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Airline Insider-Sept/Oct 05 |
| Written by Brian Dunn | ||||||
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While passenger traffic has been making a slow but steady recovery after both 9/11/01 and the SARS outbreak in 2003, air cargo traffic has been enjoying a veritable boom. Air Canada Cargo for example, raked in nearly $600 million in revenue last year, a number the division hopes to double within the next five years. It has identified 12 to 15 international markets for expansion in South America, Europe and Asia. As part of its global expansion, Air Canada earlier this year launched an all-cargo service between Toronto and Shanghai using a leased MD- 11 freighter, bumping frequency from three to five times a week. The airline ultimately wants to get back into operating a dedicated fleet of cargo aircraft instead of relying on the cargo capacity of its passenger jets. As part of that goal, it has leased two more MD-11 freighters and is looking to acquire additional cargo aircraft. Air Canada operated a small fleet of DC-8 cargo aircraft, but pulled out of that market in the 1990s when it acquired new Airbus and Boeing passenger aircraft that had substantial cargo-carrying capabilities. Air Canada carries about 300,000 tonnes annually, although the domestic market only represents about 15% of that. Before it got rid of its fleet of DC-8 cargo aircraft, domestic cargo accounted for 60- 70% of the total, according to Claude Morin, vice-president of Air Canada Cargo. “We’re always looking for more all-cargo aircraft, but they’re in hot demand, even though it’s hard to make money with high fuel prices.” Freighters now account for less than 10% of Air Canada’s cargo capacity. Morin would like to see that figure climb to between 30% and 40% so that overall capacity isn’t reduced if some passenger/cargo flights are cut back like they were to Asia during the SARS outbreak in 2003. “On the passenger side, international traffic is growing rapidly where cargo demand is also growing. For example, we had no cargo capacity to South America five years ago. Now it represents close to 5% of our cargo activity.” Cargojet is also going great guns, according to Pauline Dhillon, vice-president of marketing. Formally known as Canada 3000 Cargo, before Canada 3000 went bankrupt in 2001, Cargojet emerged in 2002 and currently operates 11 Boeing 727-200 dedicated cargo planes each with a capacity of between 50,000 and 60,000 pounds. Dhillon says Cargojet is the only domestic operator that has a neutral network, meaning it doesn’t have its own customers but carries cargo for all the majors such as FedEx, DHL, UPS plus all domestic freight forwarders. It also has interline agreements with 11 global airlines and has a codeshare agreement with Purolator. “We fly roughly 500,000 pounds of cargo each night across Canada. We’re operating at 100% capacity east to west and about 70% capacity west to east,” says Dhillon, who estimates Cargojet has a 40 % share of the domestic cargo market with Purolator ranking second. Its aircraft are owned and operated by Kelowna Flightcraft. Last year, Cargojet generated revenue of over $100 million and is listed on the Toronto Stock Exchange. Future plans call for service to China using an MD-11 freighter, with a decision on a start-up date being made early next year. Founded in 1970, Kelowna Flightcraft operates 21 air cargo aircraft of various sizes, the largest being Boeing 727- 200s and Convair 580s. In 1976, KFC signed a 10-year renewable mainline haul contract with Purolator Courier Ltd. and hauls roughly 500,000 pounds a day in the Purolator system and up to 1 million pounds a day during the peak Christmas shipping season, according to KFC executive assistant Jennifer Morden. Air cargo accounts for roughly 62% of KFC’s gross revenue with the balance coming mainly from charters and maintenance operations. In addition, it operates the new Canadian Forces Contracted Flying Training and Support services program at Southport, Manitoba. Like Purolator, Morningstar Air Express also has an exclusive contract, only with FedEx Canada. Founded in Edmonton in1970 by two Edmonton businessmen as Brooker Wheaton Aviation Ltd., Morningstar enjoyed rapid growth due to the oil boom economy in Alberta during the 1970s. During the mid-1980s, the company began flying for various courier companies and in July 1990 acquired a contract to initially operate two Boeing 727s nationwide for FedEx Canada In January, 1992, the company became Morningstar Air Express and currently employs approximately 100 people and operates four Boeing 727s and six Cessna Caravans. HIGHER COSTS HIT TRANSAT Like most carriers, higher fuel prices are hurting the bottom line of tour operator Transat A.T. of Montreal, but the charter operator doesn’t expect that hurricanes in the Caribbean or terrorist bombs in London will have any longterm effect on the company. Britain accounts for 40% of Transat’s European business. The company’s holdings include Air Transat and its four Airbus A330s and 10 A310s. Although the tour operator is forecasting a profit for its fiscal year ending October 31, it said higher fuel prices will prevent it from matching the $72.5-million profit it made in fiscal 2004. In its first half ended April 30, Transat recorded a profit of $36.6 million versus $48.2 million in the same period a year ago. The charter operator also faced stiff competition during the summer between Toronto and London from both Air Canada and British Airways. In June, Transat signed a charter extension to use WestJet Airlines to fly holiday customers from 15 Canadian cities to 25 sun destinations; it runs until October 31, 2007. WESTJET SELLS LAST BOEING 737-200S WestJet Airlines has sold its last 10 Boeing 737-200s to Miami-based Apollo Aviation Group. The sale includes spare parts, engines and a pilot-training flight simulator. The airline says the sale is part of its conversion to newer models of fuel-efficient 737s equipped with leather seats and live satellite televisions mounted in the seatbacks. WestJet operates 44 next generation 737s. The older 737-200s will be phased out of its fleet by next March as the newer models are phased in. WestJet is replacing its 737-200s with 16 new 737s and will take delivery of five 737-600s, six 737-700s and five 737-800s over the next 12 months. CANJET LOOKS AT NEW AIRCRAFT CanJet Airlines is also in an expansion mode and expects to decide within a year whether to stick with its fleet of 737s or acquire new aircraft from Airbus, Bombardier or Embraer. All types of aircraft are being considered in the 90/150-seat range, including the Embraer 190/195 and Bombardier’s proposed CSeries. CanJet plans to expand its current fleet of 11 aircraft to about 17 in 2007. It currently operates nine 737-500s and two 737-200s, all leased. The 737-200s are scheduled to be replaced by new 737-500s in the fourth quarter. |
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