Air Cargo Quarterly - British Air World Cargo

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BA World Cargo looks to the future with optimism
By Karen E. Thuermer, AJOTThe airline industry is flying through dark clouds these days, but the sun does shine on the freighter business, particularly for international carriers, and British Airways World Cargo in particular.
Quarterly figures recently released by BA World Cargo indicate the carrier continues to show strong growth. In the third quarter from October 1 to December 31, 2004, better utilization of capacity has enabled BA World Cargo to achieve sharp increases in volumes, exceeding its growth in capacity. As a result, the carrier may have realized only a 1.7% increase in capacity, but an increase in carried volumes of 8.1% in comparison to the same quarter last year. As a consequence, the overall load factor is up by 3.9 points. This strong performance has been achieved by working more closely with customers, and identifying areas for growth.
Flown revenues for the third quarter are 134.4 million British Sterling, which, compared to last year, represents a 12.5% increase, excluding the impact of exchange rates, or 6.3% including the exchange rate movements. Yields for the quarter are down 1.6%, but when the effect of the exchange rate is removed, yields have grown by four percent across the network—all this while unprecedented fuel prices have hampered the industry.
Expanded network
Key to increasing its capacity, BA World Cargo expanded its freighter network by wet-leasing four freighters to provide a flexible and comprehensive service to customers.
“This doubled our freighter capacity in the past five years,” comments Keith Packer, senior vice president commercial, BA World Cargo. “Our freighters now serve many key trading lanes throughout the world and, earlier this year, we established the United Kingdom’s first direct freighter service to Shanghai.”
Regular British Airways passenger service to Shanghai is scheduled to commence this summer between London-Heathrow to Shanghai, subject to approval by the Chinese authorities. Shanghai Pudong airport is due to open a second runway and British Airways is talking to the Chinese authorities about securing take-off and landing slots in Shanghai for five flights a week with a Boeing 777 aircraft.
The airline currently flies from London-Heathrow to Beijing four times a week with a Boeing 777. This will increase to six times a week from June 2005. British Airways also flies a Boeing 747 from London-Heathrow to Hong Kong 17 times a week, which will increase to 21 flights a week from June 2005.
Closer to home, however, British Airways has responded to tightened market conditions similarly to the way US carriers have managed their domestic routes.
“In Europe, many of the fleet’s wide-bodied aircraft have been taken out of service, which has significantly affected our capacity,” Packer says. “As a result, last year, a joint venture with DHL was established to utilize space on DHL’s 757 aircraft to serve a wide variety of destinations throughout Europe. This has provided faster connections for customers and has increased British Airways World Cargo’s capacity in Europe.”
Rates on passenger flights within Europe have been severely impacted by the decision by airlines in the United States to offer extremely competitive rates to customers as a result of their need to inject cash into their businesses.
“However, we remain competitive in the United States and the addition of Chicago to our freighter schedule has brought real benefits to our business in the region,” Packer remarks.
Unlike some carriers, however, Anti-Trust Immunity laws prevent British Airways World Cargo from establishing effective alliances with other airlines.
“We feel that without forging fully integrated partnerships, there’s little value in pursuing these opportunities as there will be no real benefits to the customer,” Packer says. “Therefore, while current legislation remains in place, we are happy to build relationships directly with the customer and remain focused on del

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American Journal of Transportation