Etihad: Expanding on all fronts

To talk to Etihad is to be taken back to the golden age of air cargo –  a time of double digit growth, expanding freighter fleets and new belly cargo routes. Once, all air cargo was like this.
Full year figures were not yet published at time of writing, but based on the January to November performance the carrier was forecasting 17 per cent volume growth to more than 570,000 tonnes, which David Kerr, its vice president cargo, reckons is “pretty much the fastest growth of all the major carriers”.
Load factors have held steady, he says, meaning volume growth is more or less in line with capacity. The same is apparently true of yields, with cargo revenue now topping a billion dollars for the first time.
Geography is on Etihad’s side, of course, but global economics seems to be too. Look at the markets showing most growth – China, India, South East Asia and Africa – and the United Arab Emirates (UAE) seems to be at the fulcrum of all of them. Even the US and South America are now within its reach.
Slowing growth in China may be worrying economists, but Kerr says that the Middle East, Africa and Indian Subcontinent have seen no fall in demand from that source: “We had a slower start to the year in North East Asia but we expect that to build,” he says.
To the US, Etihad has been expanding its capacity on the passenger side. Last year, it added B777 routes to Dallas three times a week from November 19 and San Francisco daily from December 4. Earlier in the year it started double daily flights to Los Angeles, joining existing double daily routes to New York and Chicago. 
Europe remains a weak spot for cargo, both inbound and outbound, but not entirely. Some European lanes continue strong, Kerr says, and through its just-completed investment in a 49 per cent stake in Alitalia, Etihad has an interesting opportunity to further grow its business.
In December, even before the deal was finalised, it launched twice weekly freighter flights from Milan to Bogota in partnership with Avianca. The flight uses an Atlas Air B747-400F and a combination of Etihad, Atlas and Avianca rights. 
Etihad uses the route to feed cargo into Avianca’s belly and freight network across Latin America, and then the aircraft flies onwards to Amsterdam, a leg sold by Avianca.
The Abu Dhabi carrier also has four daily A330 freighters a week from Abu Dhabi to Milan and a daily passenger A330 flight. From Milan, cargo is trucked to France, Germany, the Czech Republic, Switzerland, Austria, Hungary and Croatia.
The Bogota freighter is not Etihad’s first foray into Latin America. It first made footfall in the region with a passenger flight to Sao Paulo Guarulhos, and in May 2013 started a round the world freighter using an Atlas Air B747-8 that flies from Abu Dhabi to Hong Kong, Chicago, Miami, down to Viracopos near Sao Paulo and back to Quito before returning to Miami and on to Amsterdam.
More routes out of Milan look to be on the cards. “Working with Alitalia is an obvious opportunity to grow the market in that region, so we foresee more operations,” Kerr says, though he is tight-lipped about details. 
Having said that, the Italian market is one that has long frustrated freighter operators. Alitalia itself had five MD-11Fs until 2009, while Cargoitalia operated DC-10-30Fs and MD-11Fs out of Milan from 2005 to 2008 and again from 2009 to 2011. The global downturn put paid to these operations, but Cargolux has had a B747-400F operating under its Cargolux Italia subsidiary out of Milan since 2009 and is due to add a second aircraft to the operation. 
Lufthansa also makes some freighter calls in Milan.Other new Etihad freighter services dur-ing 2014 included weekly services to Dar es Salaam and Entebbe, a twice weekly service to Moscow and an A330F service to Hanoi, which was rapidly expanded to three times a week.
These brought to 15 the number of freighter-only destinations served by the airline. All-cargo aircraft now account for around half the carrier’s cargo capacity, a surprising figure given that it only got its first freighter in October 2010. The fleet now numbers 11 aircraft, having been augmented by a fourth A330F and a third leased B747-400F from Atlas Air in 2014, with the latter arriving in late November. 
Eithad also has three B777Fs of its own and a leased B747-8F from Atlas Air. 
Two more freighter orders were announced at the Dubai Air Show last year – an A330F for delivery in 2017 and a B777F for 2018. 
Kerr says he is very happy with the performance of the A330Fs. “It is a good aircraft for thinner markets or for entering new markets, or it can give you relatively high frequency to give the customer more choice. It allows you to do twice a week with 120 tonnes rather than once a week with 100 tonnes.” 
An example is Hong Kong to Abu Dhabi, which was launched twice weekly with the A330F, with a B777F frequency later being added as demand grew. Frankfurt is also served with the A330F to give maximum frequency.
Meanwhile, regional markets such as Entebbe, Dar es Salaam and Nairobi are ideal for the A330F’s payload and range.The 777Fs are used for Etihad’s key routes linking China and India to the Middle East, as well as for longer range routes into Africa such as Lagos and Johannesburg. They also fly to Amsterdam. The fact that both the A330 and B777 feature in Etihad’s passenger fleet gives the carrier considerable crewing and maintenance synergies.
In addition, the A330F has been in demand for charters. “Not everyone needs 100 tonnes for project cargo,” Kerr notes. He points out that with the B777F and nose-loading factory-built B747-400Fs in its fleet, Etihad has the full range of charter aircraft.
As well as the partnership with Avianca, Etihad has been exploring cargo cooperation with other operators in the past year. In February 2014 it signed a deal with DHL for a five times a week service using a DHL A300-600 freighter from Bahrain to Abu Dhabi, and it exchanges capacity with Singapore Airlines into Europe and de-feeds its flights into Abu Dhabi.
On the passenger side, the roll out of two significant new aircraft types has just started. The first of ten A380s entered service on 18 December, flying to London, with four more to come in 2015, while the first of 41 B787-9s entered service to Dusseldorf on February 1, with two more to come this year. Longer term, there is a positive tidal wave of aircraft coming: 30 B787-10s, eight B777-8Xs, 17 B777-9Xs and 40 A350-900s (the first due this year) and 22 A350-100s.
Other developments include the launch in October of Skystables, a specialist product for horses. This joined Safeguard, a valuables product, and Fast-Track, a priority product introduced in 2011. Kerr says significant investments are being made in cool chain capabilities and he hopes to be able to announce a product soon.
The carrier also went live with the Hermes cargo management system in its handling operations on 18 January, having taken over responsibility for the Abu Dhabi airport cargo terminal in 2013. Kerr says the system will allow it to handle cargo in a much more sophisticated way, with improved prioritisation and information exchange, and more transparency for customers.   ■

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