For AirBridgeCargo (ABC) – the scheduled cargo unit of the Volga-Dnepr Group – the current industry downturn is a mixed blessing. While its scheduled cargo business has clearly suffered, the slowdown has opened up new, and welcome,opportunities for its ad hoc charter business.

By Donald Urquhart.

Operating its fleet of six Boeing 747s – one -200, one -300 and four -400s – ABC has followed a similar rudimentary blue print that most other all-cargo airlines have relied on, in these desperate times – scaling back of frequencies along with routing changes. But for ABC, the basic blue print required some unique modifications.

“The frequencies were slightly adjusted, but not all were down, Shanghai became more than last year but the Japanese operations were reduced down to just one per week,” from three previously according to the group commercial managing director for Volga-Dnepr, Dennis Gliznoutsa. The scaling back of its Japan service was largely compensated for through a code share with All NipponAirways (ANA), he added.

Hub restructuring
But more interesting is the clearly more significant change that Russian scheduled cargo carrier made in restructuring its Moscow hub activities, Gliznoutsa told Payload Asia in an interview recently.

In part this restructuring was driven by the mix of aircraft ABC operates. Not only do its B747-200 and -300 offer quite different economics than its -400ERs, but there are crewing certification issues between the classics and the -400s. The solution, according to Gliznoutsa was to look at “modernising our route structure in terms of having the hub operation from Moscow.” The idea is to have the -400s flying from the Far East to Moscow and then do an on-ramp transfer to the -200 and -300 to serve the European operations.

“We have done some trials with this and we are doing it at a mild stage, twice a week and it seems to be working all right, and in fact there is some satisfaction because doing the connections from Moscow we’ve virtually doubled the destinations to the Far East,” he said. ABC’s flights from Europe all connect via its Moscow hub – using both Sheremetyevo airport mainly for transit cargo and Domodedovo airport for Russia destination cargo – which meansaccording to Gliznoutsa, that cargo can be sent to Shanghai irrespective of theexisting schedule for the China route.

This has been enabled by the way ABC now uses its secondary hub at Krasnoyarsk. “We used to operate flights through Krasnoyarsk by default. Now we have what you can call a ‘charter approach’,” he said.

“We will take cargo into virtually any destination in the Russian Far East and we will try and combine it with our China operation,” he said citing the examples of Moscow to Shanghai via various Russian Far East cities like Novosibirsk, Vladivostok, Petropavlovsk, etc. Traffic rights do not pose any problems and more importantly, the reaction from the market has been positive, he said.

Ad hoc charters
The other key development that ABC started putting greater emphasis on from last year is the pure ad hoc charter operation using its B747s. “We did about US$35 million in just charters last year, when previously charters were largely a second priority. But it is a chicken and egg situation where the scheduled flights were busy and there wasn’t enough time to do charters and now that the scheduled flights have become more flexible, we have more opportunity to do charters.”

He added that while some of the charter business is linked to the scheduled operation, some of the business are completely brand new ad hoc charters. This new revenue stream has helped to offset the loss of scheduled traffic, he said, describing it as a sort of ‘mix-and-match’ business model.

“In the current climate in terms of revenue you can see the impact of the downturn on the scheduled services, but if you look at the structure of the revenue, the fuel has come down significantly since last year. So I don’t think we’re doing any worse than last year on the 747 operation and with the charter operation there are some improvements in some areas and downturns in other areas. If you look at the bottom line figure, it has pretty much stabilised to where we were last year.”

In terms of fleet development, ABC is sticking by its order for five of Boeing’s redesigned 747-8 freighters, with options for a further five, but does not know when it will be receiving them because of ongoing delays at the American aircraft manufacturer.

“We have not received, as such, a firm indication on what the new delivery date is. We are in continuous talks with Boeing on this and once the date is confirmed then we will look at our schedules, financing and business planning,” he added.

Group activities
As for the other business units of the Volga-Dnepr Group Gliznoutsa said that aside from some internal restructuring in terms of how the group reports and combining of some business activities, its pretty much business as usual for Volga- Dnepr’s charter cargo services which operates Antonov An-124 aircraft, along with Ilyushin Il-76s and similarly for its joint venture heavy and outsize carrier, Ruslan International.

“The government and military requirements are still pretty strong,” he said, noting that the Middle East operations into Iraq and Afghanistan generates steady business.

One new development for the group is a pilot project known as Charter Plus, aimed at providing ground logistics at both ends of the charter flights where the client may require additional services like trucking, craneage, insurance and so on.