France – Asia may see sector through a rough patch
As if the effects of Sars and the global economic downturn were not enough, the French air freight industry started the year with another blow: an air traffic controllers' strike. The setbacks induced a 6.3% drop in capacity at Air France and a subsequent 5.7% decrease in cargo volumes in the first quarter of this year. The malaise probably had something to do with the decision from TAT, the French post office's B2B express parcels arm, to axe 60% of its express operations from Paris.
Poor results – cargo revenue down 8.8% for the first quarter and a reduction of 9.2% in total airline revenue – could also be the driving force behind Air France's talks with KLM.
Although Air France will not elaborate, it has admitted the two airlines are discussing taking a minority stake in each other.
However, Air France has held its own in its home market, due partly to the demise of rival carrier AOM, which served the French West Indies and Indian Ocean.
It has also seen a "a slight" recovery in the North Atlantic, good results from South America, especially Brazil, and a "stable" Africa.
None of these areas are, however, as important to Air France as Asia, which has disappointed so far.
The airline remains optimistic, though, adding a fifth weekly freighter to China next month, as well as a passenger flight to Canton in early 2004.
"We are also thinking of putting a freighter on to Canton, " says Jean-Charles Faucault, VP sales and marketing worldwide, "but we'll see how the bellyspace does on the passenger flight first." Air France has also improved its freighter fleet, with three B747-400ERF long-range aircraft delivered last November. Two more are on order for 2004/5.
Other innovations designed to boost performance include the development of its special products: Equation for express; Cohesion for tripartite traffic (negotiated jointly with forwarders and shippers); and now Equation Heavy, which has increased weight per shipment and piece.
Equation and Cohesion are each expected to account for 10% of global revenue this year.
Sodexi, the Air Franceowned express operator, handles express shipments out of Paris for 15 other airlines, including Lufthansa subsidiary Time Matters, which signed an agreement with Sodexi in May. Time Matters' airport-to-airport service could be extended to door-to-door.
FedEx, the largest of the integrators at Charles de Gaulle, will not reveal figures, but Alain Chaille, VP southern Europe, says: "The express market in general is growing 8-10%; we're doing better than that." FedEx is growing its Asian service, launching a nightly departure to Bombay and the Philippines, its Asian hub.
Another nightly Airbus departure was added to Madrid, as well as extra feeders to Germany, which now boasts up to seven flights a day. Toulouse was added to the French linehaul services which also link Nice, Marseille and Lyon to Paris.
"We need to open new markets, " says Chaille.
"Spain and Italy are tremendous opportunities, as they are less mature markets than France, the UK and Germany." Lufthansa's French business is growing. Paris is the airline's second largest station outside Germany, using both aircraft and trucks to link to Frankfurt, Munich and Cologne. "We are translating our German cargo strategy to France, " explains Hugo Duchemin, regional manager sales and marketing for France, Benelux and Switzerland.
"Premier products such as ControlTD (temperaturecontrolled), FreshTD (food) and SmoothTD (fragile) are all proving popular in France." Despite the pressures on carriers, Aeroports de Paris, which runs Charles de Gaulle and Orly, is building for growth. According to marketing project manager Claude Elbaz, cargo increased by 4.6% between January and July, the fastest growth of any of the main European airports – London, Schiphol and Frankfurt.
"Orly cargo has decreased because Air Lib went bust and the low-cost airlines taking some of its slots don't carry cargo (although Air Bourbon's A340 to Reunion is doing well). But cargo at CDG is strong. Over the last two years, capacity at CDG has increased dramatically." SFS, a leading handler at CDG, is adding another 40,000sq metre state-of-theart terminal this year, Air France is extending its warehouse by 50%, allowing it to handle 1.5m tonnes, and La Poste is opening a new warehouse and office next month.
And the reorganisation of ADP's management could boost cargo further, says Elbaz. "Each airport will now have its own director, who will have overall control of every activity and decision at the airport. This could be good for cargo." France, like the UK, faces the problem of congestion at its major international airport and is trying to persuade carriers, forwarders and shippers to use regional alternatives. And it seems to be doing a good job.
Vatry, opened in 2000 as an all-cargo airport, handled 6,200 tonnes in 2002 and has seen an 8% increase in the first eight months of this year. In addition to a 3,860 metre runway and 45,000sq metres of apron, it has a 4,200sq metre terminal capable of handling 60,000 tonnes of cargo a year and is a certified EU border inspection point. Charges are, claims Vatry, 40-50% less than at other airports.
An 8,000sq metre freight terminal is being built for general cargo, to be operational by the end of 2004. This will free the existing terminal to be dedicated to perishables, sensitive and valuable cargo.
Other new developments include a second logistics park, over100ha, to open next year, complementing the existing 265ha; a direct connection to the A26 motorway; a rail-linked distribution centre to be opened by Prologis next year; and a charter flight terminal.
Even more importantly, though, is the government's decision to drop the idea of building a third airport for Paris and, instead, focus on enhanced utilisation of existing facilities and reducing the number of night flights at CDG and Orly.
Vatry's main cargo rival is Chateauroux, 250km south of Paris. Another all-cargo facility, last year Chateauroux welcomed carriers Cameroon Airlines, serving Lome twice weekly, and Africa West, flying an Antonov 12 weekly to Africa.
Perishables are a major commodity for the airport, which is close to the Rungis food market. Much of its 3,000-plus annual tonnage (2,000 for the first six months of this year) comes from Africa, the Middle East and Indian subcontinent. A 500cu metre cold store opens on 1 October, to be followed by a doubling of the ambient warehouse to 6,000sq metres on 1 November.
Marseille – which has also built a perishables centre – has lowered rates to attract new business.
Although the airport has dropped its idea of looking for longhaul carriers, it has nurtured its shorthaul and express business. FedEx, DHL and TNT all have daily freighters – to CDG, Metz and Liege, respectively.
French integrator Jet Services runs two freighters a day – to CDG and Rennes – and Hays DX has a daily departure to Le Bourget.
Air Algeria added a second flight to Algeria at the end of April, but La Poste has dropped its nightly freighter because of CDG's night flight restrictions, leading to a 3.5% drop in cargo, to 22,000 tonnes, in the first seven months of this year.
Another regional airport, Lyon Saint Exupery, boasted a 10% jump in cargo in the first seven months of the year, with June seeing an 18% increase.
Surprisingly, perhaps, international traffic accounts for the majority of Lyon's freight – 71% – most of it going to Germany and other EU countries.
