American’s Jim Butler prepares for expansion
10 / 06 / 2015
American Airlines Cargo (AAC) may be the Cargo Airline of the Year, but freight boss Jim Butler is not a man to put his feet up and say ‘job done’.
“We had a small celebration across the system. It was a moment to stop and celebrate but also to remind our folks that we haven’t arrived. I see it as a fantastic validation of their hard work but there are a lot of things that we want to continue to evolve.”
The carrier was awarded Air Cargo News’ top airline accolade in April this year.
Butler, who became president of AAC in 2013, has seen the successful cargo merger with US Airways and the looming expansion of the freighter-less carrier’s widebody passenger fleet.
“We have now integrated American Airlines and US Airways, and so customers see one airline with a larger and more expansive network. We have got an incredible amount of new airplanes coming with a lot of cargo capacity.”
There are 17 B777-300ERs in the AA fleet now, becoming 20 by the end of 2016. AA has already launched its first 787 flight, the first of 42 coming in over the next few years – with 13 more delivered this year – plus options on a further 58. There are also 22 A350s on order and they will start arriving in 2017.
Says Butler: “We have a very large orderbook of new cargo-friendly airplanes.” And next comes the inevitable question: will you operate freighters?
Butler laughs loudly and answers: “We have absolutely no plans to buy freighters.
“We have 6,700 flights every day, we have over 150 widebodied aircraft which fly expansive networks, we have 21 destinations in Europe, and we are about to start our 11th flight to the Pacific, plus we have an industry-leading Latin American network.
“We have an incredible number of hubs that are well located within the US, and so I don’t see a need for freighters. I know that in business you can never say never, but I think that in the grand scheme of things that I can come pretty clear to saying we will not have any freighters.”
But cargo has to pay its way. Adds Butler: “Cargo is a very big contributor to the bottom line of the airline and as we bring on more widebodied aircraft and grow our international network, so it becomes even more critical.
“Everybody in the leadership team, through to Doug Parker [AA Chairman and chief executive], sees cargo as a strategic side of the business and, I might argue, more than either carrier ever did.
“As part of that there is an appetite to invest and to continue to evolve cargo with very ambitious goals. It is the only way in which to continue to develop AAC and be a leader.”
Butler takes a hands-on approach to the business and makes regular visits to hubs throughout the AAC system, talking to local people to gauge what they need and what the customer requires.
“We have a number of specialty products. We have a general freight product and an expedite product which is 100% guaranteed. We also have ExpediteTC, which is our temperature-controlled product throughout the network.”
Investment has taken place across the AAC product range, with the most recent being a 2,300 sq m temperature-controlled pharmaceutical facility in Philadelphia.
Says Butler: “Philadelphia is the hotbed of pharma in the US and we have an incredible hub that serves a huge number of destinations throughout Europe and which can also link with widebodied services down to Latin America. It is a perfect point for us to expand our pharmaceuticals capabilities.
“When it comes to pharmaceuticals, we make sure that we don’t just have the products. We train the entire chain on our policies and procedures. That includes the ramp, the warehouses and everybody involved.
“And we have Tom Grubb, a thought leader in the industry, who makes sure we are evolving the temperature-controlled product each and every day.”
AAC’s priority parcel product deals with known shippers, and is not viewed as a direct competitor with the likes of FedEx, who are also big users of the airline’s network.
There is also considerable perishables traffic, in and out of Latin America, with a major new “drive-thru cooler” being installed at the carrier’s Dallas facility.
“We have perishables going in both directions, clearly a lot of perishables going northbound – everything from asparagus to limes and flowers – but there are also a lot of perishables out of Europe, and so we have a big focus there.”
With his passenger background, Butler can cast an informed eye over the cargo interlining between carriers.
“We use alliances around the world to extend our reach beyond where we serve, and even in places where we do fly, but only with narrowbody capacity.
“One of things I heard from customers, as soon as I got into this industry, is that they are frustrated with how interline works. Well, the only way we will do interline is if we sit down with a partner and figure out a way to provide a seamless product to customers.
“The last thing we want is a sub-optimal offering, only because we did not do our homework on how to partner up with a carrier.”
In many cases, interlining partner airlines are based in different warehouses, and that – says Butler – requires both sides to sit down and talk strategically through the necessary processes and procedures that customers expect.
He adds: “You have to ensure that those processes and procedures marry up with those of the interline partner, otherwise you can end up with a disparate product.”
His experience also helps when assessing where the global air cargo industry stands versus passenger, in terms of digital data, IT systems and its use of the web: “Exactly the same as to where the passenger side was fifteen years ago, and so we have got to move.
“I think that we can do a lot to catch up, but we have got to recognise that the business needs to modernise and that it is the only way we are going to continue to evolve.
“The key to adoption and rolling out the electronic air waybill (e-AWB) is focus, investment and having a dedicated resource whose sole job it is to go out and drive change and train.”
He continues: “When you have literally a few hundred facilities around the world, each one of those is a project. Because the business is carried out locally, each of those projects has local discussions and implementations.
“That makes it very difficult but not impossible, but you have to do it in a measured way.”
And that is the primary focus of AAC right now, says Butler. “We are arguably a little behind where the others are, but that is only because we wanted to make a seamless integration last year, and we did not want to change the business at a time in which we were merging two airlines.
“Now that we are done with that, we are rolling out incredibly fast and we are seeing adoption across some of our hubs where in a matter of a couple of months we are up in the 25%-35% e-ABW penetration range.
“We will inevitably hit that point where it [an e-AWB] is expected and where it is the only way to do business,” but he counsels: “We should never forget that that is the first of many pieces of paper that have to go away.”
So, what does Butler think of the airfreight business?
“I love it, I have been here a year and a half, and I am very lucky to have a fantastic team that has accomplished a lot over that time.
“I cannot imagine a different side of the business where 18 months into it I would know so many of the industry folks, both our customers on a one to one basis, but also the partners and providers that we do business with…and even the competitors, where we partner on things like safety and security, to better the industry.”
But there is still work to be done, says Butler: “There is a lot of opportunity, to provide a more seamless and more transparent product to customers. We need to modernise the business, such that as ocean carriers and others continue to evolve, so the air cargo industry stays ahead of the game and we have a value proposition that candidly shows customers what we provide over those other modes.
“I am speaking generally about the industry, but American Airlines Cargo is a big part of the industry, and it is our responsibility to help drive that change.”