Volga-Dnepr Group / Press-center / Media Coverage

Peter Convay interview...

03/26/2010

Tatyana Arslanova. When most carriers are happy just to be recovering, AirBridgeCargo is expanding, with a strong performance in 2009, and its new executive president is showing every confidence for the year ahead

FOR an airline to manage any increase in cargo traffic in 2009 would be worthy of note: to achieve a near 20 per cent increase seems nothing short of miraculous.

Yet that is the performance clocked up by AirBridgeCargo during the year, in which its freight tonne kilometres rose 19.5 per cent to 1,317.71 million. And lest anyone thinks that this growth was achieved at the expense of Aeroflot Cargo, whose woes have been much publicised, AirBridge executive president Tatyana Arslanova, begs to disagree.

“It is true they have reduced their freighter flights in January and February, but in 2009 they were flying a full schedule,” she says. “So that did not help our 2009 figures . It will not be until the middle of this year that we see what impact Aeroflot will have on us.”

Instead, Arslanova attributes AirBridge’s success in 2009 to the development of an effective transit hub at Moscow’s Sheremetyevo airport, and several new destinations that were added in Europe. More destinations and more aircraft are on the cards in the next year.

The aim of the Sheremetyevo hub is a fairly simple one – to allow AirBridge to swap cargo between its various European and Asian routes, and so provide connections from any flight in Asia to any point in Europe, and vice-versa.

In any other country this would be a fairly straightforward operation, but in Russia it has clearly been a challenge. Arslanova says it was the first hub of its type in Russia, and to create it AirBridge has had to overcome a lack of equipment, a shortage of personnel, and a lack of experience among the three handlers at the Moscow airport.

“When we started this operation, every flight was a small challenge,” she says. “I still get reports about each flight to ensure that everything is going well. We make a big issue about punctuality and we still get some delays. But these are the kind of problems experienced by any airline.”

As it is, the hub operations are only achieved by using all three handlers, sometimes with all three working on the same flight. “You might have one handling the cargo, the other providing the personnel, and the third the high loader,” says Arslanova. To run the hub, AirBridge created a separate department within its organisation, including operational staf available 24 hours a day, seven days a week.

Arslanova is in no doubt that the effort has been worth it, however, saying the feedback from customers is that they have increased their usage of AirBridgeCargo as a result. “It has been a big change for us,” she says. “In 2008, we were only a point-to-point carrier, moving cargo from Shanghai to Frankfurt on the same flight, for example. Now we can fly cargo from Shanghai to Maastricht, Zaragoza, Amsterdam and so on. We have services daily from Europe to all the points we serve in China.” Maastricht, Milan Malpensa and Zaragoza in Spain are all destinations that have been added to the AirBridge network in the past year. It serves each one twice a week, with Maastricht sometimes served three times a week. Budapest, added in 2008, is also served at least once a week.

They join Frankfurt, where AirBridge is now the largest cargo carrier after Lufthansa, with 14 flights a week, and Amsterdam, where it flies five times a week. This marks a move away from the airline’s policy in its early days when it focused its flights on Frankfurt. Arslanova says that one reason is that with double daily flights it has pretty much reached the limits of the Frankfurt market.

But she says the carrier is following the needs of its customers – particularly China-based ones. For example Maastricht, despite being fairly close to Amsterdam, “is a huge distribution centre, and we had a lot of cargo going there from China”. She says more frequencies to that airport might well be on the cards, and other European destinations are being considered for 2010.

She would also like to grow its network in Asia, but here traffic rights are a barrier. AirBridge currently flies 11 times a week to Shanghai, daily to Hong Kong and six times a week to Beijing, as well as having a single weekly flight from Narita to Amsterdam via Moscow.

Arslanova would like to have more Japan flights and also start services to Korea, but is waiting on government negotiations. What she does not say is that AirBridge might also pick up some rights forfeited by Aeroflot, if its freighter operations continue to shrink.

AirBridge remained solidly loyal to the Asian market during the downturn, cutting relatively few flights in the first half of 2009. “We decided to support our key customers and provide regular service even when demand was low,” says Arslanova. She reckons this policy, together with the new Sheremetyevo hub, has paid dividends when the upturn came.

The carrier flies its Moscow to Asia legs using B747-400ERFs, of which it has three, with a fourth leased from Air France Cargo joining the fleet in November. A second Air France ERF will follow in April.

It also still has three classic B747Fs – two -200Fs and one -300F – and flies these on the shorter legs from Moscow to Europe. Once again, it is the Sheremetyevo hub that enables it to rationalise its operations in this way.

AirBridge was supposed to be taking delivery of the first of five B747-8s around about now, but these have now been delayed until next year. The first one should arrive early in 2011 with a second coming later in the year and two more in 2012. Arslanova is clearly looking forward to deploying the extra payload and better fuel efficiency of the new freighters on high frequency Asia-Europe routes, but says that it is still too early to say exactly what difference the aircraft will make. “We won’t receive the final performance figures until the test programme is complete, but we believe that Boeing will meet the performance figures they have promised,” she says. AirBridge was also originally due to take delivery of three Il-96 freighters, which it planned to use on short haul routes into Moscow and Krasnoyarsk, but these plans have now been ditched. Instead, Polet Cargo Airlines has launched a service from Europe to Asia via Moscow with the aircraft.

“We decided to focus on just one widebody type,” says Arslanova. “After last year, we understand that fleet commonality is an important issue, and could be a killer for us or any other airline. And with the Il-96 it would not just be another aircraft type, but a mix of foreign aircraft and Russian ones, which would create a whole set of technical challenges of its own.”

While she insists that AirBridge still has plans to develop the Russian market, plans to hub in Krasnoyarsk in Siberia are also on the back burner. “The Russian market dropped more than the worldwide market last year, and we decided that we could not focus on developing two hubs at once,” she says.

“Krasnoyarsk is still in our plans, but to develop it at the same time as Sheremetyevo would have been too much. In any case 80 per cent of Russian air imports still come into Moscow.” The case for Krasnoyarsk has also been weakened by the use of -400ERFs to f y from Asia, as these do not need the technical stop en route that the 747 Classics did, and it was supposed to be a staging post on polar flights between China and the US, a plan proposed in the early days of AirBridgeCargo, but firmly in the deep freeze ever since.

Arslanova insists this plan still has not been abandoned, and hints that it may be revived once the 747-8s come. But it is not hard to see why the Asia-Europe market is the one that the carrier focuses on, as it has done well in the past couple of years, and now forms the bulk of its traffic.

Whereas in the early days its volumes out of Europe were 50 per cent imports to Russia, and 50 per cent bound for China, now it is 20 per cent to Russia, 20 per cent to the Middle East and 60 per cent to China. In the other direction, Russia accounts for 20-25 per cent of volumes, with the rest going to Europe.

Traffic from Europe to China has always been lower yielding and harder to come by, but interestingly Arslanova says it has recovered just as strongly in recent months as traffic out of Asia, if not a bit more strongly. “The imbalance is getting smaller,” she says. “It was as much as one to three, but now is less.”

AirBridge still needs to adopt a flexible approach to filling its eastbound legs, however, and in the past year this has included combining charter operations with scheduled services. For example, a freighter might f y from Europe to the Middle East to fulfill a charter, and then carry on to China for scheduled service.

Arslanova says that in general AirBridge has also been more open to charters during the downturn. Recent examples include flying aid to Haiti after its earthquake, and flying a planeload of pigs from Montreal to Vladivostok.

All of this rather contradicts the view prevailing among many European and US airfreight watchers, which suggest that freighter operations are under siege. The contrast between Air France-KLM, which is shedding its freighters, and AirBridge, which is leasing them, is a telling one. Arslanova is diplomatic, saying that she can understand how, in a downturn, a carrier like Air France might have to choose between filling the bellies of its 777 passenger planes and filling its B747 freighters. But she also says that being a cargo airline, purely focused on the freighter business, enables AirBridge to be flexible in a way a combination carrier cannot.

Cost has been an issue for AirBridge in the past year, however, as for any other airline. A key plank of its cost-optimisation programme has been the Volga-Dnepr group, the parent of AirBridgeCargo, starting its own maintenance operation, which is already doing pre-flight and A checks on the B747Fs and plans to work up to C and D checks. It has also taken over the procurement of maintenance services it cannot yet do itself.

Though this has required investment by the company, Arslanova says this has produced “huge savings” due to lower labour costs in Russia. The company has also taken a more strategic approach to fuel purchasing, taking advantage of lower kerosene prices in Moscow and flying the classics to Europe with greater fuel loads to avoid having to take on fuel in Frankfurt – yet another benefit of the Sheremetyevo hub.

(Air Cargo News 26.03.2010)

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