when we do not add routes, we are flying more efficient planes out of Mexico City. We are replacing our Embraer 145s with 175s and 190s. We are using these smaller planes for smaller hubs in and out of Mexico City. This is a commercial strategy by Aeromexico to become more efficient in the way we fly.”
Figueroa says Aeromexico continues to derive a boost from its membership in the SkyTeam alliance. It has positioned the airline’s brand globally, he says. Figueroa moved from Aeromexico’s passenger side in January, and he finds the transfer challenging.
“The cargo world is a very interesting business. We found many things that can be improved and we are working hard to improve them. In the Mexico market, we are the carrier that has grown the most. We are very positive and working hard to make Aeromexico the best-run company.”
AirBridgeCargo’s executive president Denis Ilin is quite pleased with his airline’s performance this year. All-cargo ABC has expanded in the region this year – and there is more to come.
“We are over-performing in terms of our budget targets, and we are significantly better than we expected in both volume and yield,” Ilin says. “It’s a positive surprise.”
Ilin describes AirBridge as a modest player in the market since it started serving Chicago three years ago, a route that has been increased to five times a week this year. That will increase to seven flights in September.
One of the carrier’s key markets is from the U.S. to Russia. Volume has grown 12-13 percent a year.
“We launched a Dallas online station in April, and since we were expecting growing competition in the Chicago market, we considered Dallas a fallback scenario and it really played well. We had 134.6 tonnes of gross weight in the first flight. It’s a healthy number for a 155-tonne aircraft. Dallas is screaming for more capacity.”
Some of the market drivers for AirBridge include its nose-loading capacity for loading oil and gas equipment bound for Russia, along with John Deere tractors.
“It’s all this big and oversized stuff that flies on 747s. Most goes to Russia and we are pretty happy with it,” Ilin says.
One of AirBridge’s strong points, he says, is that it can flight equipment from the U.S. to remote locations in Russia for 48-hour delivery. No other carrier does that, he says.
Ilin says North America is a natural area for ABC’s growth.
“The U.S. is a little bit underserved by us. We see clients in Asia who say they want more flights to the U.S. At the moment, we are increasing just to seven due to our own capabilities. I can easily fill up another two planes, but we cannot go too far.”