Middle Eastern carriers expand worldwide

Middle Eastern carriers expand worldwide

Since January, Emirates Skycargo has launched three routes to the continental U.S., the most recent of which is to Washington, D.C. This route, which complements the carrier’s new services to c International Airport and Seattle Tacoma International Airport, is propelled by the 113-percent, year-over-year, increase in UAE exports to the U.S. in 2011.

“The U.S. is a big market for us,” Menen says. He says the new routes have been so profitable, in fact, that Emirates SkyCargo is looking to increase capacity on each of them.

Europe and Latin America are also on the carrier’s radar, Menen says. After commencing service to Madrid in 2011, Emirates SkyCargo immediately launched a second freighter to the Spanish city. Heightened demand similarly led the carrier to institute nonstop service to Lisbon in July, a move that came only six days after Emirates

SkyCargo launched flights to Barcelona. Menen cites the carrier’s new services to Rio de Janeiro and Sao Paulo, Brazil, as showing immense growth potential, as well. Basically, Menen says, Emirates SkyCargo isn’t looking to expand in one particular region — it’s targeting the entire world. “You can connect the dots,” he says, laughing.

Saudi Cargo is on a similar growth trajectory, according to Peter Scholten, the airline’s vice president, commercial. On March 25, the carrier instituted twice-weekly freight service to Saigon, with routings to Vienna and Frankfurt commencing on the same day. Scholten maintains that the latter destinations are particularly key to Saudi Cargo’s growth strategy. “Frankfurt is the financial and transportation center of Germany — the largest and most important market in the European Union — while Vienna is the gateway to Eastern Europe,” he says.

And, Europe, Scholten says, is Saudi Cargo’s biggest growth market. Despite the financial turmoil in the eurozone and the havoc it’s wreaking on worldwide trade, the carrier has doubled its business in Europe this year. “Basically, we took back business to places we should have been flying to before,” Scholten says.

Saudi Cargo is also thriving in African markets, he asserts. Together with its interline partners, Saudi Cargo now serves the West African cities of Abidjan, Accra, Cotonou, Douala, Libreville, Lome, Malabo, Niamey and Ouagadougou from its Lagos, Nigeria hub. The carrier also introduced a second freighter on its weekly route to N’Djamena, Chad, in May, due to increased customer demand. Scholten acknowledges that these destinations aren’t traditional hotspots for cargo, but says they’re critical routes for Saudi Cargo.

“I think it’s the mixed markets that we service where we are able to generate growth, compared to the other airlines,” he says. The carrier’s 26-percent, year-
over-year, increase in cargo activity from January to June backs up Scholten’s assessment. Saudi Cargo also recorded a 25-percent, year-over-year, surge in airfreight revenue during the first six months of 2012, with May and June breaking decades-long records.

“Look at us; look at our neighbors,” Scholten says. “The big four airlines in the Middle East — Qatar, Emirates, Etihad and Saudi — we’re all on a growth spurt.”

Recent International Air Transport Association statistics add fuel to his argument. While carriers in other regions saw cargo demand plunge by as much as 14 percent, year-over-year, in the first eight months of 2012, Middle Eastern airlines recorded double-digit cargo growth in every month but January.

Emirates’ Menen believes the prime real estate enjoyed by Middle Eastern carriers is propelling volumes. In addition to being next to “huge, growing economies like China and India,” he says the Middle East’s geographic centrality makes it a natural hub. “Don’t forget,” Menen says, “in eight flying hours, we have access to 5.8 billion people in the world. Two-thirds of that is just east of us, and two-thirds of that is India and China, which are the factories of the world. On the other side is the Middle East itself — and the Gulf economies are all firing up.”

The Middle East’s neighbor to the south — Africa — is also enjoying economic growth, due to the region’s prolific mining and farming sectors. Menen says cargo is often flown out of Africa, since the continent is largely landlocked, and trucking cargo from one nation to another may be unsafe.

Africa, however, is fraught with infrastructure challenges, he explains. Menen says Middle Eastern carriers are responding to this problem by flying African cargo to their own airports. “The advantage we have is that we have a better infrastructure, so we become a hub,” he says. “It’s one of the reasons we’re seeing the kind of growth that we’re seeing.”

Dubai, in particular, is seeing the brunt of the traffic. Abdulla Mohammed Bin Khediya, head of cargo services at Dubai Airports, reveals that 70 percent of Middle Eastern cargo transits through Dubai, before it is then trucked to neighboring nations or flown elsewhere. Bin Khediya says such volumes led to the creation of secondary airport Dubai World Central-Al Maktoum International Airport, which opened to cargo operators only in June 2010.

The region’s primary airport, Dubai International, is more than 50 years old, he explains, and officials believe it will become congested within a few years. “There is no way to expand, so Al Maktoum International is our relief,” Bin Khediya says. “And I think opening in 2010 was wise, so we that we have the space and the proper infrastructure to handle [the volumes we’re seeing].”

In September, Dubai Airports announced its $7.8 billion Strategic Plan 2020, which will fund renovations to Dubai International’s cargo facilities and build a new transshipment facility for freight transferred between Dubai International and
Dubai World Central. The first phase of construction is slated to begin soon and involves a 30,000-square-meter addition to Dubai International’s 1.2-million-tonne Cargo Mega Terminal, a move that will increase the CMT’s freight capacity by 25 percent.

Dubai International’s original freight facilities — Hall A and Freight Gate 1 — will also undergo full reconstruction, with Emirates scheduled to occupy both facilities. Menen says Emirates’ current CMT at Dubai International, which offers 1.2 million tonnes of annual freight capacity and spans 43,600 square meters, is also essential to operations.

“The facility is vital to the efficiency and speed-to-market that our customers expect, and its role is even more important as we continue to meet those expectation levels [while simultaneously] managing the growth of our operation,” he says.

So far this year, Emirates has taken delivery of 21 new aircraft, including two Boeing 777Fs, and added 12 new routes to its network. “Of course,” Menen says, “increased capacity and new trade lanes all contribute to increased volumes, and that growth in trade is only sustainable thanks to the continued investment we’re making to ensure we are using the latest technology and industry-leading processes at CMT.”

An influx of traffic similarly led officials to renovate King Abdulaziz International Airport, Saudi Cargo’s home base. Upgrades began in 2006 and involve expansions to the airport’s current runway and airfield systems to accommodate the Airbus A380. Due to the soaring import levels into Saudi Arabia, experts say the extra belly-hold capacity afforded by this aircraft will likely be put to good use.

Scholten admits that Saudi Arabia’s — like the rest of the GCC countries’ — market position is better than many of the traditional world leaders. And Middle Eastern carriers, he says, are capitalizing on this prosperity. “The world is shifting,” he says. Instead of European and American carriers dominating trade lanes, he says carriers in emerging markets are rising up. Scholten projects that by 2017, the Airports Council International rankings of top cargo airlines will look vastly different than they do today.