Air China Cargo (ACC) has ramped up its activities across the North Atlantic. Three of the Chinese carrier’s 777 freighter flights that serve the United States do not return to base across the Pacific but are routed over Europe instead, continuing east around the world on their way home.
During the past year, the airline played catch-up in the U.S. market, which had been down to bare-bones freighter activities (twice weekly to Los Angeles, Chicago and New York) as its maindeck fleet was scaled down. The first 777 freighters were deployed on China-Europe routes (to Amsterdam and Frankfurt), while the carrier was working to obtain the necessary certificates to fly them across the Pacific. With these in the bag, and with new freighters about to enter service, ACC beefed up its trans-Pacific freighter operations, which are now at 16 frequencies a week, up 45 percent from the level it operated at during the fourth quarter of last year. The Asia-Europe sector has been trimmed to 10 flights a week.
The shift in Air China Cargo’s focus from Europe to the trans-Pacific reflects the relatively strong demand from China to North America, which was buoyed further by the standoff at the West Coast ports, and it also reflects the softening of Chinese flows to Europe. However, yields on the westbound trans-Pacific (i.e. the North Americato- Asia leg), although improved, are still rather low, while demand from Europe to China is still going strong, so ACC could do with more eastbound lift out of Europe, without the headache of hurting yields by sending more freighters west from its home market.
“In order to fully capture the Europe to- China demand, ACC has expanded its weekly round-the-world frequency from two to three per week, and at the same time moved its operation from Frankfurt-Hahn to Frankfurt,” said Titus Diu, COO of ACC. He added that the shift to Frankfurt was made to consolidate the carrier’s activities in Germany at one airport.
ACC is not the only Asian carrier that is boosting lift out of Europe by extending U.S. freighter flights across the Atlantic. At the start of the year, Nippon Cargo Airlines (NCA) slotted a fourth weekly 747-8F through Hahn from Chicago to Tokyo. The Japanese carrier started round-the-world flights in the summer of 2013.
“It is all about round-trip profitability,” remarked Shawn McWhorter, president of NCA’s Americas region. “Asia-to-Europe is a very weak segment now, so yields are low, but Europe-to-Asia is strong.”
The North Atlantic sector is awash with capacity, which offers paltry yields for new entrants. Initially, NCA dealt with this by feeding interline partners beyond Germany, to markets like Africa or Russia. With four flights a week, it can tackle the U.S.-to-Europe market squarely, McWhorter said. “Now, global accounts can use me across the Atlantic. When we had only one or two flights, we did not have enough capacity for big customers to support us. Now we can meet their needs throughout the week.”
Incumbent trans-Atlantic operators, however, are not thrilled. Achim Martinka, vice president, the Americas, at Lufthansa Cargo, noted that Asian carriers have added to the overcapacity in the market. But the influx has not yet aggravated the yield situation, according to Rich Zablocki, vice president for the trans-Atlantic trade lane at CEVA Logistics. “I cannot say it has had a big effect. Rates have been low for a long time.”
CEVA has not changed its carrier mix to Europe because of the influx of Asian freighters. “We stick to our preferred carriers,” Zablocki said, adding that the forwarder has been a long-standing supporter of Singapore Airlines, which was one of the first Asian carriers routing freighters from the U.S. to Asia.
Stan Wraight, executive director of Strategic Aviation Solutions International, sees a strong case for round-the world routings. He reckons that more carriers would embrace this option if they had the requisite route authorities.
“The logic is there, traffic rights usually are not,” he remarked, adding that ACMI lease arrangements could provide a solution. Not everybody is gung-ho on the concept, though. Cathay Pacific and Cargolux abandoned their round the-world routings. Looking back at Cathay’s Chicago flight in 2011, which went to Hong Kong via Amsterdam, the airline’s director of cargo, James Woodrow, recalled that too many competitors piled into the market, which caused yields to collapse. ACC’s Diu said that, based on today’s market demands for airfrieght, he sees an opportunity to increase Air China Cargo’s round-the-world frequency in the coming peak season. The carrier is planning for the arrival of two more 777 freighters. “Further expansion of the China-USA frequency is one of the options, which will likely lead to additional round-the-world operation,” he added.
For now, at least, the planet still seems big enough to have room for round-the-world expansion.