Qatar Airways Cargo is making long-term investment in the wake of growing tonnage and revenue.
It’s been a busy period at Qatar Airways Cargo over the past year. Cargo revenue rose by close to 16 per cent with 1,452,000 tonnes of cargo being handled in the 2018-2019 financial year alone. Guillaume Halleux tells Airline Cargo Management that the performance in financial year 2018-19 has been remarkable.
“We added eleven new belly-hold destinations to our global route map in 2018-19, extending our presence in Europe, whilst also launching new destinations in Africa, Asia and the Middle East in addition to increasing frequencies on several key routes,” states Halleux.
Some of the new routes launched this year with belly-hold cargo capacity include Lisbon, Davao, Izmir Rabat, Malta and Langkawi.
On the freighter front, Halleux says the launch of transpacific freighter services from Macau to North America in October 2018 has allowed customers in China to move their cargo directly to the USA and Mexico over the Pacific, significantly reducing air transport time. “We also commenced freighter services to Guadalajara and Almaty in the last financial year and received five new freighters.”
Guadalajara is served by a Boeing 777F twice weekly since January. The city has the third-largest economy and industrial infrastructure in Mexico. Major exports on the route consist of perishables and general cargo, while general cargo form most imports.
Almaty was also added to the cargo network in early 2019 served by 777Fs. Almaty is a key financial centre and the largest metropolis in Kazakhstan.
Major imports into Almaty include general cargo, fashion and high-tech products. In July, the carrier announced Singapore as a new freighter destination on its transpacific freighter route also operated by the 777s.
With the founding of a new vision, mission and a five-year Goal22 strategy, Halleux feels Qatar Airways Cargo is on the path to growth and success in the coming years. “Our strategy is focused on customer centricity and our dedicated work force have been instrumental in our rise to becoming the leading global air cargo carrier,” he says.
777F – Freighter fantastic
The 777F plays a key role in the carrier’s full freighter operation. From the order for five signed at the Farnborough Air Show in 2018, the carrier has received three brand new 777Fs so far. By the end of 2019, the remaining two will be delivered bringing the total fleet to 28 by the end of December 2019.
In July, Qatar Airways and Boeing finalised an additional order for five more 777Fs during a signing ceremony at the White House. The order is valued at around $1.8 billion and was previously announced at the Paris Air Show in June.
For Qatar Airways Cargo, the 777Fs economics makes it an attractive addition to the airline’s fleet and will operate on long-haul routes to the Americas, Europe, the Far East, Asia and some destinations in Africa. Halleux reports that deliveries for the order of five additional Boeing 777 freighters that was signed at the White House earlier this year will start from April 2020 onwards.
Slowing global demand
IATA have stated that generally, cargo volumes stopped growing more than a year ago. On top of the weak start to 2019, most forecasts for GDP growth and world trade have been downgraded, particularly for 2019.
The business environment for airlines has deteriorated with rising fuel prices and a substantial weakening of world trade, according to IATA. After an exceptional performance in 2017 (+9.7 per cent growth), cargo demand growth slowed to 3.4 per cent in 2018.
It is anticipated to be flat in 2019 with cargo volumes of 63.1 million tonnes (63.3 million tonnes in 2018) because of the impact of higher tariffs on trade. Cargo yields are expected to be flat in 2019 after a 12.3 per cent improvement in 2018, as cargo load factors fall further, and supply-demand conditions weaken – IATA data reveals.
Halleux acknowledges that 2019 has seen a reduction in demand across the air cargo industry, however he is upbeat as the industry gears up for the peak season, which starts as usual in the run up to Christmas, “Despite the softening of the market, we have been able to increase capacity in the markets we serve and of course have more aircraft joining our fleet this year. The e-commerce market remains a growing sector for the airfreight industry and that is something we are actively working towards growing for our cargo business through our mail and express products.”
Trade tensions between China and the US, Brexit uncertainties and other geopolitical stand offs have created some softening in freight demand in many parts of the world, additionally, the continued airspace blockade against the State of Qatar has been raging on for some time.
While the trade conflict between China and the US. is widely identified as the biggest drag on the market, the weakness is not confined to the trade lanes between the pair.
However, Halleux reports that the softening in freight demand is not having any effect on Qatar Airways Cargo. “We remain resilient due to our flexibility and extensive network. As for Brexit, our contingency plan is in place and we are ready to face the outcomes of Brexit. In turn, our rates have remained relatively stable. In any market, we will see fluctuations, but nothing of concern for us,” he says.
Pushing into growth markets
The carrier is adding several belly-hold cargo destinations to its global network. Later this year Qatar Airways will have launched its first operations to Gaborone in Botswana, operating a three-times weekly service with Airbus A350-900s. In addition, the airline plans to launch new services to Luanda, the capital of Angola with five-times a week services on the 787s.
“We will be launching flights to Gaborone on 15 December and Luanda in March 2020.” Halleux says these are predominately import markets and therefore more imports into these destinations are anticipated. “There are some flows of mining, oil and gas equipment from both these origins and we are also expecting some volumes of fresh meat from Botswana.
We are in the process of conducting all the necessary safety and security checks for cargo acceptance at both these origins.”
Cargo trends and looking ahead
Lithium batteries is a hot topic in air cargo. The global demand for these batteries will only keep growing due to several factors such as increasing demand for electric vehicles, renewable energy sources for power generation integrated with ESS (Energy Storage System) and rising demand for consumer electronics.
He speaks of several incidents with the transportation of lithium batteries including more than 20 events in the last two years involving air cargo. “Such accidents occur due to fraudulent declaration of cargo, absence of appropriate packing and screening requirements among others, jeopardising the safety of the airline and airports. It’s a growing concern for the sector currently.”
Halleux attests that the airline’s cargo business is doing very well and contributes strongly to the passenger side of the business. Both tonnage and revenue have increased in the past financial year.
“We believe in long term investments and we will continue to make such investments,” he says. The arrival of new 777Fs and investments in the second cargo terminal (CT2) are just two examples of how the carrier is investing for future growth. “These will pay off in the long term and are all part of our strategy that is focused around our customers. In addition, the passenger business is adding new routes all the time – nine so far in 2019.”
Ultimately, Halleux says customers have stood by the airline throughout the years and the company is thankful for that support. “If you take the top ten carriers in the world and step back a bit, what is apparent right away is that we all fly similar routes, utilising mostly the same aircraft and even schedules. So, the difference really is the people, and when you call Qatar Airways, you discover that the person who serves you is motivated to do good from the bottom of their heart. We are in the people industry and this is something we always remember.”