At TIACA’s 2016 Air Cargo Forum last week, the exhibition halls were bustling. Many delegates had already made their initial loop around the hall by the time the first panel, “Air Cargo: What lies ahead?” was presented. During the journey round the halls, one could hardly avoid bumping into large stands presented by Volga-Dnepr Group and Silk Way West Airlines — carriers that have recently entered the European air freight market.
Noting that traditional European carriers like Lufthansa Cargo, and Air France-KLM were also present in full-force, we tried to use the exhibition hall as a crystal ball to what may lay ahead. Both Air France-KLM and Lufthansa Cargo are well into their respective restructuring plans which aim to cut the fat, and make operations leaner and more efficient. Meanwhile, a recent report from DVZ indicated that fellow European all-cargo carrier Cargolux may also be evaluating some sort of restructuring plan. With a sizable freighter fleet, high double-digit year-over-year FTK growth, and orders for up to 15 additional 747-8Fs, Volga-Dnepr Group’s strategic plan, on the other hand, does not run in parallel to its European compatriots.
If just three phases separate a newly-launched carrier from an established carrier, then Volga-Dnepr Group has just entered phase three, the group’s recently-appointed senior vice president of sales & marketing, Robert van De Weg, told Cargo Facts on the sidelines of the forum. In the beginning, Volga-Dnepr Group’s three carriers, Atran, AirBridgeCargo, Volga-Dnepr Airlines, (and, recently, affiliate CargoLogicAir) focused their strategies heavily on establishing a solid foundation – the ability to book and handle air freight. Moving into phase two, airlines tend to focus on the development of a back-end support system to handle functions ranging from marketing to network, revenue, and global account management – and building up a reputation of on-time performance.
“We are now an established carrier with good resources on the sales side. We could say ‘that’s it,’ and settle with what we have, but no, now we have to build on that, and look at what some of our excellent competitors do in terms of products and service,” added van de Weg, indicating that Volga-Dnepr Group had arrived at this third, “cargo supermarket” stage of its development.
Volga-Dnepr entered its “cargo supermarket” stage of evolution with the promotion of Mr. van de Weg earlier this month from head of sales and marketing at subsidiary carrier AirBridgeCargo, to a similar position at the Group level. Although each of the Group’s three carriers will continue to operate with relative autonomy, the company says it will take on a joint “Group-approach” to sales, moving forward. “There are customers that require services from all three entities, and appreciate a coordinated effort. In the past some of these customers may have had good relations with AirBridge for general cargo,” but may have looked elsewhere for other needs, added Van de Weg. “We’re changing that, and believe that we can get better commercial synergies by offering all commercial services under one group.”
With the building blocks in space, van de Weg says products and service offerings will begin to receive more attention. Three key added-service products, pharma, outsized cargo, and 747 charters will continue to take shape in four key verticals: aerospace, oil & gas, industry and heavy machinery, and humanitarian and government, says van de Weg. “As a group we are getting more intimate with specific customers and industries.” That’s not to say Volga-Dnepr hopes to change the forwarder-airline model, rather it hopes to reassure forwarders of its ability to handle specialty cargo.
CEIV certification, which Volga-Dnepr expects by the end of this year is another way the Group is doubling-down on its added-value offerings. Van de Weg says Volga-Dnepr aims to bridge pharma cargo moving through major hubs in Europe such as Amsterdam, Frankfurt, Basel, etc., to direct points in Asia via Moscow. More competition within the pharma vertical may not necessarily be a bad thing. “Now that AirBridge is joining the arena of players, the airfreight pie could get bigger as some companies see new solutions previously absent from the market,” quipped Van de Weg.
Looking ahead to the remainder of this year, it seems AirBridge’s stellar traffic growth figures will continue, even amidst a low-growth market. After a weak summer, van de Weg is expecting a decent peak season, and regarding charters, he said “we are close to selling out.”
Likewise, AirBridge’s network expansion will continue, as the carrier is planning to open up yet another new route by the end of November, with twice-weekly service from Moscow to London, returning via Frankfurt.