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News that British Airways will end itsaircraft, crew, maintenance andinsurance (ACMI) agreement with AtlasAirs Global Supply Systems, a wet-leaseoperator, caused some dismay among aviationaficionados.

The end of the partnership means that, fromMay onwards, the Boeing 747-8F will no longerbe seen flying in BAs livery. The flag-carrier, asubsidiary of International Airlines Group (IAG),will instead rely on belly capacity in its passengerfleet, plus a new commercial agreement withOneworld partner Qatar Airways.

But, beyond the sentimental fall-out, BAsdecision to axe the 747-8F points tocontinued uncertainty in air freightmarkets. Indeed, somecommentators now believe astructural change has taken rootacross the entire cargo industry.

Speaking as BA upgradedone of its Johannesburg flightsto the Airbus A380, Tony Snell,IAG Cargos region commercialmanager for the Middle East andAfrica, said the switch away fromall-freight aircraft was a pragmaticmove that boosted flexibility, and he addedthat further cooperation with Qatar was likely.

Its enabling us to maintain our presence inkey markets when we wont have the long-haulfreighters, which is important, Snell stressed.Theres definitely an appetite on both sides towork closely together, and I think we can benefiteach other.

The change comes as other operators alsoshow an appetite for withdrawing from thededicated freighter market. In February, AirFrance-KLM CEO Alexandre de Juniac said hewould consider further cuts to the groups cargo

The air cargo market is now laggingbehind the global economic recovery.

Martin Rivers finds out how IAGCargo, one of the largest freight

operators serving Africa, is adapting,while playing to its strengths.

fleet. Air France is already in the process ofretiring three 747-400ERFs, leaving it with justtwo 777Fs. KLM, meanwhile, leases all four ofits 747-400ERFs to subsidiary Martinair Cargo.

In the Asia Pacific region, cargo volumes weredown 1% in 2013 the worst performance ofany region. Weak market conditions promptedCathay Pacific, the worlds second-largestinternational freight carrier, to cancel an orderfor eight 777-200Fs last year, while it alsogrounded several of its 747-400Fs.

The year 2013 was tough for cargo, warnedTony Tyler, director general of industry bodyIATA, noting that global freight tonne-kilometres

(FTKs) increased by only 1.4% last year.While we saw some improvement in

demand from the second half of theyear, we can still expect that 2014will be challenging.

Airlines were forced to addbelly capacity last year due to a5.2% rise in global passengerdemand. But global trade volumes

are only moving in tandem witheconomic growth, rather than

accelerating at twice its pace, as hashistorically been the norm. Rising freight

volumes by sea have also significantly outpacedairfreight growth, with exporters favouring lowercosts over speed and convenience.

Factor in the growing tendency formanufacturers to reshore back to the developedworld citing rising costs elsewhere and it iseasy to see why airfreight yields are underpressure.

Africa is not immune to such worries aboutover-capacity. In 2012, the region enjoyedrampant growth of 7.1% in freight volumes,buoyed by new routes to China via the mega-hubs in the Middle East. But last year saw the

growth taper off to just 1% below the globalaverage.

For IAG Cargo, which shuttles freight from 22points in Africa to its hubs in London andMadrid, the sluggish environment partly explainsBAs decision to deploy the double-decker A380to Johannesburg.

The aircraft started serving Johannesburg threetimes weekly in February, taking over some of BAstwice-daily 747-400 flights. Frequencies rose to sixtimes weekly in March, and will become daily laterthis year. The switch is beneficial for passengertraffic, with the 469-seater A380 carrying 124more people than the 747-400. In the cargo hold,however, BAs A380s have only five palletscompared with six the 747-400s six.

Nonetheless, IAG Cargos response to over-capacity has been more refined than simplyscaling back operations. On the contrary, thecarrier is focused on lifting load factors whileensuring that freight complements the groupspassenger business.

We do pretty well with the capacity we haveavailable to us, Snell said. I believe that theAfrican freight market will stay stable. Our flowsare stable. I dont think theres significant growth,but I dont think theres a decline either Fromsouthern Africa we tend to ship fruit and fish lychees, grapes, blueberries and raspberries.From east Africa it tends to be more vegetablesand flowers. And then from west Africa,processed fruit and chopped fruit.

In an effort to boost efficiency on its A380operations, Snell noted that BA had purchasedtwo additional unit load device (ULD) positionsin the aircraft. It has also become the first carrierto receive certification for a maximum take-offweight at 12 metric tonnes above the currentnorm for the type.

Air conditioning on the aircraft is accurate to

New markets key to IAG easing the burden

Werekeen to

develop everymarket as best

we can.TONY SNELL

De nouveaux marchs pourIAG CargoMartin Rivers nous dvoile IAG Cargo, l'un des plusgrands oprateurs de fret desservant l'Afrique,s'adapte au march.La fin du contrat ACMI qui liait British Airways loprateurAtlas Air a jet un froid dans le secteur du fret arien. Pourloprateur IAG Cargo, il sagit de s'appuyer sur unenouvelle entente commerciale notamment avec QatarAirways. Cette dcision de la BA continue semer letrouble sur le march du fret arien et un changementstructurel semble en marche.

Alors que BA va relier Johannesburg avec un AirbusA380, Tony Snell, directeur commercial dIAG Cargo pour leMoyen-Orient et lAfrique, affirme que cette tendancedoprer un avion uniquement cargo reste une solutionpragmatique qui augmentera sa flexibilit.

Les volumes de fret ont par exemple diminu de 1 % en2013 dans la rgion Asie-Pacifique. Cela a pouss CathayPacific annuler une commande de huit B777-200F.

2013 a t une anne difficile pour le fret, 2014 le seraencore , prcise Tony Tyler, directeur gnral de lIATA.

L'Afrique n'est pas l'abri davoir une surcapacit dansle secteur du fret. Le continent a connu une croissanceeffrne de 7,1 % en 2012 soutenue par de nouvelles routesvers la Chine et le Moyen-Orient. Le fret naugmentera quede 1,4 % en 2013.

Selon Tony Snell, IAG Cargo opre efficacement avec sacapacit actuelle. Notre socit reste un choix naturelpour les producteurs de fruits, de lgumes ou de produitsfrais qui cherchent exporter des marchandises versl'Europe et l'Amrique du Nord.

IAG Cargo est dsireux de dvelopper des flux versJuba, Addis-Abeba ou encore Bujumbura ou Kigali. Despartenariats sont possibles pour oprer vers Entebbe ouNairobi. Selon Willie Walsh, directeur gnral dIAG, ilnexiste maintenant plus de lien entre le march mondialde passagers et celui du fret. Le fret arien sest doncengag dans un changement structurel, ce qui rend caducsles indicateurs du march.

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SOMMAIRE1C, which enables IAG Cargo to preserve theperishable freight that forms the bulk of itsAfrican cargo. But, in contrast topharmaceuticals originating in Asia, Snell saidthat fruit, vegetables and livestock do not requirethe more advanced special temperature controlsused on other routes.

On this aircraft and the others thetemperature control is sufficient, he said. Itneeds to be kept chilled rather than very cold, andthen the speed of delivery means that the coolchain is preserved in London.

With about 80% of intercontinental traffic fromAfrica being provided by foreign carriers, IAGCargo is a logical choice for producers seeking toexport goods to Europe and North America.Three-quarters of the fresh produce shipped byIAG Cargo from Johannesburg terminates in theUK and Ireland, with forwarders like MorganFreight and Lonrho serving as middle men forground-based logistics.

Along with its Johannesburg base, the carriersAfrican network centres on Cape Town whichwill benefit from three additional weekly 777-200ER flights in May Luanda, Nairobi andAccra. It also has sizable cargo outflows fromEntebbe, Abuja and Lagos.

The freight we carry out of Africa is mostlybound for the UK and northern Europe, buttheres also tuna that goes to North America,Snell noted. Our focus is on our to-marketdelivery proposition. We can offer a very quickovernight flight, early morning delivery to theperishable handling centre in London, whichenables them to get it into the shop very quickly.

But capacity is also actively being marketed byIAG Cargo for inbound journeys, resulting in asix-fold increase in flows from North America toJohannesburg over the past five years.

The operators dependence on passenger

flights by BA and Iberia, IAGs other mainsubsidiary, inevitably limits its networkdevelopment options. However, Snell said localpartnerships with carriers like Kenya Airways,DHL and Air Uganda expand its reach.

Were keen to develop every market as bestwe can, he said. In east Africa, were setting upflows from Juba; were looking at setting up flowsfrom Addis Ababa. We want to broaden our set-up so that we can get more relationships in someof those other stations Bujumbura, Kigali places we dont actually fly, but where we can userelationships with other carriers to enable us toflow freight into either Entebbe or Nairobi.

While IAG Cargo seeks out new partners, theparent company is positioning itself defensivelyfor further headwinds.

The groups cargo revenue fell 11.8% last year,with volumes down 7% year-on-year, and yieldsdown 5.2%. In an otherwise upbeat full-yearreport for IAG, the cargo division loweredexpectations and said it would aim to at leastcover our marginal costs.

IAG chief executive Willie Walsh added thatthere is now no connection between globalpassenger and cargo markets. He endorsed theview that airfreight has undergone a structuralchange, saying: The traditional lead indicatorthat cargo provided is completely gone.

If accurate, that would mean freight activity nolonger serves as a reliable bellwether for thehealth of the global economy.

Perishables require fast, professional andreliable handling, and producers expect access toonward destinations. IAGs decades ofexperience, and its global network of 350 cities,makes it one of the few operators up to the task.

International Airline Group carrier British Airways is starting to favourhold cargo over pure freighters, such as this Boeing 747-400F.