CFS 16: Cargo carriers eye e-commerce, partnerships for growth

MIAMI – A panel representing cargo-focused carriers, ranging from regionals to established global operators, tackled an issue that has caused its share of hand-wringing in the industry of late – diminishing profits. The consensus amongst the panelists, speaking yesterday at a Cargo Facts Symposium session titled “Emerging Cargo Airlines: Growth Stories from the Frontlines,” was that ACMI and CMI business was an effective way to capitalize on strong integrator revenues. “You get a pretty stable schedule,” panelist Rich Corrado of Airborne Global Solutions added.

Hugh Flynn of ASL Aviation concurred that, from a commercial standpoint, working for integrators provides a stable income stream. However, he noted that “the low utilization of airplanes has its own challenges.”

Tim Komberec, who represents a smaller regional cargo carrier based out of the United States, noted that, for a small company like his, working with the integrators “removes a degree of risk and provides stability.” He explained that such partnerships allow a company to provide safe, legal service, but added that doing so also “demands flexibility.”

The panel also covered the need for diversification. Angel Petrov of Bulgaria based Cargo Air had one of the more extreme ideas of diversifying with his quip that, “we aim to be the first airline to deliver cargo to Mars by 2020.”

On a more serious note, Komberec warned that due in part to new regulations, a pilot shortage was constraining his and other carrier’s ability to reach out to new customers and innovate. “We’ve got a critical supply problem for qualified pilots in our segment of the business,” he said.

Whenever innovation and the future of air cargo is discussed, e-commerce is raised, becoming the Goodwin’s Law of air cargo. Hugh told the audience that, in 2016, e-commerce in India will hit US$38 billion and $120 billion by 2020. “Our networks might change and utilization might increase,” he said.

Corrado added that e-commerce will grow faster in emerging markets, making it more of an opportunity and much less of a threat that carriers ought to be looking into.

That isn’t to say that such expansion strategies aren’t complicated. Flynn recounted that India was “probably more difficult than any other region in the world that we operate in, the most difficult because of the corrupt system that they have.”