As far as the air cargo industry goes, Atlas Air Worldwide Holdings occupies a rare patch of ground. It has the enviable position of seeing demand for its solutions whether the global economy and hence the air cargo industry, be sky-high or down in the dumps as it currently is. Donald Urquhart has the story.
As an ACMI (aircraft, crew, maintenance and insurance) provider, the services of the group’s four key divisions Atlas Air, Polar Air Cargo, Titan Aviation Leasing and the UKbased Global Supply Systems (GSS) in which it has a 49 per cent stake, have the good fortune of being in demand when business is booming and also when it’s troubled.
Speaking of the current downturn in the air cargo market Atlas executive VP and COO, Michael Steen points out that such market conditions, “create opportunity for us because the solutions that we are providing through ACMI and CMI as well, give the airline industry an opportunity to reduce its unit cost.”
“It creates flexibility to adjust their fleet requirements without necessarily burdening their balance sheet and enables them to take out or minimise their maintenance cost and financial exposure,” he said adding, “we are like the ‘Intel Inside’ – we make our customers faster, more agile and better at a lower cost.”
The ACMI model also works extremely well in an upturn market when capacity is needed immediately, but manufacturers can’t provide you access to that. “So if you look at our fleet from an ACMI perspective we’ve been quite successful over a number of years both in both upturn and downturn markets. We work in a very integrated fashion with our customers providing them solutions that include not only the aircraft, crew, maintenance and insurance, but also value added services,” he says. The company also pursues a high degree of “integrated collaboration” with its customers when it comes to commercial operations.
And clearly ‘the proof of the pudding’, as the saying goes, is in the numbers with 2010 being – as it was for many carriers – a record year, while 2011 with its declining economy was still the second-best year in the company’s history. This year is looking on track to be good as well, after two consecutive quarters of healthy financial numbers and the company’s guidance pointing to consecutive improvements over the next two quarters.
Business expansion
Certainly a healthy portion of Atlas’ success can be pinned on its strategy of expanding its business scope and business segments. “What we have built over several years is a strategy which has basically expanded our activities. We have increased the number of business segments that we have and the number of service solutions that we offer.” This he says has been the key strategy “to ‘clean slate’ ourselves from major swings in the economy”.
This business expansion can be seen for instance in the expansion of its ACMI model on the B747 side and then subsequently to its B767 fleet, to include both cargo and passenger carriers, as well as doing supply chain operations for Boeing. Atlas was awarded a nineyear contract in 2010 for operating the Boeing 747 Large Cargo Freighter, or ‘Dreamlifter’, for transporting aircraft parts to Boeing’s US facilities from suppliers around the world. And as Steen says of the contract, “you could argue we operate for a shipper even.”
n the other hand involves operating a premium passenger private charter service for the US-Africa Energy Association (USAEA) through a contract struck in 2009 with SonAir which provided two newly customised B747-400 aircraft. The charter service which has become known as the ‘Houston Express’ ferries USAEA members working on long-term energy projects between Houston and Luanda, Angola.
The group is also approved by the US Department of Defense and began operating B747-400 passenger charters for the military, subsequently changing the configuration to three B767-300s. The group also operates ten B747-400Fs for long-time customer DHL Express, which are in Polar Air Cargo livery and will also be adding one B767-200F.
Utilising its all-Boeing fleet of nearly 50 aircraft Atlas also undertakes ACMI services for a number of air cargo operators including Emirates SkyCargo, Etihad Crystal Cargo, Qantas Freight and of course British Airways Cargo (BAC) and Panalpina which are being serviced with Atlas’ new B747-8Fs. One of these is in use with BAC and the other four with Panalpina. Two more B747-8Fs will join the Atlas fleet this year and two more in the first half of 2013. The group’s Titan Aviation also has four aircraft – one B757 and three B737-800s – in operation in China and Kenya.
“So we’ve clearly shown that the outsourcing model works, whether it’s in the cargo or in the passenger field and with different fleet types. The critical component here is that you have to create the kind of scale and have the most effective and efficient fleet to be able to give that kind of value back to the customer,” says Steen.
“We have been fortunate to have the ability to become the market leader, we have the largest and most efficient B747 fleet so we can provide that value to our customers and we also have long standing partnerships with key customers that are strategically focused on their particular businesses, whether it’s cargo or passenger and we have a very strong balance sheet so we have the ability to reinvest in aircraft and take that risk for the airlines and of course with the long term partnerships that makes for a very powerful mix.”
