Will Waters asks cargo airlines and freight forwarders about their choices of stations and what makes a cargo airport attractive.
The development of a cargo airport often seems a chicken-and-egg situation, with airlines choosing to fly to gateways that have a critical mass of cargo and customers, and forwarders locating where there is a good network of flights. And in the same way that a country’s cargo volumes tend to correlate closely with the nation’s GDP, cargo development at airports often largely reflects the size and economic health of the population it is located within.
But there is more to it than that, particularly when it comes to regional and specialist cargo airports, where some make steady progress and others may briefly show promise, but ultimately fail to deliver.
Cargoitalia MD Roberto Gilardoni makes a distinction between emerging cargo airports that can play an alternative role to traditional hubs in established markets, such as Hahn, Maastricht, Zaragoza and Brescia in Europe, as opposed to those in rapidly developing markets – which may be the main airports for large cities and their local or regional air freight market, and which may develop into major metropolitan cargo and passenger airports.
He believes making progress for the first category of airports is far tougher than for the latter group, since they need to provide some strong added value to compete with their bigger and stronger neighbours – Frankfurt, Amsterdam, Madrid and Milan, respectively.
Gilardoni’s third category of expanding cargo airports is those that have benefited from specific major logistic developments – such as Germany’s Leipzig, which has risen from near-zero volumes in 2007 to 528,000 tonnes last year, thanks to DHL’s move there in 2008. Other airports chosen as major bases by one or more of the integrators, such as Belgium’s Liège (TNT) and Cologne-Bonn Airport (UPS), have also seen tremendous recent growth, at a time when volumes in the more mature Europe and North American general air freight market have been relatively static – apart from the extraordinary peaks and troughs of 2009 and 2010. This third category could also be seen to include some of the emerging airports in the Middle East, such as Abu Dhabi, Doha and even the new Al Maktoum International Airport at Dubai, which have been receiving tremendous levels of investment in their cargo facilities and surrounding logistics infrastructure, as well as in their respective local airlines.
Gilardoni’s second category of cargo airports, emerging metropolitan airports in rapidly developing markets, could apply to dozens around the world, but notably, at the moment, would include several in China, including Tianjin, Chengdu, Shenzhen and Chongqing, and a number in India, such as Kolkata, Chennai, Hyderabad and Bangalore. It could also include several others in rapidly developing Asia, including Kuala Lumpur, Jakarta, and Hanoi. Meanwhile, the new Bangkok airport, with 1.25 million tonnes last year, has now emerged to join the top-tier international metropolitan airports.
Elsewhere, this category might be said to include Turkey’s Istanbul Ataturk Airport, where volumes increased 23% in 2010 to more than 417,000 tonnes; perishables hubs like Nairobi, Kenya or Bogota, Colombia, where volumes grew 16% to 447,000 tonnes last year; Addis Ababa, the home base to ambitious Ethiopian Airlines’ growing freighter network; and airports attracting cargo services related to oil and gas developments, such as Baku (Azerbaijan), Almaty (Kazakhstan), Yerevan (Armenia), Erbil (Iraq), or Luanda (Angola).
Brazil’s Viracopos/Campinas International Airport differs slightly, since it is being specifically promoted as a cargo airport for the São Paulo area, in order to free up capacity at São Paulo-Guarulhos International Airport for passenger services. Tianjin is similar in that respect: China has designated Tianjin Binhai New Area as the international shipping and logistics centre for northern China, and as a result, all new cargo airlines wanting to serve northern China’s Bohai area will now need to use Tianjin Binhai International Airport, rather than Beijing Capital airport, 120km away – although Tianjin is a large developing metropolitan area itself.
The development of cargo airports in China has clearly been phenomenal, with many averaging growth rates of more than 20% a year for the last decade. Guangzhou Baiyun International Airport saw air freight volumes top 1.1 million tonnes in 2010, while nearby Shenzhen handled more than 800,000 tonnes, a year-on-year increase of 33%. Chengdu in western China has seen volumes increase twentyfold since 2003, handling 432,000 tonnes in 2010, making it the sixth largest air freight hub in China.
Impressed with the airport’s progress and ambitions, and the movement of some of the world’s big manufacturers to the area, Jade Cargo International made Chengdu its hub for western China in December 2009. It was this potential that attracted Jade there, rather than particularly good cargo infrastructure or international cargo handling experience at the airport, but with the operations now in a new cargo terminal, handling standards have improved significantly, the airline says, and are rapidly catching up.
Tatyana Arslanova, executive president of AirBridgeCargo Airlines (ABC), expects China’s strategy of directing investment in manufacturing towards western China will generate increasingly high levels of air cargo business for ‘secondary’ airports such as Zhengzhou, Chengdu and Chongqing, making them attractive for forwarders and cargo airlines. “The competition situation in these smaller airports is also not so severe as in Shanghai, Hong Kong or Beijing,” adding to their appeal, she adds.
Zhengzhou is among a number of secondary airports in ABC’s network, including Maastricht, Zaragoza, and Russias Yekaterinburg and Krasnoyarsk. These complement its established airports such as Frankfurt, Amsterdam, Paris, Milan, Shanghai, Hong Kong, Beijing, Tokyo and Seoul, and its two Moscow hub airports, Sheremetyevo and Domodedovo.
Airlines and forwarders agree that cargo airport choice tends to be determined by a combination of some or all of the following factors: market potential, including size, growth rates, and levels of competition; requests from customers; how well it fits into an airline’s network; sector length; distance from the major cargo origin or destination areas; landing and other airport fees or incentives; presence of freight forwarding customers; a good network of airline connections for interlining; speed of processing cargo and aircraft, and lack of airport congestion; handling facilities and costs; slot availability; availability of affordable road feeder services; and affordable fuel prices.
“I would add 24-hour operations, with no curfew at night, and airport facilities such as runway length, and ILS Cat 3 for low-visibility operations,” adds Gilardoni.
Tatyana Arslanova, executive president of AirBridgeCargo Airlines (ABC), says maintenance facilities, airport capacity, availability of certified cargo and ground handling agents, and guarantees of flight-safety compliance are also important, along with up-to-date IT systems.
She adds that successful cargo airports create favourable business conditions for all the participants of the supply chain – freight forwarders, brokers, airlines, airport authorities, trucking and handling companies. “Only then will the airport see the benefits from being cargo oriented.”
But she particularly emphasises the importance of building a good environment for freight forwarders, “because they are the companies generating cargo volumes and bringing business to the airports. It is obvious that primarily an airline needs to have stable demand and see market potential to introduce new flights from this or that airport.”
She adds: “Freight forwarders tend to build their supply chains in accordance with their needs, and sometimes secondary airports are chosen because they are located closer to the final consignee or shipper, and it therefore takes less time to truck there than to major hubs like Amsterdam or Frankfurt.”
Maastricht Airport, for example, is located in a region that hosts dozens of European distribution centres for international companies, including those for air-freight-friendly manufacturers like HP and Philips.
David Lara, VP of global airfreight procurement at Ceva Logistics, says that nine times out of ten, it is the airline who determines where they will fly to, largely on the basis of their costs are going to be. But there is an opportunity for major forwarders to influence them.
“What drives us is looking at the whole supply chain, and how we can move our customers’ business more quickly and efficiently through one airport or another. And that is where some of the carriers have certain advantages, in the manner in which they choose their airports,” he says.
“This is why it is important to have a mature relationship with your partners, because that gives you an opportunity to shape their schedule around your customer base. If you can sit down with a strategic airline and a customer who understands the benefits of a tripartite discussion, you can have a sensible discussion built around, for example, where can we operate, how can we fill your plane, where is the most expedient airport to put it into? And that is where you start to be able to build a process where you deliver what the customer wants, and that the airline can deliver.”
He says whether the airport is appropriate depends on the nature of the cargo and the facilities at the airport. But an uncongested airport like Maastricht can handle freight very efficiently. “You can get the freight in one door and out another in minutes, compared with hours in a major metropolitan airport.”
But location is also a key factor.
“You could have the most modern, efficient airport, but if it is in Inverness, in northern Scotland, and it takes 15 hours to get it by truck anywhere, then that would be a challenge, and so any advantage is lost,” he says.
But several airports have developed into serious cargo contenders on the back of their flexibility.
“Hahn and Maastricht are probably the two best examples in Europe, and Maastricht in particular, and as a consequence, there are customers that have moved to be near that airport environment,” Lara says.
Maastricht has come into its own particularly in the last three to four years, moving from being a charter airport to one with scheduled cargo flights, including Europe’s largest all-cargo airline Cargolux, as well as five or six flights a week from ABC.
Lara says these airlines will be there at the request of specific freight forwarders, serving and end customers that have business based around the Maastricht area, because of the proximity to the end customers and the ease and speed of handling at the airport. Lower landing fees are also another benefit that can be passed on to customers, and there is often much more operating flexibility at these airports.
Flights could be started on the basis of requests from multiple customers, or in some cases it could be a single large end customer.
“If you look at the hi-tech customers, they are often grouped in a certain geographic area,” says Lara.”
He believes it is not always necessary for a cargo airport to have big end customers in the immediate vicinity, if they have the right infrastructure and facilities, and are well run, although he says it is a chicken-and-egg situation for airports deciding whether to invest in the necessary infrastructure.
But both Hahn and Maastricht are also close to big metropolitan airports that have congestion issues – close enough for forwarders to transfer cargo between the two.
“Another example would be Stansted in the UK,” says Lara. “It is a couple of hours from Heathrow, and so airlines can run freighters in there instead of Heathrow, as British Airways and various other operators very successfully do. The links are good, the services are good, the handling is good, and I think it is a well managed airport. So, you have got the basic fundamentals of a successful operation, and forwarders don’t need to be there, because all of the freight can be back in London in two hours.”
This proximity to a major metropolitan airport does seem to be a key factor.
For example, while Ceva does have its own presence in Maastricht, it is able to cover Hahn successfully from Frankfurt, and Stansted from Heathrow.
Secondary airports in the US face some similar issues to those in Europe, although they also face the additional challenge of the recent decline of the US domestic air cargo market (see article on pages 26-31).
Gilardoni says interesting emerging cargo airports in the US include Midwest airports such as Rickenbacker in Ohio or Chicago-Rockford International Airport in Illinois, while Emirates has chosen to fly freighters into Toledo, Ohio. Ram Menen, Emirates’ senior cargo VP, says the service to Toledo was developed because of a large customer. “Although it is a longer flight than Dubai-New York, the flight goes in there fast and gets out fast – there is no holding and no waiting. It is quite central, has a large automotive industry around it, and we have Chicago almost next door. So it works out pretty well for us.”
Meanwhile, forwarder Panalpina continues to favour Huntsville International Airport, Alabama, which it has used for more than 20 years as a base for intercontinental freighter operations. Customers at Huntsville now also include Cargolux, Atlas Air, FedEx and UPS. Henrik Lund, Panalpina’s global head of air freight, says that for certain customers with exacting requirements, a specialist cargo airport is better than “mega passenger hubs”, adding: “In Huntsville we have perfect handling conditions and intermodal hinterland connections, and customer demand for this kind of service remains very high. It is the fast turnaround time of aircraft and the speed of handling from aircraft to the road feeder service departures, and it is perfectly connected to the areas where our customers are manufacturing, so we can offer them reliable, high-frequency services and products. Once you manage to attain high flight frequencies, as we have in Huntsville and Luxembourg, you can then reach out very far geographically.”
In Lund’s view, successful cargo airports usually needed to provide tailored solutions; sufficient infrastructure; speed of handling from aircraft to road feeder service departure; temperature-controlled facilities; and intermodal options, “as well as untapped potential to grow warehousing and distribution facilities, the flexibility of 24/7 operations, and, of course, cost competitiveness.”
He says the other benefits of non-metropolitan airports include fewer delays for the aircraft, ideal slot times, and excellent cooperation with, and support from, airport authorities
“But there always has to be a certain customer base and demand – either existing or expected,” he adds.
So airports, take note: just fulfil the above forty or fifty criteria, and success awaits. It is as simple as that…