Taobao’s hidden air cargo connections

Retail spending through online channels continues to surge in most markets around the globe. This has made it easy to identify the role of air freight in replenishing inventories and in supporting expedited deliveries. But in recent weeks, Taobao, one of China-based Alibaba’s online shopping platforms, has been auctioning-off more than just commodities that demand air cargo transport – recent auctions have included freighter aircraft, and new sources of revenue for freighter operators.

Last week on 21 December, a 747-400ERF was sold in a Taobao auction for US$23.3 million to a foreign bidder by the name of “Eshel Heffetz”. Although Xinhua was unable to verify the identity of the bidder, Cargo Facts believes this is the same Eshel Heffetz serving as a fleet planning consultant for Israel-based CAL Cargo Airlines. If CAL is indeed the winner of this auction, it will be the fourth 747-400F to be inducted into the carrier’s fleet. The aircraft (35169) was the third and last remaining 747-400ERF from the fleet of long-defunct Jade Cargo International.

As we recently reported, the three Jade freighters were put up for auction on Taobao in November, and the first two were successfully acquired by SF Express (35173 and 35174, which had been stored at Shanghai Pudong International). No acceptable bid was made for the third aircraft (35169, which had been stored at Shenzhen Bao’an Airport), and so it was relisted with a reduced reserve price of just $14.9 million (down from $18.6 million in the first auction).

China-based Jade had six 747-400ERFs when it folded in 2011 – three leased, and three owned. The three leased freighters were returned to the lessors, but the three owned units were a problem, because, as Jade was running into trouble, the local bank that had financed the purchase of those freighters had increased its loan against them to keep Jade flying. By the time of the bankruptcy, the loans against each freighter had ballooned to a reported US$150 million, but, under Chinese law, the bank (which is state owned) was not allowed to take a loss against them. Six years later, these three have finally been sold via online auction.

But freighters are not the only thing for sale on Taobao. On 12 December, an opportunistic China-based cargo carrier auctioned off rights to its livery on a single 737-300F. For $313,000, the winning bidder has bought the rights to emblazon the fuselage of a 737-300F with an advertisement or design of its own choosing. For a period of three years, the seller claims the ad-clad freighter will be visible by day as a giant billboard at Hangzhou’s Xiaoshan Airport. By night, the aircraft will continue to be used in regular commercial freighter service on flights to Wuhan and Chengdu.

Just which carrier is exploring new revenue streams with its freighters? Our guess would be YTO Express Airlines or SF Airlines. Both carriers have 737-300Fs based in Hangzhou.  SF flies to Wuhan and Chengdu, while YTO only flies to Chengdu. But with two more 737-300s in conversion, YTO will soon be launching new flights, and Wuhan and Hangzhou are not unlikely city pairs.

After freighters and livery rights, we question what Taobao’s next air cargo connection could be? Pilots would surely be in high demand, but would violate the rules of the platform.