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Charter shifts

Ian Putzger discovers how operators are looking outside their usual areas for new business to offset a decline in demand from the likes of defence, government, as well as oil and gas

Last spring, Air Charter Service began a concerted effort to move into the onboard courier (OBC) market. Justin Lancaster, Group Commercial Director, says that its reception completely surpassed his expectations, with bookings coming from all regions and industry verticals. “It can be absolutely anything,” he says, his appetite whetted for more. “We're looking at how we can grow the offering.”


OBC has spread like wildfire across the charter broker sector. “Everybody is adding OBC to their product portfolio,” remarks Reto Hunziker, Group Cargo Director at Chapman Freeborn. The UK-based global broker, which lays claim to getting the OBC ball rolling on the broker scene, has enjoyed double-digit growth in this segment and is ramping up its sales effort.


“The difficulty is how to reach out and make people aware of the product,” says Hunziker. “We simply can't reach each and every jewellery shop or each and every embassy.”


Developing nascent segments like OBC is part of an industry-wide effort at diversification, borne out of the painful awareness that major verticals are prone to severe cyclical ups and downs. “Never put all your eggs in one basket. You have to have a variety of areas that you cover,” comments Lancaster.


For Volga-Dnepr, the most significant factor last year was the drop in work for the government and defence sector, reports Georgy Sokolov, Regional Sales Manager in the UK.


The writing had been on the wall in this sector for some time. “Military charters have been in decline for the last three or four years. Some competitors who were heavily into military business shifted into other areas about three years ago,” recalls Lancaster.


Hunziker agrees that military business has gone down for all the major charter brokers. Chapman Freeborn assigned most of its staff working in this sector new responsibilities, except for a core team that remained in place. “There is still some activity, and if something happens again we want to be prepared,” says Hunziker.


Predictably, the oil and gas sector has also seen a sharp drop in activity, as the low oil price prompted energy firms to scrap or postpone projects. “We have clearly seen a decline in the financing and running of oil and gas projects,” confirms Sokolov. Projects where the financing had been arranged before the downturn went ahead, which has kept logistics activity going for now, but new projects have been scarce.


Ron Buschman, Managing Director of Calgary-based Aerodyne, a charter broker and GSA for Volga-Dnepr and AirBridgeCargo Airlines, did not see any charters to Fort McMurray, in the heart of the Canadian oil sands, over a six-week period. Outbound, there have been a handful of charters, mostly to Russia. The decline of the Canadian dollar means that oil equipment can be cheaper from Canada than the US, Buschman remarks.


“Oil and gas was huge for many charter brokers. Two years ago there were not even any rigs available,” recalls Lancaster.


Gas exploration has fared slightly better than oil, but not by much. Mining, another traditional mainstay of the charter project business, is also in the doldrums, thanks to the slump in global
demand for commodities.


Mercifully, disaster relief has been relatively quiet, with no major global emergencies to deal with, which fits in with the lack of dramatic action in other areas. “Overall it's been an unremarkable start to the year. Nothing extraordinary springs to mind. It almost seems the year has not started yet,” quips Lancaster.


Some sectors have performed better, notably the aerospace and automotive industries. “Aerospace has been doing quite well. It's been our number one sector in the last 12 months,” says Sokolov.


This has given Volga-Dnepr scope to field the backbone of its charter fleet – Antonov AN-124s for satellites, aircraft wings, helicopters and rockets, with Ilyushin ILS76s used more for AOG work. The latter have also been used on a number of flights to Antarctica. “We hope to do more,” says Sokolov.


Africa has been another active region for Volga-Dnepr, whereas Southeast Asia, the Middle East and Latin America have been less lively.


Flights to Africa have also been on the rise for Chapman Freeborn, notably from Asia. “China is probably the biggest investor in Africa,” remarks Hunziker.


Lancaster is not holding his breath on the continent. “Africa is a region where every year people say it's going to take off, and then that year passes,” he comments, adding that commodity prices have not helped. Moreover, the continent's coverage by commercial airlines has improved, diminishing the need for charters.  >>

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