Aurora Air International, a cargo airline which until this announcement in early October during the TIACA Air Cargo Forum in Seoul had been dormant for nearly 20 years, plans to establish a new headquarters at MidAmerica St. Louis Airport. Aurora is teaming up with MidAmerica and Ningbo to supply scheduled air service using DC-10-40 freighters on the LATAM to MidAmerica and ultimately to Asia and return route.
With the fi rst flights to begin in the Spring of 2015, the airline’s founder and chairman Steve Crittendon – who has a colourful history from his days as former head of Crittendon Air Transport (CAT) in the mid-70’s – said: “I look forward to reestablishing the airline along with partnering with BLV (MidAmerica) and NGB (Ningob Lishe International) as their first international scheduled all cargo service.”
Th e decision to base at MidAmerica came about because Aurora Air Cargo recognised the site and operations as a key step in its plans to open Asian and Latin American trade lanes that will serve unique and needed support for perishable and pharmaceutical supplies from the Midwest USA.
“As airplanes start to operate out of MidAmerica a new, closed, safe, certified, secure cold chain will be available to USA Midwest product shippers to and from Asia and Latin American with less handling and ground movement than is available today,” said Aurora president Carlos Smith. “Asian and Latin American shippers will enjoy this route as their goods, especially perishable goods, are not double and triple handled in the USA en route to the other continent.”
Prior to this, MidAmerica had only been handling charter fl ights, mostly Boeing-manufactured Apache helicopters going to Bahrain, via carriers like AirBridgeCargo. But the opening of a US$5.7 million, 3,300 sqm, perishable handling warehouse at MidAmerica in June 2012, by international, growerowned, year-round, fresh produce marketing and distribution cooperative North Bay Produce Inc., gave new impetus for this unique trade lane.
Th e company selected St. Louis as its distribution point for its produce items, which travel from as far as Uruguay in South America to Nova Scotia in Canada. Vision becomes reality Speaking to Payload Asia on the sidelines of the Air Cargo Forum in Seoul, a clearly elated Tim Cantwell, MidAmerica St. Louis Airport’s director, highlighted the basic challenges of creating a new trade lane: “Not only do you need airports on either end, but buyers and sellers. And you need an airline.”
As Cantwell notes, “it’s got to be two way trade to make it work and going back from China to the US it’s hard to move, everybody moves in their own avenue, but if we say we can get you down to Latin America, that changes their perspective.”
It may not be entirely intuitive – bringing perishables from South America to middle-America (as compared to more traditional hubs like Miami), before turning around and sending them all the way to China, but Cantwell is adamant on one time-tested, fundamental premise: Supply and demand. With South America being a major producer of fruit and vegetables, along with North Bay’s North American business, there are plenty of sellers on the supply side of the equation.
And with an increasingly voracious appetite for imported food products, not just fruit and vegetables but meat and dairy products and of course pharmaceuticals as well, on the China side there are plenty of buyers. In fact it is a demand as Cantwell notes that continues to grow thanks to a number of factors including rising affluence and food safety scares within China. It’s not a trivial market size either he notes, with a market in Ningbo alone, of nine million people – and another whopping 250 million in the immediate Yangtze River region.
Meanwhile at Ningbo airport, where its current cargo operations centre around charter cargo fl ights largely to Malaysia and Vietnam, as well as belly cargo on scheduled carriers to destinations like Singapore, a US$1.3 billion airport renovation initiative also includes a new 15,000 sqm airfreight terminal which includes facilities for perishables.
Efficiency gains
The beauty of going from Latin America to MidAmerica by air and ultimately on to China, says Cantwell, “is that the perishables don’t have to go on a truck so you knock out almost four handlings. And to a product that needs to get somewhere, knocking out four handlings is doing what the industry is talking about in terms of taking out 48 hours from the end-to-end supply chain. It almost looks like a express service from Asia to Latin America and from Latin America to Asia,” Cantwell adds with a grin.
On the surface of it, the agreement that MidAmerica has with Aurora is fairly straight forward as Cantwell describes it: “You’re going to come in with 12 DC-10-40 and I will help you populate that route going north-south with my indigenous perishable centre – North Bay Produce with its 5,574 sqm perishable centre doing fruits and vegetables with co-op members from Nova Scotia all the way down to Uruguay – so that’s 12 months of fruits and vegetables.”
“When you get to the far reaches the B747s are more important, but if you go back up even towards Santiago you can make money because you’re not losing anything out the door because the perishables aren’t going on a truck from Miami. Even the short hop down to Guadalajara works great because there’s a lot of fruit in Mexico and they also don’t want to truck across the border because of all its associated problems. So that’s the key right there,” he says of the negated need for trucking.
Step-by-step
He goes on to say that Aurora will begin scheduled fl ights, but they will wisely proceed cautiously in phases. “Instead of trying to set the expectation like when you turn on all the lights at the same time with ten destinations, it will be layered and it will be in phases,” Cantwell notes of his air partner. Th is first northsouth phase will take off in the first part of 2015.
“Start the revenue runs and build a solid revenue stream and then go eastwest with B747-400s,” he says, adding that the DC-10s are in the process of getting their heavy D Checks, “but I think after they get three or four DC-10 going they will be ready for one or two B747’s going east-west.
“Th e rules are just set up to make this tradelane work,” he says. In terms of trade, “China honours almost every country in South America carte blanche like a whole free-trade area, but the produce can’t get to China easily so this is where the highvalue air side of it comes into play. You can throw bananas on a boat and it’s fi ne, but Chilean cherries that the Chinese market wants in December, January, February when there isn’t a cherry tree alive in China at that time of the year, that’s a perfect air cargo product.”
One thing is for sure, the naysayers are a hefty lot, pointing out everything from the over-ambitiousness of taking on established Latin American players like Miami, to the foolhardiness of trying to operate antiquated DC-10s. Cantwell of course, dismisses all of these, countering with the fact that MidAmerica is far too small to make a dent in MIA’s business and also highlighting that it’s all about enlarging the pie.
“What we’re trying to off er are new avenues for the pie to get bigger for everybody. We’re not in competition with anybody, we’re in a new market area – there’s no international air cargo service in the St Louis area,” he added.
As for the slightly ‘geriatric’ nature of the DC-10s, he highlights the fact that these are not leased aircraft, nor are they financed, they are 100 per cent wholly owned – ‘lock, stock and barrel’ – by Crittendon and that tends to cast the economics in a different light.
Cantwell also holds out high praise for the patience his airport has been given in what has been long road getting to this point. “My airport is very fortunate to have been able to stay the course with the support of the community who really don’t know what this is all about because they haven’t been able to touch it. It’s not Chicago where it’s all ricocheted freight, so the airport is very fortunate to have that support on the one hand and on the other hand we are also fortunate now look back eight years and see the sifting that has happened in terms of the changes within the industry of what does and doesn’t fly in this new environment.
“But we threw the ball so far down the road eight years ago when we said pharmaceuticals and food! Who would ever have thought that US foods would be so important to China – well here it comes!”
