Rising to the challenge

posted on 27th May 2020
Rising to the challenge

Roger Samways, VP cargo sales, American Airlines Cargo

What have been the biggest challenges?
Because we fly cargo on our passenger flights and do not operate freighters, the decrease in passenger demand directly impacts our ability to fly cargo. However, this has also presented opportunities – the biggest of which has been the creation of a cargo-only network which utilizes our passenger aircraft to move cargo to areas of greatest need.

During this situation, safety remains our top priority, and we’ve implemented measures over the last few months to care for our team members, customers and vendor partners in response to the COVID-19. We have implemented measures beyond CDC recommendations to ensure we are compliant with all directives for preventing the spread of COVID-19 at our facilities and on our aircraft. The most recent measure is to provide masks to all front-line team members. Additional measure include:

A dedicated 24/7 COVID-19 support desk at our Integrated Operations Centre (IOC), led by our staff doctor to lead coordinated response efforts and contingency plans

Enhanced cleaning in all facilities

Providing disinfectant wipes and hand sanitizer for airport team members and all cargo locations
Restricted access to all locations, including restricted movement between teams and workgroups

Enhanced aircraft cleaning procedures, including fogging

Temperature checks for operation-critical employees and self-monitoring for all others

How have you responded to these challenges?
These challenges are unprecedented, and we’ve had to adapt. But our teams are well prepared to do exactly this and we have found unique ways to meet our customer needs. For example, following the reduction in our passenger schedule, our team was able to work collaboratively with many different groups across American Airlines in order to begin operating cargo-only flights. Initially these were focused on a couple of key routes between Europe and the US, but we have quickly expanded our operations and will be operating close to 100 international long-haul cargo flights per week in May. This collaborative effort has enabled us to continue to meet the needs of our customers, to bring much needed PPE, medicine and medical supplies into the US, as well as providing work for people across the American Airlines team.

Has there been any significant cooperation between stakeholders?
Getting cargo-only flights approved and off the ground takes a lot of collaboration across multiple groups. For example, network planning, revenue management teams, government affairs, legal, crew scheduled and operations, the list goes on. As these flights are operating separately from our typical network schedule, it also requires approval from the destination airports and various government entities around the world.

What challenges and opportunities have been presented by the introduction of cargo-only passenger aircraft services? What proportion of your ‘normal’ cargo capacity are you currently operating?
Lots of opportunities… and lots of challenges! Without passengers, our capacity to carry cargo in our aircraft expands because of lack of baggage and increased payload capability. Also, working on a cargo-only schedule has given us a certain amount of flexibility in terms of where we operate and with what aircraft – this has enabled us to meet some very specific customer requests, which has been great. On the flip side, the additional flying requires a huge amount of coordination between different groups, and we’ve learned a lot about things as diverse as the approval needed to operate in Russian airspace, crew rest and hotel requirements, airport capabilities and aircraft maintenance requirements. By late April, we were operating 46 international cargo-only flights each week on our widebody aircraft, in addition to our 17 weekly passenger flights to London and Tokyo. This total number is expected to nearly double in May.

Has the increased number of healthcare-related shipments, for example testing kits or personal protective equipment, presented any particular operational challenges?
The main challenge we’ve experienced is that we’ve had more demand than we can accommodate. There have also been varying challenges related to changing customs requirements in some countries that have taken some extra efforts and time to resolve.

What new opportunities have arisen, amid the undoubted challenges of the last few weeks?
We’ve had the opportunity to implement some new projects that have been under discussion for some time. Most notable is our Fair Booking Policy that we announced on April 15, with an effective date of May 1. The policy is meant to mitigate unused space, especially when demand is critical, by implementing fees for late cancellations, late changes or bookings which no show. Particularly now, as an industry we have a very limited number of daily flights around the world and we have a responsibility to protect and utilise capacity as effectively as possible. This is space that could be used to move life-saving medicines or critical commodities, so we must do everything we can to avoid wasted cargo capacity and to ensure that we have as positive an impact on the world at a time when people are counting on us so heavily.

It’s also been a great opportunity to further raise the profile of our cargo business within the company. Cargo has always been a valuable contributor to the bottom line, and the current efforts just help to highlight the important role that the team plays.

To what extent has increased pricing on certain lanes in response to cuts in capacity made up for losses of capacity and demand?
The available cargo capacity across all air cargo carriers has been greatly reduced due to COVID-19, which puts us in a unique situation regarding the economics of operating cargo-only flights. Since we’re a passenger airline that carries cargo in the belly of our planes, in normal times our network schedule is primarily influenced by passenger demand.

However, market rates are higher right now than we would normally see, which makes running cargo-only flights using PAX aircraft feasible. We look at this as a win-win – we provide much-needed capacity for our customers to move critical shipments, positive cash-flow for the company as well as providing additional work for our team members. That said, while we are excited to offer cargo-only flights as a solution for our customers and our business, they can in no way fill the revenue gap resulting from our broad network reduction.

Have you had to let go of or furlough significant numbers of cargo staff?
As a company, we have offered employees temporary leave and early out opportunities if they wish to take them. However, no employees have been furloughed. We’re grateful for the relief and support we are receiving from the government stimulus bill and are working to ensure we are taking care of team members during these times.

Has the changed environment meant you have had to change your charging structure – for example via cargo handling surcharges?
The massive reduction in passenger demand in addition to governmental travel restrictions significantly disrupted cargo commerce and has significantly impacted operational efficiencies of scale. For that reason, we did implement a Peak Surcharge for international shipments toward the end of March to help mitigate that loss.

To what extent have contractual arrangements prior to Covid-19 had to be suspended – for example, long-term pricing contracts and blocked-space agreements?
We’ve honoured these agreements to the extent that we can considering our current schedule and capacity.

Handling and quality challenges

To what extent has it been possible to maintain normal levels of service or handling times in recent weeks?
Our Operations team continues to do an incredible job to protect customer service level during these unique times, and our performance metrics, including our flown as booked performance, have been excellent.

We’ve not experienced issues with ground handling during this time, and our performance metrics have in fact been excellent. While we have received approval from the FAA, as have all US carriers, to carry cargo in-cabin, there are logistical challenges to doing so. One of those is loading time as this is an entirely new process and time on the ground doesn’t always allow time for in-cabin loading. Because of this, we are evaluating which routes might make using upper deck space a feasible solution.

What have you done to help protect staff from exposure to the virus itself?
Many of our frontline team members now wear masks. In addition, we supply our cargo stations with extra hand sanitizer and wipes and enforce proper social distancing guidelines. We have changed up eating in break areas to accommodate social distancing, started to install plexiglass at counters, and have implemented additional and more frequent cleaning of equipment and facilities. We’ve also implemented a work from home policy for those employees who are able, set regular temperature checks at some of our facilities for team members working from those locations, created a rotating staff scheduled to mitigate the number of employees in one location at once, and created a COVID-19 support desk available for all employees 24/7.

Contingency planning

To what extent did your contingency planning prepare you for the various scenarios that it has thrown up?
Our teams often hear a phrase called “adaptive advantage”. This is a mantra all cargo leaders adopt, and while this circumstance is not one we have seen before, we are so proud of the way we have all worked together and even taken on new roles and responsibilities to meet the changing needs of our business and our customers.

What lessons have been learned for future contingency planning?
The lessons we’ve learned now will continue to help us in the future, and we will continue to learn from this experience even once it is well behind us. We’re already more nimble and know what can be accomplished when we all come together to solve a problem. It’s been a testament of great team work in uncertain circumstances and we can be motivated by that in the future.
How well do you feel the air cargo handling sector has responded to the various challenges?
Air cargo plays a critical role in the world economy – 30% of world trade moves by air. As an industry, we have recognized that now it is as important as ever to ensure we keep goods moving around the world. Certain infrastructures have stalled, and we see shipments shifting to air transport that may not typically travel that way. The urgent need for medical and food supplies is an example of something that the air cargo industry can quickly work together to solve. It’s encouraging to see other airlines also striving to find solutions, like taking out seats to allow for more PPE cargo space or flying speciality shipments for their country’s health organizations.

How do you see the situation evolving over the coming weeks and months?
As passenger routes are added back into our schedule, we will carry cargo on these regularly scheduled flights. Additional cargo-only flights will continue as we have the demand and aircraft to do so, but I anticipate a gradual transition back to our regular model of carrying cargo on our passenger routes. We’re all taking this one or two months at a time and it is hard to predict a timeline for any of this with any certainty.

What preparations do you have in place for volumes returning to more normal levels as restrictions are eased?
We have a working group at the airline that is tasked with these discussions.

Do you have any other comments or observations about the current challenging environment?
In situations as severe as this, it’s really easy to become very inward looking. We can spend time wishing that things were different and talking about the need to simply “survive” the crisis. Ultimately though, as challenging as this situation is, it presents a great learning experience – one which we will benefit from in years to come – as long as we can maintain a positive mindset. So, let’s keep focusing on the things that we can control and not worry about the many things that we can’t, remain positive, and be grateful for all that we still have.