A strong mango season out of India and higher levels of premium business out of Asia as a whole helped British Airways World Cargo to increase cargo traffic by 4.1 per cent in the quarter to June, even though capacity fell by 3 per cent on its network overall. The carrier also saw a sharp rise in US exports, although it struggled with tough market conditions out of Europe and the UK.
According to Tony Nothman, senior vice president Middle East, Africa and Asia Pacific for BAWC, demand for premium traffic has been so good on some Asian routes that in some markets – for example Hong Kong and Islamabad – the carrier has made its belly capacity premium-traffic only. Demand out of Shanghai and Beijing for premium products has also been strong.
“The opening of our Premia facility a year ago at Heathrow has enabled us to optimise our flights more effectively, and that has certainly given us an advantage,” Nothman says. Among the products offered include Prioritise (an express product), Courier, and Constant Climate for perishables.
The latter product is not yet available in India, as BAWC says the expertise and infrastructure is not currently in place at Indian airports to handle the Envirotainers used for this service. But Mat Burton, area manager for India and Nepal says there is nevertheless strong demand for the Prioritise service from Indian pharmaceutical companies.
Restrained maindeck capacity
In general, BA reports that Chinese exports remain stable, despite increased softness in the global economy, but Nothman admits the carrier is watching the market closely. BA is in any case somewhat insulated against a Chinese downturn in that it has not followed its European rivals in pouring main deck capacity into the market. Instead it has just two B747-400 freighter services a week into Shanghai,and even these call at Mumbai and Delhi.
This allows BA to tap into lucrative China-India fifth freedom traffic, which fills around a third of its outbound freighter capacity from China. In India it can use this space to load up with cargo that will transit London and continue on the BA network to the US. Out of China, by contrast, most of the cargo is destined for the UK or Europe.
Burton says demand for the China- India leg is so good, BA can use it to get capacity commitments out of India, a market notoriously unwilling to make such deals. He also says BA is able to hold onto customers in the increasingly competitive Indian market because it has kept its freighter schedule unchanged for the past two years. “A number of our competitors have fluctuated their capacity or cancelled flights, but we have remained constant and the market recognises that,”he says.
Revenues surge Revenues for the cargo business rose a massive 22 per cent in the quarter, or 19.3 per cent after exchange rate effects are stripped out. Much of this rise was due to fuel surcharges, though Sean Doyle, BAWC’s financial controller says underlying revenue also grew faster than traffic.
The 3 per cent capacity decrease during the quarter to June were due largely to adjustments to BA’s European freighter schedule, which is operated by DHL aircraft. There were also some passenger capacity changes.
In the winter season, the carrier will be making bigger cuts as the global downturn bites, offering 6.4 per cent less passenger capacity compared to the same period in 2007-8. However, Doyle says this will have a lot less impact on cargo, as most of the routes being trimmed are shorthaul.
One exception is Tokyo Narita, which will be cut from twice a day to once a day from December. Ironically this comes as the cargo market out of Japan has been improving, but Nothman points out that BA still shares Japan Airlines’B747 freighter services into Heathrow, so the effect of the cut will not be as big as might be thought.
September and October will also see BA move the remaining 50 per cent of its flights to Terminal Five, its new home at London Heathrow whose opening in March was accompanied by massive delays and baggage problems.
However, these troubles are far behind the carrier, and it is currently running an advertising campaign in the UK boasting of its passenger performance in the terminal. Doyle says cargo – which was in any case not affected by the March problems – is also performing smoothly, with better on-time performance than pre-Terminal 5.
The flights to be moved to T5 on 17 September include Abu Dhabi, Bahrain, Doha, Kuwait, Mumbai and Muscat, followed on 22 October by Chennai, Delhi, Dhaka, Dubai, Islamabad, Kolkata and Shanghai. Other Asian longhaul flights are already in the new terminal.
