ACMI market set to grow as carriers seek flexibility

The ACMI (wet-lease) aircraft market will continue to grow in future because of carriers’ need for flexibility, while the number of wet-lease joint ventures and long-term relationships will also continue to increase.
Speaking at Air Cargo News’ Freighters and Bellyhold Conference in Abu Dhabi, Atlas Air Worldwide executive vice president and chief commercial officer Michael Steen told delegates that carriers’ need for flexibility, innovation and resource would drive growth in the ACMI market in the future.
“In the airline industry, the outsourcing element has been fairly small but I would argue it is growing over time,” he said.
“Not every carrier is equally structured, they are located in different domiciles, they have different finance capabilities and having the flexibility to outsource – versus insource – is a critical component that every industry has to have.”
He said that ACMI allowed carriers to break out of their traditional markets and avert industry resource issues, such as the disparity between the number of crew and the growing fleet.
Etihad vice president cargo David Kerr said that ACMI had helped the airline enter new markets when it started to grow.
“As a younger carrier it is really about being able to grow flexibility,” Kerr said. “We have been through a couple of cycles of wet lease operations and progressed into operating our own aircraft.”
Saudia Cargo director cargo charters Michael Duggan said that from a charter perspective, having the flexibility to ramp up and down its operation was “aided enormously” by having a wet lease operation.
“It’s much more difficult when you own your own aircraft and employ your own resources to scale up and down,” he said.
Looking to the future, Steen and Duggan expected to see an increase in the number of long-term ACMI partnerships and joint ventures, a trend that has been developing over the last few years.
“When I first started selling ACMI 20 years ago we would go to the customers and say we are completely independent, you can rely on us. We are not competition,” said Duggan.
“That’s changed and DHL is the prime example of that, not just with Polar and Atlas, but several other carriers around the world.
“They essentially have ACMI joint-venture relationships which involve carrying cargo and mixing capacity on different routes and then they have their global network above that. So I see a lot more of that happening.
“Even at Saudia, I have a role to go out and plug gaps in our network, for example in South America and the US, by talking to other carriers, sharing capacity and using their metal.”
Steen said at Atlas the ACMI relationship with customers had changed over the last 5-10 years, becoming more long term, allowing it to become more integrated with customers.
He added that in the future he expected to see shippers become more involved with their supply chain and therefore the wet lease market.
Other growth opportunities in the future would come from the fast growing e-commerce industry and helping express operators meet that demand and the growth in the number of middle class consumers, the speakers said.