Charter heavyweights

posted on 15th August 2019
Charter heavyweights

Outsize carriers need airports to give them plenty of space, competent handling, and the operational flexibility their customers need, Antonov Airlines’ Graham Witton tells Will Waters

After growing last year, the outsize and heavylift market has held up relatively well this year, remaining stable while the general air freight market has recorded declines in many areas.

While both are affected by trends in the wider global economy, the heavylift market has its own unique characteristics and a particular customer base – plus its own set of challenges.

With the outsize market, people will always use another aircraft if they can, unless they have no choice,” observes Graham Witton, managing director for the US and UK at Antonov Airlines. “Then they have to determine whether flying is beneficial from a cost point of view compared to paying a penalty for being late.

“I think they think a lot harder now about that than they used to. They also try and source options from as many people as possible – the ‘bean counters’ are more and more in control now.”

For example, they will want to see at least five or six quotes to move a piece of cargo from A to B – even if there’s only one operator that can do that job. “That means we may get an enquiry from the shipper or the forwarder appointed, or other forwarders competing for that business. They, in turn, might use a broker or they might work directly with us. It multiplies the amount of work that we have to do,” says Witton.

“And, of course, between us and the end client, everybody is trying to find an edge – maybe in promoting an airport that may be cheaper, or maybe splitting the cargo into different components or shipments, splitting it in different types of airplanes that may be cheaper. It’s a tough market for the middleman, between us and the cargo owners.”

He says it’s quite common for brokers or forwarders to promote certain airports. “Some would rather work with a particular airport because they know they will be well looked after. We have to try to be fair to the airports. But we know the airports that are not necessarily the most suitable for our type of operation; we try and stay clear of those unless our customers specifically ask for it.”

In the UK, for example, Antonov favours East Midlands and Doncaster airports – “both very cargo friendly, very helpful, and close to each other”. Some customers may request a price from Doncaster, and others from East Midlands. “To make it fair, we make sure the pricing from both airports is done at the same level,” he notes. “And then it’s whoever offers the best service.”

Airport suitability

In terms of airport suitability for an outsize operator like Antonov, Witton says: The key thing for us is working space; the ability to park the aircraft not too far away from where the cargo has to enter the airfield. So, remote parking stands, disused runways, taxiways, they are not always ideal. Just getting the equipment and people from the airplane to the nearest airside building can be difficult; they can’t just walk. If you park on a cargo apron, normally the warehouse won’t be too far away; it’s possible for people to walk backwards and forwards, and the vehicles and equipment are able to get close to the aircraft, with very short lead times.

“But probably the most flexible point for us of all is the ability for an aircraft to land and stay there for any length of time, and they are able to accommodate the size of airplane there and still do everything they want to do with their flights.

“That’s why we’re not really favouring certain airports, like Cologne and Dusseldorf, because we know that their level of flexibility is not going to be there. They just don’t have the space to accommodate our airplanes the way that they used to. So, we’re going to the more cargo-friendly airports – Leipzig is our key German airport now, because they have plenty of space, the handling agent knows what he’s doing, and offers very, very good service.”

He continues: “And then we have airports like Vatry, near Paris: a very friendly, ad hoc cargo airport – not just for cargo, but even for refueling stops. Extremely long runway, which is very important for us from a performance point of view.

“But at the end of the day, we will generally aim to go to any airport that a customer would like us to go to. If we can do it, we’ll offer it.”

Explaining why Cologne and Dusseldorf are less attractive than they used to be, Witton responds:We had an issue with Cologne where a couple of days of the week they would not be prepared to handle us. We’ve had some issues with Dusseldorf mainly because of the noise surcharges that sometimes had to be paid.

Prohibitive restrictions

“The noise curfews imposed by some of these airports are quite prohibitive to us. Generally, the airplane would come in and want to rest a minimum 12-14 hours. That means the departure or the arrival often would be not during normal working hours, or daylight hours.

“So, if we arrive at 6am, do the loading through the day, by the time we’ve finished and the crew have rested, the airport is either closed or has imposed a jet ban. So, we then have to stay 24 hours.”

Witton says he is sympathetic to the noise conditions and understands and agrees with the need for some controls. But, if we take Cologne as an example, it’s not as though we’re going for the airfield every single night. It makes it harder for us to do what we need to do.”

He adds: “The key selling point for us is flexibility; then we are able to be flexible as we can with the airplane, with the crew, with the solution we present. But if the third parties that we rely on are unable to be as flexible because of their constraints, regulatory or otherwise, it can make it challenging.”

Leipzig’s appeal

Another reason Antonov favours Leipzig is because it has a base there to support the Salis operation – Strategic Airlift International Solution programme – that it runs on behalf of various Nato members. That used to be run in partnership with Volga-Dnepr Airlines (VDA), although that partnership ended on 1 January.

Witton explains that when the contract first went to tender in 2006, no single airline felt comfortable being able to provide capacity to Salis exclusively, without cutting themselves out of the commercial market. So, Antonov and VD went into partnership to offer one aircraft from each of their fleets. “And that then led on to the Ruslan International joint venture which spread into the commercial market.”

That operated for several years, until various political issues made the partnership no longer sustainable, and the joint venture in both entities came to an end two years ago. Both Antonov and Volga than had separate arrangements with Salis, and then last year Volga decided it did not want to be involved in Salis any longer.

“Since 1 January, we have provided airlift to them exclusively – normally with two airframes,” says Witton. “The programme is more flexible now, which enables us to tap into the capacity that’s allocated to them for the commercial business.” Because there are no specific airframes dedicated to Salis – as in tail numbers – this allows more flexibility to interchange airframes within the fleet. “We have to give them a nominal two airplanes; but how we manage making sure there are two aircraft allocated to them is essentially up to us,” Witton explains.

“And we have the option to ask them to release capacity if we can see they have nothing booked for the airplane – because generally, most flights require a few days’ advance notice. Some of the flights require even longer notice because of the type of cargo, where it’s going to, or where it’s over-flying. You can plan a lot further ahead now than you used to be able to.”

Fleet composition

The two AN-124 aircraft for the Salis programme leave another five of the 150-tonne payload aircraft available from the airline’s fleet of seven. Alongside this, Antonov operates the world’s only AN-225 mega-freighter, capable of carrying payloads up to 250 tonnes; the only surviving commercially certified AN-22, a 60-tonne payload aircraft that is the world’s largest turbo-prop; one AN-26; one AN-74 passenger aircraft; and the very small AN-38, “used for para-dropping”.

Such a unique fleet needs to be managed carefully, in order to preserve its longevity.

“You have to control it as best as you can, because if you start flying all the airplanes nonstop, they’ll run out of hours before their maintenance check, and you’re left with not much capacity. We try to carefully manage the availability so as one airplane comes into the maintenance facility for a check, another one’s ready to go out,” Witton says.

“We want to work with as many people as possible; but at the same time, we’re not just going to do any flight at any price, because we’re trying to manage the way our aircraft are flying in the most efficient way.”

Positioning priorities

Key to this is “to be able to run the airplanes with minimal intermediary positioning between flights”, he notes. “If we have a leg to fly with the airplane from Europe to North America, that’s the area we’re going to be concentrating on – not sending a flight down to South Africa. Theoretically we could do it, but it will be using up a significant number of hours – and affecting our margin. The margin we achieve is done through the overlap of all the flights that we’re doing.”

That process is largely planned manually. You can never automate that,” Witton says. “Our commercial planners are responsible for making sure that the airplanes are operating as efficiently as possible – to balance when we have a fixture with a customer, where it’s best placed in our programme; what equipment that might require – that equipment is not in every single airplane, so, that’s got to be deployed in the right place, or switched between airframes. The commercial planner then has to balance maintenance regimes, airworthiness regimes, engine hours, limitations that might mean an aircraft has to pass through our base for at least a check before it can continue on.”

Fluid business

Such a check might sometimes happen in the middle of a commercial operation.

It’s a very fluid business that we’re in – because we always try to be flexible with our customers, and if they ask us to push back a flight for various circumstances, we’ll do our best to accommodate,” Witton says. “So, one minute your flight might be on aircraft 82007, tomorrow it might be on 82009, and then perhaps changes again – until we make it run in the most efficient manner.”

It’s also a very technical business that doesn’t lend itself well to automation – such as through a cargo charter booking platform like that recently launched by CharterSync.

That might work for small aircraft, but not for the heavylift market, Witton says, adding: “We deal with freight forwarders and brokers, and they still like the personal service; talking to somebody. Some would be quite happy communicating by email, but at least you know there’s some human there. If it starts going automated through platforms like that, I don’t know how that will work. It’s a bit different from the executive jet market.

“Good luck to them. But it’s certainly not workable for our airplane. The technical needs are such that you need at the very least telephone calls and, at best, face-to-face discussions – where I can explain how we’re going to do something, and they explain what they can do with their cargo at a technical level. It’s only when you see each other eye to eye that you can gauge whether they really understand what you’re saying or not.

Efficient communications

That’s not always practical, he acknowledges. “But video conference calling is a big plus. At our new office in Stansted, we have a video conferencing platform being set up – because a lot of our US customers, in particular, like to see who they’re talking to.”

That’s not only because there are a lot of technical issues, but also the need to build trust. That is true whether the customer is a shipper, freight forwarder, broker, or agent.

“Obviously, the more layers in between, it’s more likely something can get lost in translation,” Witton notes. “But the good intermediary will at least open the door for a three-way discussion at a technical level – and feel that they can trust us in talking to their customer, without fear of having them taken from under their nose.” But the greater competitive concern is generally between intermediaries.

Pricing the job

Witton says pricing the job is the easier part, with the technical assessment and the solutions presented at a technical level taking longer and requiring the greatest level of care and attention.

The pricing can be done without having done the technical assessment – “to a point”, says Witton. “Generally, we’ll know what type of equipment we will need to provide, and if the customer has to put make some additional preparation. So, we can say: ‘Assuming you prepare the cargo in accordance with our needs, this is the sort of cost you’re looking at, from A to B, and this is what it includes and this is what it doesn’t include. If you want some extra service on top, then let us know’.

“If we wait for the technical solution before we price it, we wouldn’t react quickly enough for the customer. At the very least, they want to try and decide whether the air option is a workable solution. They can budget for it, and if they decide to go this way, then we can start digging into the details on how we’re going to do this. But they need a number in their head, first of all.”

Oil, gas, and energy sector

Demand from different parts of the energy sector has gone up and down in recent years, to some extent fluctuating according to oil prices.

“Our activity in the oil and gas market is when something goes wrong, such as an urgent need for production recovery, or there’s exploration taking place in an area which is difficult to reach,” says Witton.

“The exploration side of things is not as active for us as it has been – primarily, I think because some of the exploration projects are on a much smaller scale, or in a much lower budget, for whatever reason.”

Of course, when breakdowns happen, a different calculation comes into play. “But I think, nowadays, they still consider long and hard how much they really need the cargo before they commit to flying it by the Antonov, compared to years gone by.

“I would say the gas market is a little bit more favorable. But it could be a lot better; we had some good activity – particularly in the Far East – a few years ago in that market.”

But the growth of fracking has limited demand. “They’re not going to need the Antonov for that sort of activity because their components are much smaller,” says Witton. “I’m confident it could come back up again, but for us we’re in a lull right now (in that market).

“And whilst we’re in a lull in that area, we’re surging in others: aerospace, power generation, and even defence to a certain degree.”

Power generation projects

Power generation projects come in a variety of forms, from sustainable energy projects to disaster recovery.

We did a project last year with the 225 to Bolivia for a generating station,” says Witton. “The driving force for flying it was the terrain. They had to go to deepest, darkest Bolivia. The cargo came in through a port in Chile and had to get across the Andes, and air freight was the only option – because the components were so large and numerous. And when power plants go down, they need to be reactivated very, very quickly and that often requires flying components, sometimes great distances.”

Other recent projects have included responding to power supply problems in Pakistan that left a lot of people there without electricity. Some of this is triggered by the much greater demand on the energy systems for things like air-conditioning and telecoms systems than there was ten years ago. “So, when it goes down, everybody’s panicking a lot more than if an oil well has gone down,” Witton observes.

The requirement may be for power companies to source and replace the components, or set up generators, for example. “They know how much time they’re going to save, and they know how much generating capacity they’re gonna lose; and then they can do the maths and decide: do we wait or should we fly?”

He says Antonov has done some large wind-power generation projects in the past. These are “not as numerous as other areas or other components that we fly, but always interesting jobs”. The wind power equipment is relatively light, “but the size and geometry of the items are quite interesting when it comes to preparation”.

More often, the power generation projects are from conventional, fossil-fuel power generation – occasionally coal or oil, but more often gas, or diesel.

Disaster relief

Diesel generators are commonly needed for disaster relief.

“It seems that’s easier equipment to provide, particularly on a temporary basis,” notes Witton. “So, after some sort of humanitarian disaster, they need to provide significant power-generating capacity, so they set up diesel-based generating stations – often on a rental basis. If they need it to be flown out, which 9 times out of 10 they do, we can carry them out – often trailer-mounted, so it’s maneuverable to the site where it needs to be located. When it (the emergency) is over, they can send it back by sea.”

The origin points for these moves are often Europe’s main industrial countries like Germany, France and Italy. “And Eastern Europe is becoming more important for us, especially in the power-generation sector,” Witton says. For example, there is a major manufacturer of power-generation equipment in Budapest.

In terms of being a cargo-generating location, he says the UK is now “a shadow of its former self, even before Brexit”. In the subsea oil and gas field, for example, he notes that Leeds-based Cameron had recently closed down its UK manufacturing operations after being taken over by multinational Schlumberger in 2016 – and with it “one of the UK’s last cargo exporters was lost”. However, the closure was reportedly largely due to a downturn in the oil and gas industry rather than just another casualty of Brexit.