Hawaiian Air Cargo does not appear to pay close attention to International Air Transport Association traffic statistics and forecasts. The Honolulu-based carrier has seen its cargo business grow 20 percent in the first quarter of this year, comfortably ahead of the modest growth that IATA registered for its worldwide members in the period.
“We have done better than anticipated,” says Tim Strauss, managing director of cargo. “We are probably full on 70 percent of our lanes from the U.S. and Asia.”
To be sure, his projections were somewhat above IATA predictions for the industry, coming after double-digit growth in past years. Hawaiian registered 33.7 percent growth in cargo revenues for the past year, following a 26.3 percent increase in 2012.
The respective average numbers for the major U.S. airlines – American Airlines, United, Delta, Alaska, Southwest and Hawaiian – were declines of 5.3 percent in 2013 and 6 percent in 2012.
Strauss concedes that the likes of Delta and United have more cargo revenue in a month than Hawaiian generates in a year, but he emphasizes the share of overall revenues as a measure of cargo focus. He claims that of the abovementioned carriers, Hawaiian has the highest cargo contribution – higher than Alaska Air with its main-deck capacity. Hawaiian Air Cargo’s share of the parent airline’s overall revenues climbed from 2.3 percent in 2011 to 3 percent last year, while the collective average for these carriers went down from 2.6 to 2.1 percent over the period.
Hawaiian’s growth resembles more the momentum of the Middle Eastern airlines, and there are certain parallels, namely growth in transit cargo moving over its hub powered by fleet and network expansion. In recent years, Hawaiian has morphed from a carrier focused on intra-islands and U.S. mainland-Hawaii routes into a player in the transpacific arena.
This came on the back of a fleet overhaul that brought in A330-200s, which have been used to launch flights to points in Asia, Australia and New Zealand. The addition of Taipei, Taiwan, to the network last July turned the balance from a preponderance of U.S. destinations to a majority of international points served.
Auckland, New Zealand, has been another bright spot.
“We are the only U.S. carrier that flies direct to Auckland,” says Strauss, adding that he hopes the frequency can go up from three or four weekly flights to daily frequency. “Inbound, you can sell as much as you like.”
The expansion continues, with two more A330s due to enter service this year and another three in 2015. With all A330s in the fleet, Hawaiian will have 29 or 30 wide-bodies, and it has firm orders for six A350s, plus another six options. The first of the A350s is expected to come on board in 2017, provided Airbus manages to stick to its development schedule for the aircraft.
“We look to add more Asian points in 2014,” Strauss says.
Overall, he is pleased with the network additions of 2013, notably Beijing, the most recent destination on Hawaiian’s route map. Taipei worked well for cargo too, but passenger results were below expectations, leading to the suspension of that sector.
With only negligible origin and destination traffic in its home turf, Hawaiian focuses heavily on transit cargo. Traditionally, much of this has been interline traffic, but the expansion of the carrier’s international network has shifted the balance considerably. Strauss says interline cargo accounted for over 30 percent of the loads in Hawaiian’s wide-bodies, but has since declined to about 5 percent. In revenue and volume terms, though, interline traffic has expanded, he adds.
To accommodate anticipated growth, the carrier is in the process of building a new cargo facility at its hub, which will not only boost overall capacity but also feature a larger cooler. Perishables are the largest segment among the commodities that Hawaiian hauls on its flights. The cargo facility is scheduled to come on stream at the start of the new year.
Not surprisingly, given the high emphasis on transit traffic, a large chunk of Hawaiian’s cargo does not touch the building. About 60 percent of its traffic through Honolulu is transferred directly between planes. Besides cooperation with operations ground staff on the passenger side, this requires good information flow. Strauss says the system is more than adequate, but he is looking forward to an improved IT platform. Hawaiian uses iCargo, which is currently undergoing a major upgrade.
“I see a lot of opportunities in the interline area,” he says.
Hawaiian has registered a rise in interline traffic, which suggests an improvement in the market, as airlines usually fill their capacity on the direct routes first, he adds.