Long Term Plans Revealed

      ANA’s parent, ANA Holdings, recently laid out its long-term strategy, not least via its commitment to achieving a full year operating profit of Y200 billion ($1.8 billion) by FY2020.
      The target would represent a huge improvement on the operating income of Y146 billion reported in FY2016 ending March 31 this year and meeting it will require boosting cargo revenue by some 40 percent over the period.

Belly Adds Up Cargo

      The plan will involve increasing international passenger traffic by some 30 percent by 2020 as more slots become available in Tokyo.
      As pax capacity rises, so will the bellyhold space available to ANA Cargo’s sales teams. “We will be receiving state of the art aircraft like B787-10 and B777-9X, with enhanced cargo space in the coming years until 2020,” he added. “This will allow us to maximize the synergy effect by combining our freighter flights with the expanding passenger network using the best mix, and by closely watching each route’s demand trend.”

Reorganizes Freighters

      ANA currently operates 12 freighters (eight B767-300BCF and four B767-300F) that supplement its passenger fleet of 256 aircraft. The spokesman said the carrier intended to “maintain and utilize the current fleet” of freighters, adapting its deployment based on customer service requirements.                         
      “We will flexibly reorganize our freighter network to cope in a timely manner with the potential for unstable market trends and/or demand,” he added.
      “In addition, adaptability to the cargo market’s volatility will be enhanced to meet the changing needs of both customers and ANA Cargo, by reinforcing with freighter flights markets where the passenger belly network needs more capacity.”

Profits In Forecast

      For 2017 and the coming years, ANA Cargo aims to achieve profitability by constantly reviewing and optimizing its freighter network.
      “In other words,” he added, “with very high flexibility, adding frequencies on routes with high demand and suspending unprofitable ones.
      “For example, at the end of March 2017, with the start of the summer schedule, ANA started six one-way flights per week from Tokyo Narita to Tianjin, and added two one-way flights per week from Osaka Kansai to Shanghai Pudong, resulting in six one-way flights per week and two one-way flights per week from Shanghai Pudong to Tokyo Narita, resulting in 13 weekly flights.
      “By adding frequencies on China-bound flights, ANA Cargo is responding to the market trend, which shows a rising demand.
      “At the same time, four one-way flights from Tokyo Narita to Osaka Kansai, six one way flights from Osaka Kansai to Tianjin, and two round trip flights from Tokyo Narita via Bangkok to Jakarta and back to Tokyo Narita were suspended.”

Okinawa Hub & Spoke

      ANA Cargo is also leveraging its Okinawa hub and making best use of the Hub and Spoke concept to balance supply and demand by cancelling frequencies on slow demand days and adding direct flights when higher demand is expected. “In cases where regular belly cargo space is not able to cover the high demand on certain routes, ANA Cargo adds charter flights to high demand destinations,” said the spokesman.

Changes In The Wind

      To help manage its business expansion, ANA has now made organizational changes to its sales and marketing operation and each division now has its own Executive Vice President. “The ‘Global Sales Department’ will literally focus on sales, while the ‘Global Marketing Department’ will look after the freighter network, including the belly space of passenger aircraft, and the new development of products and solutions as well as managing joint ventures and alliances,” said the spokesman.

Venture In The Joint

      The key joint venture for ANA was the deal signed with Lufthansa Cargo in 2014, which the spokesman said “was the world’s first Joint Venture in the cargo field.”
      At first it was limited to cargo traffic between four European countries—Germany, France, Belgium, and UK—and Japan.
      But now the scope has been expanded to 43 countries after adding 38 European countries to the arrangement.
      “The Joint Venture with Lufthansa Cargo enabled us to access the inventory of each other under the harmonized pricing structure,” said the spokesman.
      “Customers and cargo forwarders may purchase both Lufthansa and ANA’s cargo space through Lufthansa and ANA’s sales agencies.
      “All benefits of the Joint Venture are available through both carriers’ booking channels.”
      As a result, he said, greater network options and enhanced uplift capacity were now being offered to forwarders and shippers and both airlines had gained enlarged market access, improved load factors, and increased shipment volumes.
      “The outcome of the agreement has proved to be beneficial for both parties,” he said. “The load factor of both carriers went up by three percentage points on routes linking Europe and Japan last year.
      “Over 6 percent of the entire tonnage flown under a Lufthansa or ANA Airway bill from Europe to Japan is transported on the partners’ aircraft.”
      One of the targets as the JV is expanded seems likely to be the fast-growing market for international e-commerce shipments. “Since FY2016, and for the coming months of FY2017 starting from April, we at ANA Cargo are continuously pushing for cross-border ecommerce sales and more sales in the automobile industry and healthcare businesses, by collecting and analyzing market intelligence essential for generating further business,” said the spokesman.
      “We expect e-commerce to become a promising future business, so we will most likely put high priority on this to capture such demand.”
      ANA Cargo has also established a new marketing team, which focuses on research and analysis of four key industries—automobile, electronics, cross-border e-commerce, and healthcare—as well as the development of tailor-made products and solutions to enhance customer service. “This marketing team is incorporated in the ‘Global Sales Department’ in order to work in close coordination with the front line sales team and to be reactive to the constantly changing economical and geopolitical circumstances,” said the spokesman.

E-Freight Conversions Slow

      Multiple authorities have recently noted that the air freight industry’s failure to adopt e-freight common standards and technology was reducing supply chain transparency and reducing competitiveness, with Japanese stakeholders proving surprisingly slow at changing their business practices.
      ANA, however, is optimistic that progress can be made in the near future.
      “We are working closely with forwarders, ground handlers, and our Joint Venture partners to promote and facilitate e-freight and overcome possible hurdles so that we can provide harmonized ‘make it easy’ products to our customers,” he added.
Sky King