Asian airlines and airports are on the front line of finding solutions to, and opportunities arising from, the eventual aftermath of the Covid pandemic, the World Cargo Summit heard on January 27.
The pandemic has altered the business mix for both, with a much stronger emphasis on cargo likely for the foreseeable future.
Philippines-based Cebu Pacific Air, like many carriers, has seen a complete reversal in its business model. Before Covid-19, only 8% of its revenues came from cargo, against 66% in the third quarter of last year, Joey Laurente, director of cargo sales told the Summit.
Two ATR72s have been converted to freighters to provide an island-to-island service, Laurente said. Cebu Pacific has also contracted a Spanish firm to adapt two of its eight Airbus A330s from passenger to freighter craft. “We’ve been very busy. We changed the way we do business,” he added.
Going one further is VietJet who were among the first to start moving freight in passenger seats but are now planning to “buy freighters” to deal with the growing segment, said Do Xuan Quang, CEO of its cargo division.
VietJet’s argument, one heard throughout the industry, is that passenger numbers are down and likely to remain so for some time – as far out as 2024, according to Do. However, cargo is booming now and will continue that way for some years, with VietJet looking actively to capture the value.
Part of this will be done by its own fleet, which will ultimately be a combination of conversions already underway and purchases. “It’s a good time to develop a freighter fleet as well as belly capacity,” said Do.
The other way is alliances.
VietJet already has a deal with UPS which sees those packages go to the US via Seoul Incheon. Do the relationship as “very successful” and stressed this was the future, despite Covid upheavals. “In the future, we will have more cooperation like this. It’s very, very necessary,” he said.
Part of the explanation is lockdown buying by homed-up consumers. Do reported e-commerce developing “very fast“ in Vietnam, with an 80% increase in 2020, but also pointed out manufacturing is moving to Vietnam. “It’s a very positive picture for air cargo in Vietnam and Southeast Asia,” he said.
This has impacted air freight rates. One kilogram from Ho Chi Minh City to the US now costs US$10 (up from a recent price of US$2), while the same origin to Australia now costs US$6, up from US$1, said Do. This means there is serious money behind Do’s confidence.
The Philippines, long not much of an exporter of anything more than labour, is getting in on this growth as well, with Laurente reporting electronics, among others, now a part of Cebu Pacific’s business. “We’ve a lot of automotive parts going to Japan and even Korea,” he added.
Paradoxically, even the pandemic is an opportunity, although responses tend to be defined by location. Cebu Pacific is planning to use its ATR72s to distribute the vaccines to the country’s remote islands. “We are already coordinating with the government,” he said.
In India, GMR Hyderabad International Airport Limited and GMR Hyderabad Air Cargo (GMR-HYD), and Dubai Airports will build an exclusive vaccine air freight corridor product called HYDXB-VAXCOR (the Hyderabad to Dubai global Vaccine Corridor), Youssef Beydoun, head, cargo business relationships, at Dubai Airports told the Summit.
This will see GMR-HYD and Dubai Airports give priority to the temperature-sensitive vaccine shipments moving between GMR Hyderabad and Dubai Airports.
Delhi and Hyderabad Airports, along with clearing agencies, have also put in place processes for express movement of vaccines to and from the airport and 24x7 operations of cargo terminals, it added. There are separate dedicated gates to allow fast movement of vaccine-carrying vehicles as well as a truck slot management system for pre-booking at the terminals.
More muted but still preparing, Thailand’s airports are working on a ‘Land and Go,’ strategy, said Khata Vinin, deputy VP, air cargo management department for Airports of Thailand (AOT), which manages the country’s six international airports.
Vinin summed up the goal as being “when the vaccines land, they go immediately.”
To achieve this, AOT has a two-fold strategy.
One prong is readying all the stakeholders. There have been meetings with a number of companies, government bodies and organizations, including the Food and Drug Administration, to set up protocols for as much clearance as possible to be done quickly, said Vinin. The goal is for a three-hour transit time from the airport to medical hubs in nearby Bangkok.
Additionally, AOT is building up its infrastructure with a specific cargo terminal being prepared along with chargers and adaptors for cool dollies being acquired.
Longer term, AOT is preparing itself for a new business environment, which will have more emphasis in cargo. One part of this is talks with the airlines to block space for cargo, he said.
It is also looking to work with other airports, which he did not name, so they can align better to each other “like code sharing” so the planes can carry more bellyhold cargo. “This has to be taken seriously,” he said.
Another part of this is more cargo infrastructure, especially as a region east of Bangkok targeted for upgrading with new industries such as AI, robotics and bioscience is being promoted. Suvarnabhumi, the jewel in AOT’s crown, is near and has noted the potential as well as its own resources such as “spare land next to the airport that could be deployed,” said Vinin.
Michael Mackey
