Cross-border e-commerce props up soft Chinese air cargo demand
Sagging economic growth in China is having an adverse knock-on effect on its air cargo ...
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By Alex Lennane
Air France KLM Cargo claims to have turned the tide in its freight fortunes.
But while volumes grew 1.4% in the second quarter, to 286,000 tonnes, they remained flat over the first half, at 558,000 tonnes.
Despite the slight volume rise, revenues fell to €506m in the second quarter, down 0.2%, while they fell 2.5% in the first half, or down 3% like-for-like, to €1 bn.
Capacity, measured in available tonne km (ATK) rose 0.3% in the first half. Unit revenue per ATK fell 2.5% in the first half to €0.13, while unit revenue per RTK fell 3.8% to €0.22. The group now operates four 747-400 freighters and two 777 freighters, after a series of cutbacks.
The group, which has in previous years suffered heavy losses in cargo, sounded a note of optimism.
“During the second quarter, the improvement in the cargo performance was driven by a 2.7% increase in traffic, resulting in a 0.7pt increase in load factor. The trend in unit revenue, down 1.3% during the second quarter, continued to improve compared to previous quarters, confirming the gradual turnaround.”
Air France KLM announced last week that it was buying Richard Branson’s 31% stake in Virgin Atlantic, a move that has been welcomed by forwarders, and will give AF-KLM some short-haul feeder traffic it has keenly wanted.
It is part of a wider equity change, with Delta, which already owns 49% of Virgin, buying 10% of AF-KLM, and China Eastern also buying 10%.
“It could be good,” said one European air freight forwarder. “AF-KLM is one of our major suppliers. For me, the fewer suppliers we have to deal with the better.”
Another industry observer believed “it could only be a good thing for Virgin”.
Minor equity investments in other airlines do not always seem to play out well, as Etihad is discovering. And post-Brexit, Virgin could find itself on the wrong side of foreign ownership rules, being 80% under foreign control. Nevertheless, the transatlantic joint-venture, which includes cargo, could simplify operations for forwarders.
One, however, warned: “Providing Virgin doesn’t get caught in the AF-KLM ‘CRM’ pricing control, it will be a good thing.”
Comment on this article
Jon Champs
July 31, 2017 at 5:01 pmPlease tell me how buying Virgin Atlantic as stakeholder is going to provide either Virgin Atlantic, KLM or Air France any feeder traffic? It’s an entirely long haul airline, every one of its routes is matched by AF, KLM or in partnership with Delta. This is all about Delta getting indirect full control of Virgin Atlantic. It’s an immunised cartel at the end of the day and not much more.