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Geoffrey Arend Air CArgo News Thought Leader
Vol. 13 No. 57                                                                                                                             Tuesday July 1, 2014

Afraid For Freighters

Afraid For Freighters

Fred SmithAt the IATA WCS 2014, Fred Smith described the 747-400 and MD11-9 as the workhorses of a golden age. Now they have become very expensive to run, and airlines need to rethink their freighter strategy.
     A triple seven-freighter flight from Hong Kong to Anchorage costs $30,000 less than a 747-400F while carrying almost the same payload.
     New, fuel-efficient, twin-engine freighters in the form of the 777F and the A330F provide airlift with much lower unit costs than the 747-400 and MD11.
     Given all these factors, and with current freighter capacity exceeding demand, forty-three Boeing 747-400s and twenty MD11s are parked in the desert, and six 747-400s and four MD-11s have been scrapped.
     Fred closed his speech by stating that in the absence of a change in the outlook for overall global trade, and given the introduction of over 200 efficient 777, A330, and 747-8 freighters, more 747-400Fs and MD-11Fs will have to be retired.
     Their economics simply cannot compete with the more modern airplanes.
     Moreover, underbellies will be increasingly attractive for the smaller shipments that do not require priority service.
Karl Ulrich Garnadt     All of us may wish for a return of the days of double-digit air cargo growth, but we are creatures of much larger forces and the winds are not favorable.
     Former Lufthansa Cargo head Karl Ulrich Garnadt (right) told media when he got bumped to a higher position at the airline that he too didn’t believe there was a strong future for all-freighter operators.
     “The combination carrier model is the only one I believe has a future in traditional air freight,” he said.
GErt Jansen      Gert Jansen, (left) executive director of Seabury, said that the average large- and medium-freighter is flying increasingly shorter sectors to “vacuum clean” for cargo, with the range capabilities of the aircraft typically not used.
     Gert also shared that while freighter orders placed since 2009 will continue to provide new deliveries in the next few years, after 2014, deliveries are not (yet?) expected to come close to the 2012/2013 peak.
     Many industry leaders continue to push for a rethink.
     IAG Cargo recently signed a long-term commercial agreement with Qatar Airways to purchase capacity on Qatar-operated freighters, terminating their agreement with Global Supply Systems for three leased B747-8 freighters.
     QR will now operate five B777F flights a week between Hong Kong and London on behalf of IAG Cargo.
     The trend is also downward:
     Air France-KLM has cut freighter capacity by 11.5 percent and Cathay has ceased freighter operations into Manchester.

Russell Tom and Patrick Murray


     In contrast, Russell Tom, Boeing’s Regional Director of Marketing for Air Cargo, stated at the IATA WCS 2014 that main deck’s share of cargo continues to remain steady at about 60 percent.
     Boeing figures say the world’s freighter fleet would increase from 1,730 to 2,300 by 2032.
     Calogi Head of Cargo is bucking a trend?
     I think freighters are here to stay,” says Patrick Murray.
     “But we will see more retirements over the coming years.
     “The challenge is to be competitive; carriers have to use more modern fuel-efficient freighters and making a case for a new passenger plane is always going to be easier than making a business case for a new freighter.
     “It’s also worth bearing in mind the passenger business normally picks up most of the costs for belly cargo, whereas the cargo side of the business pays for freighter operations in their entirety.
     “The main demand will continue to come from integrators, but where it makes sense to do so, larger airlines will continue to use freighters to serve markets where they have no passenger flights and where the demand makes it sensible.”
Geoffrey


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