Stan Wraight, president and CEO of Russian carrier AirBridge Cargo has long been predicting overcapacity out of China. So now that his warnings seem to be coming true, why is AirBridge still going ahead with plans to launch freighter services from Shanghai to North America via Krasnoyarsk in eastern Russia laterthis year?
Wraight admits that the region’s air freight markets have been fl at recently, with forwarders reporting factory orders signifi cantly down, though he points out that only air cargo has been hit by this, with ships still leaving full to the US andEurope.
But he insists that the Krasnoyarsk service will not be reliant on cargo from Shanghai. “From Asia, we already link Krasnoyarsk to Nagoya, Beijing and Hong Kong as well as Pudong with our B747- 200Fs, and by April 2008 we will also connectto Singapore, major points in India and likely Bangkok as well,” he says.
“And this is only the start. So we are not dependent on one market at Krasnoyarsk. This has always been in the business plan since we started operations in 2003, as we saw overcapacity out of China coming even then.” The North America service will start once AirBridge gets its fi rst B747- 400ERF in November. The routing will be outbound from Krasnoyarsk over the North Pole to Toronto, and then backvia Houston and Amsterdam.
Two more ERFs are due to be delivered in February and April and will free up some of AirBridge’s existing -200F capacity to fl y regional Asian routes. The carrier currently has fi ve B747-200Fs and one -300F. However, two of the -200Fs have already been sold to a leasing company, and will leave the fl eet in October and April, so the capacity increase will be somewhat more modest than at fi rstappears.
Preparations for the North America fl ights have included new warehouses, offi ces and ramps at Krasnoyarsk, which will be formally opened in August. The company has hired Andrew Morch as itsVP Americas, to be based in Chicago.
One part of the preparations that is proving diffi cult, however, is sourcing aircraft for regional fl ights from Krasnoyarsk to such Chinese destinations such as Tianjing, Nanjing, Dalian, Shenyang and Qingdao. These were due to be operated with three TU-204 freighters that AirBridge ordered some time back, but the delivery date for these aircraftseems shrouded in mystery.
Instead, AirBridge has been looking for western mid-range freighters to lease, including the A300F. “But we found out only the A310 conversion is certifi ed in Russia, and no provider has been able to come up with more than one,” Wraight says. “We hope to have more news on thislater in the year.”
On the overcapacity out of China, he points out that most of the new capacity is from what he calls “surrogate daughters” of legacy carriers, particularly European ones: “The real upswing in capacity will come when the major Chinese airlines fi nish consolidating. Then watch out!” He predicts that consolidation in China and Asia will soon expose the high cost burdens of the European legacy carriers.“Strong action will be needed to fi x that,and I am not sure they are up to it,” hesays. By contrast, he insists AirBridge hasoperated on strict cost control principlesfrom day one, only investing wherethere is a proven return. AirBridge’soperations suffered somewhat in thelast peak season, with a series of engine failures, but Wraight says the addition of two more freighters to its fl eet and the purchase of additional spare engines has resolved this problem.“We have managed to bring our ontimereliability to over 93 percent,” hesays. “This will improve as the ERFs areadded. I am convinced that by provingto our clients that AirBridge Cargo isan on-time, reliable carrier, offeringdaily capacity to the markets they want,we will succeed whatever the state ofthe market.” – Peter Conway
