Facing turbulence
At the other end of the scale are the names of the carriers that struggled last year, many of which continue to face hardship this year. For instance, Thai Airways, awash in US$5.9 billion in debt, was forced to sell some of its non-core assets to cover some of the seven straight quarters of operating losses. As part of its restructuring efforts, the Bangkok-based carrier ended operations of its two 747-400BCFs in March.
Air France-KLM, which had been the perennial top international cargo carrier until 2013, had a rough 2014, with volumes falling 5.1 percent over the 12-month period to 539,000 tonnes. This year, the cargo problems intensified through the first half of 2015, as freight capacity fell 5.7 percent y-o-y and cumulative operating losses reached €141 million – an increase of €44 million, compared to 2014.
The effects of Brazil’s sagging economy were seen in a 4.9 percent drop in tonnage for TAM Airlines to 292,000 tonnes carried last year, as well as a 36.6 percent plunge in domestic freight carried by Azul Brazilian Airlines.
Other names of carriers falling on hard times included Saudi Arabian Airlines, which saw its combined 2014 cargo traffic fall 5.9 percent to 427,000 tonnes per year, including a loss of nearly a quarter of its domestic traffic. Also, Virgin Atlantic saw a 1.9 percent, y-o-y, drop in traffic, to 206,000 tonnes, placing it near the bottom of the list, at No. 49.
Revenge of the freighter
As seen in the examples earlier, freighters have been enjoying a bit of a comeback this year. For the last few years, much trade press ink has been spilled about finding ways to free carriers from the shackles of having to fill main-deck freighters. But perhaps this attitude of freighter-shunning is changing. Take Cargolux, for instance. Now that the revolving doors in the executive offices in Luxembourg have stopped spinning and the pervasive labor union problems have eased, the all-freighter carrier is beginning to see some solid results.
Last year, thanks in part to the U.S. West Coast port slowdowns, freight traffic for Cargolux rose by 15.6 percent to reach 728,000 tonnes, moving it up three spots to No. 17 on the Freight 50 list. The secret, said Niek van der Weide, Cargolux’s executive vice president, sales and marketing, is to always keep ‘em flying. “We try to maximize the number of hours we are in the sky. There’s a strict curfew for flights leaving Luxembourg, so we always make sure we have no flights just sitting around overnight. Plus, we also tend to fly long-haul routes.”
After adopting its unusual Luxembourg-Zhengzhou “dual-hub” strategy, Cargolux is rolling the dice again by adding service to Turkmenbashi, in Turkmenistan, as a stop on its flight to China. The newly developed Central Asian hub, Van der Wiede said, will help Cargolux increase flights to Kuwait and other parts of the Middle East.
Cargolux also opened a flight to Chennai, India, as part of a recently signed agreement with Oman Air. Eventually, Cargolux plans to expand the service to Mumbai to seek lucrative pharmaceutical business.
Even IAG Cargo, the airline group perhaps most famous for eschewing the ownership of freighters, has been employing main-deck space, albeit in a more collaborative way. A year and a half ago, IAG Cargo shed its freighter fleet and focused instead on sharing limited freighter capacity with other carriers, such as Qatar Airways, with which it signed a deal to purchase space on Qatar’s Hong Kong-to-London-Stansted 777F route. IAG also recently entered into a block space agreement with Finnair Cargo, operating a shared, twice-weekly A300-600F service between London-Luton and Helsinki.
So how has this freighter-sharing strategy been working so far? Last month, IAG Cargo extended its deal with Qatar “indefinitely,” and expanded the original agreement to nine routes that now include Mainland China, Pakistan and Kuwait, among other destinations. IAG Cargo also reported an 8.8 percent increase in commercial revenue for the second quarter to €259 million, versus the same period last year.
“It’s a matter of matching the right aircraft with the right sales force,” IAG Cargo CEO, Steve Gunning, told Air Cargo World. “With our asset-light strategy, our aim is to have a more flexible arrangement that allows us to grow or shrink our space, depending on the market.”