No Money in Freight.....

Gulf Carriers to Outpace Old Europe With Cargo Expansion: Freight Markets - Bloomberg

Gulf Carriers to Outpace Old Europe With Cargo Expansion: Freight Markets
By Tamara Walid - Jun 3, 2011 6:58 AM ET


Emirates has a total of eight 747 and 777 freighters, plus orders for five of Boeing’s updated 747-8s and two 777s and nine options, giving a possible total of 24 dedicated cargo planes.

Qatar Airways Ltd. and Emirates, already luring passengers from British Airways and Air France, will extend the contest to the $68 billion air-freight market by turning their bases into global cargo hubs.

Emirates, the world’s biggest airline by international passenger traffic, aims to add as many as 18 cargo planes in Dubai, while Doha-based Qatar Air is converting 15 passenger jets to freighters and buying 33 percent of Cargolux Airlines International SA, Europe’s biggest freight-only carrier.

The plans are sounding alarm bells at companies already under pressure as Emirates builds a fleet of 90 superjumbos and Qatar awaits delivery of 200 jets worth $35 billion as part of a bid to persuade travelers to fly via the Gulf instead of London, Paris and Frankfurt. SkyTeam Cargo, which includes the freight arm of Air France-KLM Group, is concerned about the expansion.

“We’re not blind,” SkyTeam Managing Director Michael Wisbrun said in Munich after a meeting of the alliance’s cargo chiefs. “It will be tough. There’s no reason to have a hub in Qatar or the United Arab Emirates, and adding capacity with supply and demand as they are won’t help the equilibrium.”

Qatar Air Chief Executive Officer Akbar al Baker said in an interview that the Middle East’s No. 2 passenger carrier will become “one of the major players in cargo” by 2015 as the addition of Cargolux creates “a very potent airline.”
Freighter Fleets

European airline stocks are among the worst performers in the region this year. Air France-KLM has dropped 17 percent, Deutsche Lufthansa AG (LHA) is down 11 percent and BA parent, International Consolidated Airlines Group SA has lost 19 percent since it was formed on Jan. 24. The Gulf carriers aren’t traded.

Qatar currently has a five-strong freighter fleet of Airbus SAS A300s and Boeing Co. (BA) 777s. That will rise to 16 planes with the addition of 11 Boeing 747 freighters from Luxembourg-based Cargolux, into which the CEO says he’s prepared to inject more cash for expansion as required. The total may reach 31 including the A330 passenger models earmarked for conversion.

Emirates has a total of eight 747 and 777 freighters, plus orders for five of Boeing’s updated 747-8s and two 777s and nine options, giving a possible total of 24 dedicated cargo planes.

In expanding their freighter fleets the Gulf carriers are bucking a trend to focus cargo provision on the holds of passenger jets. Paris-based Air France-KLM (AF), Europe’s biggest airline, moves 75 percent of its goods as belly freight and has 14 specialist planes, including five at Dutch cargo-only unit Martinair, while British Airways has just three leased 747Fs.
Belly Space

Even Lufthansa, the biggest cargo carrier among passenger airlines with a 50:50 split between belly freight and cargo aircraft, has only 18 Boeing MD-11 freighters at its main hub in Frankfurt. The Cologne-based company also operates six 747s through a business with China’s Shenzhen Airlines and eight 777s via a venture with Deutsche Post AG’s DHL Express.

Qatar Air’s passenger fleet provides belly space equal to about 25 freighters, Al Baker said. Airbus’s A380 double-decker, of which Emirates is the biggest operator, can carry 15 tons in its hold on average, and the single-deck Boeing 777 even more.

Fleet expansion has allowed Emirates, Qatar Air and Abu Dhabi-based Etihad Airways to add waves of frequencies radiating from their hubs, providing keenly priced connections to Europe, Asia, Australasia and North America. That’s led to clashes with more established rivals over the use of export-credit financing.

“They’re financed differently and that makes it easier to add capacity than if you have to go to the banks,” SkyTeam’s Wisbrun said in an interview on May 11.
‘Accept Competition’

Emirates, whose record 5.93 billion-dirham ($1.6 billion) profit for the year ended March 31 was twice Air France-KLM’s earnings for the same period, says only 20 percent of its plane purchases have employed export credit. Qatar’s Al Baker said in a statement on Feb. 10 that European airlines need to “accept competition and the customer being in the driver’s seat.”

The Emirates strategy envisages adding freight capacity to Latin America, Africa and Europe in coming years, according to Ram Menon, its senior vice president for cargo.

“We’re in it for the long term,” Menon said in an interview on May 15 in Dubai. “As the world becomes more globalised and economies move towards liberalization, capacity will need to improve. The wheels of commerce will not stop.”

Air cargo volumes that currently account for just 2 percent of the global total are forecast to grow about 6 percent to 46.2 million tons this year and will increase at about the same rate for the next two-and-half-decades, the International Air Transport Association industry group said in March.
Doha Hub

Qatar Air bases its plans on building Doha into a “viable hub” while meeting the needs of the economy, Al Baker said. A $15 billion airport serving the city that’s due to open in 2011 will be able to handle 2 million tons of freight a year, more than enough to cope with the planned expansion of a carrier that moved 455,000 tons in 2009, the last year with available data.

Qatar, the world’s biggest exporter of liquefied natural gas, has an $81 billion economy and will likely see growth of 20 percent this year, the International Monetary Fund has said.

Still, Qatar Air isn’t seeking to copy Emirates and the two have different strategies, Al Baker said. Whereas the expansion of Dubai Al Maktoum International airport will accommodate a theoretical 150 million passengers a year, Qatar would “never want” a hub bigger than one-third of that size, he said.
‘Diverging Strategies’

Taking the stake in Cargolux, which serves 90 destinations, will “complement and supplement” Qatar Air’s own growth plans as the carriers have contrasting networks, Al Baker said. Following the deal the pair may take reciprocal bookings via so- called code-sharing and could operate flights for each other.

Menon said that Emirates for its part has no plans to invest in outside airlines.

“What we’re seeing is a gradual maturation of the Gulf airlines,” said Seabury Group analyst Geoffrey Weston. “Qatar is signaling that it’s going to push air freight as a major part of its service. Five years ago it and Etihad appeared to be chasing Emirates. Now we’re witnessing diverging strategies.”

SkyTeam’s Wisbrun said the Cargolux transaction amounts to a “survival plan” for a carrier that couldn’t have survived as a freight-only operator and that the surge in capacity from the Gulf represents a setback for the global air-cargo sector.

“In times of high demand there is no issue, but if it’s added in times of low demand there will be an issue for the whole industry,” he said. SkyTeam members also include Delta Air Lines Inc. (DAL) and Korean Air Lines Co., which has one of the world’s biggest air-cargo operations.

Emirates reckons such a view is “shortsighted” and that there will be more than enough demand in coming years to support extra capacity without it heightening competition, Menon said.

“If we doubled the capacity available in the market we would still not be able to satisfy the demand,” he said.

How much belly freight does a 744 carry? I sure hope big D has a strategy for this revenue stream.

 

The joys of not having real competition, no FedEx or UPS company already existing, small countries, oil supply and government assistance.

 

Those balls are on the floor.

 

Leaving on a trip tomorrow..Do we still need our flight bags on the DC-9? Havent heard anything official but I thought today was the changeover day.

 

I'm pretty sure when my fleet changed over they wanted us to bring our own for two weeks or so, just in case there were any SNAFU's. Also, when you do get to leave your flight kit at home, you'll need to find -something- to cary your sunglasses, flashlight, scrap paper, crayons, etc. in.

 

No flight bags needed for June 5 (MSP mailroom posting).

 

From above:

“What we’re seeing is a gradual maturation of the Gulf airlines,” said Seabury Group analyst Geoffrey Weston. “Qatar is signaling that it’s going to push air freight as a major part of its service. Five years ago it and Etihad appeared to be chasing Emirates. Now we’re witnessing diverging strategies.”

SkyTeam’s Wisbrun said the Cargolux transaction amounts to a “survival plan” for a carrier that couldn’t have survived as a freight-only operator and that the surge in capacity from the Gulf represents a setback for the global air-cargo sector.

“In times of high demand there is no issue, but if it’s added in times of low demand there will be an issue for the whole industry,” he said. SkyTeam members also include Delta Air Lines Inc. (DAL) and Korean Air Lines Co., which has one of the world’s biggest air-cargo operations.

Emirates reckons such a view is “shortsighted” and that there will be more than enough demand in coming years to support extra capacity without it heightening competition, Menon said.

“If we doubled the capacity available in the market we would still not be able to satisfy the demand,” he said.



So there's the next threat to...every other International carrier. Emirates doesn't even have to make money to survive, since they are state owned and get their jet fuel at...a pretty good price I'll bet! And they have a great hub location, close to the two biggest emerging markets, India and China, and not too far from Russia only Brazille is a long way off for them but they have the airplanes to make that trip.

Should I go there now and get a seniority number or just wait until they take over the world and hope I do ok in... Binding Arbitration?

(that's a joke, lighten up Francis)

 

There was a time when airlines flew 747s domestically. Once the market became saturated with airlines and aircraft the larger aircraft gave way to smaller and smaller aircraft. I once heard a pilot say in 2001 that there should never be anything with less than 3 engines doing transcons.

For delta, what may be going on here or has gone on here is they saw the freight market was saturated andthey pulledthe plug. If we had a large freight operation stuff like this would have us in a horrible mood today. But there ain't nothing to stop the gulf carriers from this massive expansion in a location that foreigners were once making a killing.

Really, this sucks but it's inevitable. Truth is dal lost freight a long time ago and could've restarted it with nwa's operation but by then the cost and risk probably were too high to justify continuing with 742s or buying 744s.

counter-to-counter freight is good money and a unique product that FedEx and ups don't readily have. I know, i used to ship aircraft tires that way. and that's maybe a reason why we should have 88s replacing nonstop rj service with multiple leg hub and spoke operations so that real freight can be carried to places like ROA, BTR, GSP, LRD, GSO, ALB, BTV, HPN, CRW, SDF for not a dime more.

Still think we should have 1 or 3 744Fs.

 

The FCB on the airside kits says we have to bring our flight kits until we get an electronic bulletin telling us we don't need it anymore. It also says to expect that on or about June 5.

I left on a trip yesterday and emailed the DC-9 CLCP the night before I left. He wrote back and said that he anticipated issuing the bulletin on June 5 per the FCB or possibly a day early on June 4. My guess is you're probably going to have to bring your flight kit on a trip leaving tomorrow... unless they issue the electronic bulletin before you have to leave for your trip.

 

Code A Phone is out...no mention of AE. Thanks for keeping us in the loop DALPA.

How do I get rid of the New Hire? I not old, but I am not new.