Volga-Dnepr Group / Press-center / Media Coverage

Moscow receives Asia cargo boost

04/08/2008

Russian freighter airline AirBridgeCargo last week launched the first direct scheduled freighter services between China and Moscow, and its first westbound services to the Russian capital.

The move was made possible by the arrival of the carrier's first two B747-400 extended range freighters, which allow non-stop flights for the first time on the long sectors from Shanghai, Beijing and Hong Kong.

But Denis Ilyin, senior VP for strategy and commercial, said the move also fitted with growing demand for consumer goods in western Russia, and changes in the culture of Russia's customs services.

Ilyin said most cargo moving from the Far East to western Russia went via Europe before being trucked back to Moscow. That situation had been created because of a shortage of direct capacity and inconsistent application of customs rules, which encouraged importers to use certain Russian land borders as entry points.

Ilyin said Russia's federal government was increasingly insistent that importers complied with the rules, which would shift traffic from truck to air.

The higher value of consumer goods demanded in Russia also encouraged shippers to use air, for reasons of security and to reduce expensive inventory.

The Far East-Moscow services mark the start of a second phase in the carrier's strategy, which aims to make Russia its primary commercial market, rather than a transhipment point for Far East-Europe traffic.

Meanwhile, ABC's B747-200 freighters will continue to serve the Far East-Europe market, stopping westbound at ABC's Siberian hub in Krasnoyarsk.

Ilyin said Russia's growing consumer economy, driven by high energy prices, gave its domestic air cargo market "stable growth from all destinations", but he added that poor airport infrastructure – and some of the highest aviation fuel prices in the world – was restricting the market's potential.

He said ABC's four weekly freighter flights into St Petersburg has taken up most of the airport's cargo handling capacity.

But progress was being made in Moscow, where a US$100m cargo hub for ABC is being created at Domodedovo Airport. The government also has plans for a new cargo area at Sheremetievo Airport.

Profits at ABC's parent company, Volga-Dnepr, more than doubled in 2007 to $49m, driven by growth in charter activity for the group's AN-124 and IL-76 aircraft, with ABC's scheduled services "slightly negative".

Group turnover was up 51% to $1.05bn, due to business growth from both charter and scheduled services and higher income from fuel surcharges.

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