IAG Cargo sets sights on digitalization, new routes

IAG Cargo is prioritizing its digitalization efforts and routes into Asia Pacific, Chief Executive David Shepherd told Air Cargo Next . In its full-year 2022 financial results , IAG saw slightly lower year-over-year commercial revenue at 1.6 billion euros ($1.7 billion), 44% higher than 2019’s total commercial revenue. The high cargo-driven results paired with a strong rebound in passenger services helped bring the carrier out of a $2.9 billion deficit at the end of 2021. Customer engagement via digitalization IAG is prioritizing digitalization for a “younger, more digitally savvy customer base,” Shepherd said. Internally, IAG has replaced older systems with “top of the range digital solutions” for unit load device management and warehouse management, he noted. “Until recently, we’ve been using systems that are, by and large, green screen, replacing those with much more intuitive, much more savvy, easier to interact with [systems] to integrate within the full operating platform,” Shepherd said. To ensure high customer engagement, IAG is making its digital distribution system more user friendly. The carrier replaced its booking platform, a legacy system built by British Airways, with IBS Software ’s iCargo platform, he added. On the digitalization and sustainability fronts, the carrier is aiming for 100% customer compliance with e-air waybills. It also has begun testing airside electric vehicles, which could replace its fleet of 600 ground vehicles. Sustainable aviation fuel remains “critical” with ongoing partnerships with Bollore , Kuehne+Nagel and DHL driving demand for the fuel, the CEO said. 2022 results The main change for IAG in 2022 was the shift in its mix of passenger and freighter operations, Shepherd said. Although IAG experienced a softer fourth quarter due to a lack of peak season, this mix had a greater effect on operations, he said. 2022 saw the carrier shift away from converted freighters and charter services to resumption of passenger routes, such as London Heathrow (LHR) to Bangkok (BKK) and Hong Kong (HKG), as well as Tokyo Haneda (HND) in November, with more bellyspace capacity for cargo. While 2021 saw high demand and large cargo loads, 2022 saw lower cargo loads and fewer charter services, Shepherd noted. “The passenger airlines, particularly British Airways , returned to close to the full force of flying in the latter end of last year,” he said. “We've had a resumption of flying at a considerable level on the North Atlantic. There are now over 70 widebody aircraft per day flying across the Atlantic between [subsidiaries] Aer Lingus, Iberia and British Airways.” North Atlantic route destinations include Chicago (ORD), Miami (MIA), Los Angeles (LAX) and Seattle (SEA), as well as destinations in the Caribbean and Latin America. This year, the carrier will add a route to Cincinnati (CVG), which Shepherd expects will be strong for cargo, he added. 2023 outlook In 2023, the carrier also hopes to resume more routes to Asia Pacific as well, Shepherd said. “We’re keen to see our Asian business get back to strong growth,” he explained. “We have our resumption of flying to China in quarter two this year, so depending upon the destination, between April and June, we’re putting up more aircraft of a passenger nature on those routes.” IAG still is flying to Asia Pacific less than it had pre-pandemic, partly due to ongoing COVID-19 restrictions as well as the war in Ukraine, which has restricted several routes to the region. However, with the potential for new routes this year, IAG plans to get back to being a “truly global network carrier,” he added. Shepherd assumed his CEO role in October 2022 after serving as managing director and helped bring the carrier back into the black in 2022 after two years of pandemic-era losses.

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