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Tactical moves

Satu Dahl analyses the bidirectional transatlantic air freight market and looks at how major gateways and airlines are gearing up to accommodate growing freight volumes

Cargo business is making a growing contribution to airline revenues. IATA’s data for global air freight markets in 2018 revealed that, overall, the market is growing. Demand, measured in freight tonne kilometres, grew by 3.5% when compared to the previous year. Freight capacity rose by 5.4% in 2018, measured in available freight tonne kilometres. IATA says that despite several negative factors, including the weakening of the global economy and consumer confidence, international e-commerce grew in 2018, contributing to the growth of the cargo demand. As well as rising volumes, cargo costs have fallen in real terms – in the past 20 years, compared to other prices in the economy, per tonne kilometre flown, air cargo user costs have fallen around a half, IATA’s Chief Economist Brian Pearce notes in his ‘Cargo outlook 2019’.


Transatlantic market

When looking at the performance more closely by region, IATA’s analysis shows that air freight markets are expanding in the US and Europe. In the US, the total annual growth in demand for air cargo in 2018 was 6.8%, matching the rate of capacity increase of 4.5%. Across the Atlantic, the annual growth in demand for air cargo in Europe was 3.2% and capacity increased by 4.3%, the report says. It is no surprise therefore that airlines are growing their share of the transatlantic market. One example of this is American Airlines Cargo which had an exceptional year in 2018, exceeding multiple all-time records in performance, volume and revenue and finishing the year with more than $1 billion in revenue. The airline added more destinations in the European market last year, which included a service from Philadelphia to Budapest and Prague, Chicago O’Hare to Venice and Dallas Fort Worth to Reykjavik.  


In January, American Airlines Cargo announced that, starting this summer, it will begin operating a new seasonal non-stop flight from Dublin to Dallas Fort Worth, directly connecting the two for the first time in the airline’s history. “Traditionally, North America is the most important destination for Irish exports by air, with many US companies across diverse industries having manufacturing bases in Ireland. This first direct flight from Dallas Fort Worth to Dublin using our 787-9 is ideally suited to supporting the export demand from Ireland. And of course, the onward connections – up to 900 per day from DFW to South and Central America – also have considerable appeal for Irish shippers and forwarders,” Andy Cornwell, Regional Sales Manager – Northern Europe, American Airlines Cargo, explains. In addition to American’s new DUB flight to DFW, the airline also offers flights from DUB to Charlotte (CLT), Chicago O’Hare (ORD) and Philadelphia (PHL), as well as seasonal service from Shannon (SNN) to PHL.


Regarding the commodities and volumes, the airline will be transporting on the Dallas-Dublin route, Cornwell says: “This is a seasonal flight running from early June through to the end of September and we anticipate wide appeal which will deliver strong volumes. Texas is the second largest importing state in the US and customers with potential commodities including computer parts, medical devices, machinery, oil industry equipment, aviation parts and pharmaceuticals are already expressing interest in using the service.”


When discussing which European routes see the most demand for cargo, Cornwell says that, from the airline’s perspective, all of them do. However, he says: “There are clearly some which I would single out. For example our pharmaceutical hub in Philadelphia continues to flourish as shippers and forwarders alike recognise our capabilities when they are working in that sector. It's served from a number of European cities which will be further expanded this summer, with additional service from Edinburgh, Berlin-Tegel in Germany, Bologna in Italy and Dubrovnik in Croatia.

“Then, of course there is our highly successful European trucking operation, which supports shippers and forwarders who don’t have easy access to our network, but when we offer a trucking operation from their local airport we can give them a quality service to the nearest hub. That's had notable success for southern French cities who can truck their cargo into Barcelona.”


Continuing to discuss the demand for air freight capacity in the bidirectional transatlantic market, Cornwell says: “Our widebody capability between Europe and the US means there is consistent demand for cargo services across the pond in either direction. Flights to and from our US gateways to the major capitals such as London (LHR) and Paris (CDG) and major cities such as Frankfurt (FRA) perform well on a year-round basis and the new additions to our network for the summer season always generate considerable cargo interest making the transatlantic very positive for us.”

Cornwall adds that to meet ongoing demand, the carrier has a new daily year-round service from Charlotte (CLT) to Munich (MUC) in Germany and also a summer seasonal service between DFW and Munich.  Other seasonal services this year include Chicago (ORD)–Athens (ATH) and Phoenix (PHX)–LHR.


Regarding competition and the development of the market between the US and Europe, Cornwell says the transatlantic sector has always been a competitive market and that's not going to change any time soon. “The key to operating successfully in the market is to really understand the needs of our customers and to use our frequency and capacity to meet these needs – the same goes for the other regions of the world we operate in too. American has both of these, and, as a result, air cargo is a key contributor to the bottom line of the airline as a whole.” >>


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