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Cargo

Dominic Kennedy, Managing Director of Virgin Atlantic Cargo

Dominic was promoted to Managing Director of Virgin Atlantic Cargo in August 2017. He has been a key member of the airline’s cargo leadership team since 2008
 

Dominic joined Virgin Atlantic in March 2005 in the airline’s fleet and network planning team, providing revenue analysis on all business propositions affecting Virgin Atlantic’s capacity and revenue, including aircraft acquisition, new route studies, configuration changes and product investment. He moved to the airline’s cargo division in 2008 to create and manage a centralised price and product team to focus on all aspects of pricing as well as management of internal and external incentive programmes, the development of sales intelligence capabilities, commercial contracting, product strategy and interline agreements.

In November 2010, Dominic was given responsibility for Virgin Atlantic Cargo’s revenue management and capacity control function, accountable for optimising the return of its global cargo capacity. This included route management, capacity control, operational research and ULD control.

 

How was 2018 at Virgin Atlantic Cargo and how does it compare to your forecast for 2019?

2018 was an outstanding year for Virgin Atlantic Cargo. Our revenues rose 13% on the previous year to £222 million – the highest level for five years – and our volumes rose 6% to 244,000 tonnes, our best result since 2013.    

The year included positive contributions from across our network and partnerships, and a series of milestones, including growth across most of the commodities we carried. The investments we’ve made in the last 18 months in our life science product; achieving GDP compliance and opening our Pharma Zone at Heathrow, for example, contributed to a 50% year-on-year increase in pharmaceutical shipments. We also set new records for tonnage from both the UK and the US, achieved our highest-ever daily import and export volumes through London Heathrow as well as the best Q4 in our 34 year history. Several routes also set volume records, including Los Angeles and Delhi.

Our performance also benefited from the continued development of our transatlantic joint venture with Delta Cargo, and from the increased revenues and volumes we generated for Virgin Australia under our longstanding international long-haul sales and management agreement. This was enhanced by the launch of Virgin Australia’s daily Sydney-Hong Kong services in July, which added much-needed capacity on the route, especially for the vibrant e-commerce market.    

For me, the result was a testament to our amazing cargo team here at Virgin Atlantic. We were successful in growing our business with existing and new customers, and we delivered the service level improvements our customers expected in spite of higher volumes. It’s well known that we’re passionate about customer service and, in support of this, every month we invite customers to participate in an online survey to tell us how we’re doing, highlight where we need to improve and how we perform versus our competitors. Their feedback is invaluable. In the last year, for example, after listening to our customers, we opened new customer service centres in Atlanta and Johannesburg to provide more local support to customers in the US and South Africa. We also took steps to improve our flown-as-booked performance, which we achieved with the close engagement and support of our handling partners. At the end of the year, customers gave us our highest-ever score for their experience of working with us and we’re very proud of that fact.    

 

2019 has started very well for us although it’s clear there was less volume in the market in the first quarter. Nonetheless, we achieved strong year-on-year gains on the strength of the momentum and reputation we built last year. We expect 2019 to be a tougher year but we are totally focused on achieving our targets.

 

This will be a game-changing year for our cargo business because we have a lot of significant projects in progress which will enable us to give our customers even more choice and benefits. These include the opening of a new state-of-the-art cargo terminal, Dnata City East, at Heathrow with our partner Delta Cargo, which will double our footprint at the airport to 335,000 sq ft. The airline will also take delivery of the first four new Airbus A350-1000s, and our network is growing too. The other very important focus for us is technology and the implementation of new digital solutions to drive the simplification of our business. This will include giving customers self-service options to make us even easier to do business with.       

 

Virgin dropped the Dubai route and is now launching Tel Aviv later this year. Are you expecting better fortunes for cargo to Israel in comparison to Dubai?

Dubai was a good cargo route for us but when all the economics were taken into account, the airline decided to look at new opportunities. We very much appreciated the support customers gave us to and from Dubai and it was important to us to give them several months’ notice of our decision so they could find alternative solutions.       

 

We are very excited about the potential of our new daily flights between London Heathrow and Tel Aviv, which commence on 25 September. It is a new route for us with significant import and export cargo opportunities for customers in the UK as well as the US. It is also timely because of Israel’s buoyant economy, which boosted total volumes into the country by some 17% in 2018. We expect to carry a wide range of cargoes, from high value precious stones, fresh produce and high-tech products to electrical goods, pharmaceutical and express shipments. The route will be operated by an Airbus A330-300 offering 20 tonnes of capacity on each service and, with our ability to offer fast connections to and from the UK and US markets; we expect this new route will quickly gain strong customer support.  

 

We have also just announced that we will be resuming daily flights to Mumbai in October from London Heathrow, operated by our B787-9 aircraft with 26 tonnes of cargo capacity. We have given our cargo customers direct access to the vibrant cargo market in India for 19 years with our daily Delhi flights and, in 2018, our cargo revenues excluding India rose by 10%. After a gap of four years, we are returning to serve the equally buoyant Mumbai market. In the last four years, the overall market from Mumbai to the UK and US has increased by more than 50% in revenue terms, alongside increases of 46% to India from both countries. We aim to win a strong share of this growing market, supported by our fast and easy connections over London to and from major cities across US and our enhanced capabilities for handling pharmaceuticals, one of the main types of shipments ex Mumbai.

 

You went double daily to Johannesburg last year. Do you feel the additional lift is sustainable in both directions and are their plans to enter other African markets?

Johannesburg has been a very important route for us for 22 years so the airline’s decision to go double daily last year was great news for our cargo team and our customers. On our first day of double daily services, both flights operated with full payloads totalling 34 tonnes and we’ve seen strong demand on the route since then. Overall, in 2018, we increased our volumes by 15%. It’s a big route for perishables, including pre-packed fruit salads, vegetables and stone fruits, as well as for shipments of car parts, agricultural spares, computer components, mining equipment and personal effects. We also carry a lot of courier traffic and high-value cargoes. In Africa, we also have daily services to and from Lagos, Nigeria, another growing cargo route for us, but we currently have no other plans for new routes to the continent.     

 

Sao Paulo will be an interesting destination next year. What kind of shipments are you anticipating in both directions?

Like Tel Aviv, we expect to see strong cargo demand to and from São Paulo, Brazil, when we begin daily London Heathrow operations in 2020. Brazil is the powerhouse of South America and this will be our first-ever route to the continent. It means our customers will benefit from direct access into the continent’s largest import and export market and one of the top 20 global economic cities, and we expect to see regular shipments of car parts, pharmaceuticals, food and agricultural products.

 

Can you tell us a bit more about the $13bn transatlantic joint venture that Virgin is a part of?

Closer cooperation between Delta Cargo, Air France KLM Cargo and Virgin Atlantic Cargo across the trans-Atlantic is subject to regulatory approvals and the receipt of anti-trust immunity (ATI) from the US Department of Transportation (DOT). Once ATI is received, the cargo divisions will be able to start working together to give our customers more choice across a broad network of passenger flights with joint trucking options and tailored products and services. 

 

What factors led to the decision to operate both 787-9s and A350-1000s and what opportunities do you anticipate for cargo with the A350s?

This is part of Virgin’s modernisation programme which will see 50% of our fleet replaced over a

six-year period and give us one of the industry’s youngest fleets. Both aircraft were primarily chosen for the outstanding customer experience they enable us to offer as well as their carbon and fuel efficiency credentials, but cargo potential was also an important factor in the orders we placed. The Boeing 787-9 has provided us with growth opportunities since joining our fleet and we are especially looking forward to the arrival of our first four Airbus A350-1000 in 2019, part of a $4.4 billion order for 12 of these aircraft. Depending on configuration, it will deliver a significant improvement in lower deck cargo capacity of between 10% and 22%.


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