CAL to introduce third B747F by year end
28 / 09 / 2015
CAL Cargo Airlines is to expand its freighter fleet with a third aircraft, a Boeing 747-400F which is set to join on a long term lease from late 2015 or early 2016.
The Israel-headquartered niche freighter operator, hubbed out of Liege airport in Belgium, is in expansion mode and has just launched two weekly flights to Atlanta in the US.
Also, the carrier has confirmed that the recent downturn in the Chinese air cargo market saw it put on hold plans for a twice weekly freighter to Shanghai.
CAL chief executive Eyal Zagagi said: “ We did our homework on China, including operational preparations to fly twice a week from Liege to Shanghai and back. But what happened in the Chinese market and into China over the last five months made us rethink our plans.”
Zagagi added: “We were almost ready to start, but the cargo volumes went down significantly and rates went even further down.”
Industry sources suggest that rates from Shanghai to Europe, peaking at around $3 per kilo, plunged to around the dollar mark, while eastbound rates, already at the lower $1 level, fell to 65 cents.
Continued Zagagi: “We decided that it is clearly not the right time to enter the market, with overcapacity and a drop in volumes. But if other airlines stop flying into China, so reducing the available cargo capacity, then we will take another look.”
The carrier has already upgraded its freighter fleet in the past 12 months, replacing two B747-200Fs with nose-loading B747-400-ERFs as it continues to focus on the non-standard cargo – pharma, live animals, dangerous goods, valuables, oil & gas, aircraft engines and cars – that accounts for 65% of its business
The carrier has also recently gained IATA CEIV certification (Centre of Excellence for Independent Validators) for pharmaceutical handling, and in the final stages of certification across its entire pharma supply chain.
Zagagi, who joined CAL two years ago with a remit to double the airline’s then $150m in annual revenues, is determined that the carrier’s watchword remains “growth”, stating: “We have to keep on the plan for expansion, and that is why we decided to start flying into Atlanta.”
The current plans are to have three transatlantic rotations, one of them being the existing freighter link between Liege and New York (JFK), and the other two being Liege-JFK-Atlanta-Liege. These flights are in addition to five weekly B777F transatlantic flights operated in a code share with aircraft operator TNT.
Atlanta – the number one US passenger hub and 12th worldwide for air cargo – was chosen because of its good ground transport links and an extensive cargo hinterland that includes Philadelphia, Carolina(s), Virginia, Florida and Dallas.
Said Zagagi: “Atlanta has a wide catchment area and excellent access roads. It is very different to JFK where there are bridges and tunnels before you get to the airport. We realised that many customers will truck significant amounts of cargo to and from Atlanta on a regular basis.”
In terms of future network growth, Zagagi said that the doubling of CAL’s revenue “cannot be done without significant expansion and growth,” adding: “This has to be done step by step and not by the sudden addition of three or four new aircraft.”
On the shorter term plans he added: “There is another potential destination in the US and in the Far East. We are not only looking at Shanghai, but at other destinations as well. Longer term we will most likely include Africa as well as South America.”
TNT, with whom CAL has a transatlantic code share agreement, will have to sell its air express airline if it is taken over by US parcel giant Federal Express, subject to regulatory approval.
Said Zagagi: “We have a long term agreement with TNT and I think it is extremely beneficial for both parties. So the question now is: who will be the one to buy the airways part of TNT. Will that entity want to continue the relationship?
“I believe that whoever buys it will look at the relationship with CAL and see that it is a good fit for them and for us.”
CAL air crew in Atlanta