New joint venture launches behind Air China Cargo

CHINA’S airfreight recovery is speeding up as Cathay Pacific, Dragonair and Air China negotiate operating Air China Cargo as their own new joint venture.The cargo airline became a wholly owned subsidiary of Air China after the latter bought controlling shares from CITIC Pacific and Beijing Capital International Airport. How Cathay becomes a part of the venture is still open to negotiation but suggestions include it putting all of its freighters into Air China Cargo and taking a 49 per cent stake in the company.Air China Cargo currently operates services to 36 cities in 27 countries with a fleet of three 747-200Fs, six 747-400Fs and one Tupolev 204-120CE. However, with Cathay’s 25 747 freighters this would more than double its capacity.According to James Tong, chief executive officer of the Hong Kong-based Dragonair, Air Cargo China’s headquarters will be in Shanghai, to make use of international direct routes in the city, instead of its current location in Beijing. After an all-time low of -50 per cent traffic in May/June, Tong expects freight recovery to be improving soon.Cathay Pacific’s September results were the first to herald a change in fortune for Asia’s airfreight. It recorded only a slight year-on-year drop in traffic for the month, suggesting a favourable chance of recovery in 2010.Both Cathay Pacific and Dragonair carried a total of 133,301 tonnes of cargo and mail last month, down 5.8 per cent on September 2008, while the cargo and mail load factor rose by 7.9 per cent to 74.4 per cent. Capacity for the month, measured in available cargo/mail tonne kilometres, was 13.6 per cent down. For the first nine months of the year, tonnage has fallen by 12.3 per cent against a capacity reduction of 13.9 per cent.Cathay Pacific’s general manager of cargo sales and marketing, Titus Diu, was optimistic but still cautious. “The trend of plummeting yields that began in fourth quarter 2008 and continued through second quarter of 2009 has stopped as volumes have strengthened,” he said.“We have experienced a gradual improvement in both volume and yield, albeit from a low base. However, it is still too soon to say whether these improvements are the beginning of a sustained recovery.”

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