American Gets It On In Delhi

Is 2006 a year of good news for struggling U.S. flag airline profit margins?
     Maybe.
     Anyway buzzword on many lips is “Look East,” (read out of the country).
     American Airlines may be the largest airline in the world, but air cargo has never been much of an item at the Dallas-based airline.
     American Airlines should be looking in some other direction for business if it is to survive.
     While U.S. carrier Southwest just reported profits of $548 million in 2005 up 75% over 2003, AMR the parent of American Airlines reported a net loss of $604 million in the fourth quarter and $861 million for the full year 2005, compared to losses of $387 million and $761 million during the same time in 2004.
     With mounting debt and torrid competition at home from low-cost passenger carriers, air cargo at least on the international runs may finally be coming into its own.
     Now direct daily services from Delhi to Chicago since last November has the carrier optimistic that the 200-ton per month loads its B777s are carrying across the route will support profits this year.
     AA gets around 300 tons of cargo a month from Indian carriers like Jet Airways in one arrangement.
     Cargo moves via Chicago where AA picks it up for destinations in the US.
     Dave Brooks, American Airlines' cargo division president, on a visit to Delhi with his MD, Cargo Marketing, Spencer K Dickinson, sounded like he was right at home.
     "We have finally found ourselves in India," he said.
     His first task – and he was quite candid about it—was to "Get Delhi up".
     Brooks said:
     "The market is important for American Airlines,"—since India was a fast growing international market for both passenger and cargo traffic.
     American is certainly looking forward to the success of the cargo services from India.
     Over the last year, Brooks mentioned that the carrier's cargo revenue had seen a rise of 12 percent (USD 900 million in 2005).
     International routes, growth in express product sales and growing wide-body capacity is driving growth.
     "Each day, American Airlines flies four-five million pounds of cargo worldwide.
     That," said Brooks, "was the equivalent of 15 Boeing 747 freighters."
     AA's focus is to expand international services with Shanghai from O'Hare this year in addition to the carrier's connection to Osaka from Dallas.
     Brooks said that American Airlines had reduced the fuel surcharge on cargo to 40 cents a kg on the India-U.S. route from 60 cents a kg.
     Treading a path of caution, Brooks said that the high surcharges had seen a lot of cargo moving away from air to other modes of transport.
     American's direct Delhi-Chicago flight on the passenger side is in collaboration with Air Sahara.
     With talk of Sahara being acquired by Jet Airways, (see breaking news) Brooks said, "the negotiation was being closely watched by his company.
     “We have to see the final shape of the talks between Air Sahara and Jet," said Brooks.
     "Our reaction will depend on the nature of the agreement that the two carriers will conclude. “Let the whole negotiation play out.
     “We will find a way to be successful in the Indian market," said Brooks.
(T.Ghosh)