Ask Denis Ilin, CEO of AirBridgeCargo, what is new and needs to be shared with the global air cargo business as 2016 starts, and his answer is upbeat and immediate.
     “In 2015 we have successfully continued our strategy of fleet and network expansion based on maintaining a high level of service and schedule reliability.
     “Today ABC demonstrates strong performance and has proven to be one of the world’s most rapidly growing carriers despite a challenging business year for the industry, with some carriers reporting negative trends, parking their aircraft, and cutting capacity down.
     “ABC has achieved a significant increase in tonnage—a 31 percent rise year-on-year with a very decent average load factor of 67 percent.
     “Growth of cargo traffic (in FTK) has reached 24 percent, which is mostly attributed to the introduction of longer routes and the company’s expansion to new markets such as Asia–USA, including transpacific flights, and Europe–USA.
     “As a major player at one of the world’s leading markets—Asia–Europe—we have been consistently expanding our network and developing new destinations to respond to the diverse needs of our customers.”

LOOKING FOR THE NICHE

     “While average statistics show a pretty flat year and stable excess of the capacity, ABC has been intentionally looking for niche destinations with un-met demand or at least a better balanced capacity-demand ratio.
     “Such expansion and a stronger presence on Asia–USA and USA–Europe lanes have enabled AirBridgeCargo to launch ‘round the world’ service in 2015, which provides both a unique set of destinations for our clients and profitable economics for our operations.
     “Needless to say that such an approach moves on-time performance to the forefront, requiring a lot of effort to be taken in the operational area. And we are proud to say that our ‘delivered as promised’ (DAP) index is over 80 percent, which is at the industry level and for some destinations is even higher.
     “In fact, ABC is among the TOP 3 C2K (Cargo2000) companies in terms of DAP level.
     “The value of the airline’s strategy is reflected in the mutual trust that exists with our customers, their confidence in ABC as a reliable business partner, and ABC’s 11 years of sustained growth. This year, with the clients’ support, AirBridgeCargo has also been recognized for the quality of its service performance with leading industry awards.

NEW AIRCRAFT POWER FUTURE

     “To power current and further network expansion to different parts of the world there is a need for additional capacity.
     “For some market players it came as a surprise that Volga-Dnepr Group (a parent of ABC) and Boeing signed a MoU at the Paris Air Show to acquire 20 B747-8 freighters over the next seven years.
     “However for us it is just logical to support our own future. Customers expect global coverage on both established and new markets, a broader range of destinations, and a fully diversified product portfolio.
     “As part of that MOU in Paris, ABC took delivery of two brand new Boeing 747-8Fs, thus totaling its fleet to 15 airplanes.
     “New planes will be deployed under winter schedule 2015/2016 throughout ABC’s network, mainly on Asia to USA and round-the-world routes.”

MARKETZ-APOPPIN

     “ABC has never stood still. We believe that markets keep shifting, asking for a more diverse range of destinations, and we have to dynamically move along,” Denis assures.
     “2015 has been no exception and brought to ABC’s network such destinations as Helsinki (Finland), Hanoi (Vietnam), Basel (Switzerland), Los Angeles (USA), Singapore (Singapore) and, most recently, Atlanta (USA).
     “However, it does not mean we are slowing down on the existing markets, as the clients not only want to see the existing service continuing, but they’re also asking for more.
     “In 2015 ABC introduced additional frequencies to existing destinations to improve our product to daily, and for some destinations even double-daily services. Freighters have always lagged behind belly competitors on this front, as daily passenger service is much more common in our industry.
     “Now we are able to deal with customers who require daily uplift. Besides, it allows us to ensure a decent back-up solution for shipments—which can run late on the way to the airport for whatever reasons—while keeping integrity of our own schedule without disturbing other clients already on board.
     “It sounds very much as if we are dealing with a real passenger, not a pallet, right? “Well, that is the reality of today—cargo customers expect this level of service, and we have to match these expectations.
     “To differentiate us even more from pure passenger or combination carriers, the airline continues developing niche destinations with limited belly capacity but still quite healthy cargo flows, providing customers with better access to point-to-point cargo solutions within its global route network while guaranteeing on-time and reliable delivery.
     “Development of such niche destinations, which lack main-deck lift and quite often insufficient belly capacity, have become another way to make use of the light but stable traffic flows.
     “Helsinki and Malmo are good examples and are mostly used for clients with freight to/from mainland China and Hong Kong.
     “ABC started flying to Helsinki online in January 2015 and for the first 10 months had already carried 1,195 (to China) and 2,920 (from China) tons of cargo.”

BASEL PHARMA & NEW DESTINATIONS

     “Basel is another example; it is known for its pharma market, and this is the area where we are concentrating our efforts towards developing procedures for carrying temperature-sensitive cargo to Russia, and beyond to Asia and the Far East.
      “Pharma customers want to have the option of main-deck online capacity, and we are trying to make sure they have a solution available. We have already witnessed positive feedback from our clients.
     “Hanoi is popular among customers from Italy, Sweden, France, and Germany, with monthly tonnage of at least 120 tons.
     “The U.S. and Germany are the leading destinations (monthly tonnage on ABC of 75 tons each) out of Hanoi, which is no surprise given its cargo nature (hi-tech, shoes, garments, clothing, fruits, and vegetables).
     “Los Angeles is our first trans-Atlantic destination, opening new horizons for ABC in the form of round-the-world service.
     “This station shows growing monthly tonnage figures of 570 tons for Los Angeles–Europe and 605 tons for Shanghai–Los Angeles in 2015 ytd.
     “Following the successful launch of Los Angeles, ABC has added Atlanta to its schedule since November 20, thus continuing to improve its offering on both Asia–U.S. and U.S.–Europe lanes.
     “The USA is one of the world’s largest cargo markets and the current main focus for AirBridgeCargo.
     “Our airline has been actively developing its presence in the country since it introduced Chicago flights back in 2011.
     “Since then, ABC has expanded its network to include Dallas-Fort Worth, Los Angeles, and now Atlanta, and achieved a compound growth rate in tonnage to/from the U.S. of 36 percent and annual volumes to/from the USA of over 56,000 tons.
     “We are open to their suggestions and ideas for new destinations. The average market can be flat or negative, and capacity on average is excessive, but the real business is not about average numbers but rather about being there, where clients need you most.
     “These needs shift very dynamically, so the real art is to be responsive and flexible enough to amend your network while at the same time ensuring your schedule integrity.”

WHO IS DENIS ILIN?

     AirBridgeCargo Airlines has had Denis Ilin as Executive President (CEO) since August 2013.
     He joined the Volga-Dnepr Group of Companies more than 20 years ago.
     “Starting my career in Volga-Dnepr Airlines back in 1995, I then joined AirBridgeCargo Airlines management team in 2004 as Chief Operating Officer, and then in 2006 as Managing Director of ABC.
     “I left AirBridgeCargo in 2008 to join Volga-Dnepr Group again in April 2013.”
     Denis has a degree in Applied Mathematics and a degree in Philology from the Moscow State University. Later, he earned an Executive MBA from London Business School in 2011. Married with two children—a 16-year-old daughter and a 7-year-old son—Denis said that after family and work he enjoys football (soccer) and alpine skiing.

SURPRISING CHALLENGES

     Taking an industry view, Denis Ilin notes:
     “Airfreight logistics, by its nature, is a global, macroeconomic industry and it cannot stay out of what is happening in the world.
     “What has surprised me the most is the degree of the challenge and speed of changes we are facing at the moment, when all cargo industry influencing factors have mixed together and entwined.
     “Decreasing oil prices; currency volatility that resulted in a drop in demand, fiercer competition, and upturn of political risks; global unrest; security instability—these are just a few examples of the forces that will still be factors in the future.
     “The entire world is now moving and changing much faster; so is our industry.
     “As one of the results, airlines are more and more reluctant to invest in a new cargo fleet, as such long-term investments seem riskier in view of the industry volatility.
     “However, clients still need freighters and main-deck lift, so we have to accept these challenges, be flexible and proactive, and find solutions to support our customers.
     “We will be working on additional measures in all the areas concerned and surely will get over the current turbulence.”

MOTHER RUSSIA IS VIVID

     “2015 has not been an easy year for Russia: market has been steadily declining compared with 2014.
     “Almost all international markets demonstrated negative results in Q1 with significant drop of export tonnage to Russia by air: ex-USA (-30 percent), ex-Europe (-28 percent), and ex-China (-30 percent).
     “However, in Q2 we witnessed slight improvement of the situation when the negative trend came to a stop, stabilized, and the market ‘calmed down.’”
     “What we see today is that the Russian cargo market is becoming more of a niche market and specializes on transportation of certain types of cargo with ‘only by air’ requirements, such as valuable and/or time-sensitive freight, and freight with special transportation needs.
     “At the same time, this year ABC managed to capture new traffic to Russia from recently opened stations. For the first 10 months of 2015 it collectively amounted to 886 tons and we reached market share of 45 percent ex-USA and 29 percent ex-Europe.
     “We have seen that our customers value ABC’s connectivity options via a hub in SVO and this is the area that still keeps its potential, especially in view of decreasing belly capacity to Russia.
     “For the November and December 2015 reporting period we expect seasonal increase in demand for Russian destinations.
     “The Russian domestic market is getting more vivid, especially between Moscow and Russian destinations in the Far East and in the North.”

QUALITY FOR EVERYBODY

     “Speaking about bettering the air cargo industry, I would echo IATA’s concern that the biggest advantage of delivery by air is time—on average we are still talking about days and weeks, but our metrics should be hours.
     “Whatever initiative needs to occur to reduce the ultimate delivery time for our clients will only increase competitiveness of air cargo versus other modes of transportation.
     “I really admire the many cargo veterans that serve this great industry worldwide. “These are people who have wonderful leadership skills and a deep understanding of our industry, who are willing to share their ‘baggage’ with us, thus helping us to follow the straight road.
     “I have been lucky to know and work with many of them.
     “They demonstrate great professional and personal qualities, sharing knowledge and best practices, and yet after all these years their passion for air cargo is still something to be learned by younger generations.
     “A personal word of thanks to everyone, with sincere wishes for a glorious 2016,” Denis Ilin said.
Geoffrey/Flossie