AIR CARGO QUARTERLY - US carriers sell connectivity in competitive Chinese/Asian market

By: | at 08:00 PM | Channel(s): Air Cargo News  

By Karen E. Thuermer, AJOTAmerican Airlines (AA) has jumped into the burgeoning China arena and according to AA executives, they are thrilled!AA, the main subsidiary of AMR Corp, began flights to China on April 2 when it commenced daily 777 non-stop service between Chicago O’Hare International Airport (ORD) and Shanghai Pudong International Airport (PVG). While passenger driven, the new service offers opportunities for air cargo as well.
By offering the service from ORD, an airport that holds the unique distinction of being the nation’s only two-carrier international hub, American Airlines can capture the depth and breadth of business that feeds into ORD from all regions of the country. For some areas, O’Hare operates as the primary and only link to international markets.
“The biggest buzz in the industry over this service is its ability to connect with our daily service to Latin American,” comments Spencer Dickinson, managing director for AA cargo marketing. “Our strength has always been in North and South America and trans-Atlantic between the United States and Europe.”
Given the fact that large multinational manufacturers today are focusing efforts on global supply management that requires producing parts around the world, having this type of connection is a real asset.
In November the carrier added daily 777 service between Osaka Kansai International (KIX) and Dallas Fort Worth International (DFW), which followed its new Nagoya-Chicago (NGO-ORD) service that began last May. AA also services Tokyo’s Narita (NRT) with service from Dallas, Chicago, New York, and Los Angles. Also in November, American Airlines launched daily non-stop service from Delhi, India to Chicago (DEL-ORD). With the new service, Shanghai becomes the 19th international destination served by American from its Chicago hub. An added benefit, from Shanghai, American can offer connections to cities within China through its long-standing partnership with China Eastern Airlines, which is based in Shanghai and is that city’s largest carrier.
“These services add a nice addition to our network,” Mr. Dickinson says.
“When we look at our network, we are proud of the fact that we are the world’s largest carrier that does not utilize freighters,” says Mr. Dickinson.
Given China’s unprecedented growth, executives at American are convinced this awakened dragon will continue to present increasing opportunities. “We think it makes great sense for us to be there,” Mr. Dickinson adds. “I expect American Airlines will continue to look at the marketplace. The key is we are interested in providing the type of service customers need and want.”
Reliability and connectivityFor years, the Asia Pacific region has been critical to United Cargo. United has a dominant position in China with 28 weekly frequencies to the United States — the most of any carrier.
Neel Shah, United Cargo Vice President of Sales and Marketing, comments that China is no longer “the goose that is laying the golden egg.”
“The rates are more competitive,” he says. “It’s a place where sometimes you have to scrape to fill your airplane, whereas before you only had to be an order taker in China. The customers just showed up. The game has changed.”
The carrier continues to have robust volumes out of Hong Kong, Singapore, Bangkok, and Taiwan. “We interline a lot of traffic on carriers out of the Philippines, even Bangladesh and Pakistan and India,” Shah states. “Overall, the region continues to be robust. But specifically with China, with all the additional capacity—and we feel even more capacity will come in the near future, things are a little different. It is a more competitive environment.”
United expanded service considerably during 2004/2005 by concentrating new service into Asia, especially China, Japan, and Vietnam. Last year daily service commenced between Nagoya and Taipei, supplementing daily frequency between the new central Japan International Airport near Nagoya and San Francisco. In April, United A

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