HAE targets expansion in Africa and Indian Subcontinent

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American Airlines Boeing 787

Africa and the Indian Subcontinent are the target markets for HAE in 2017, as it eyes new general sales and service agents (GSSA) contracts and acquisitions.

The company’s vice president of senior management, Peter Kerins says having opened up GSSA services this year in South Africa, Canada and Iraq, it expects to see expansion in the Indian Subcontinent and further development in Africa in particular, where it believes its “niche services” such as its ‘total cargo management’ service has great potential.

He adds: “We are in negotiations in various locations with both airlines and acquisition targets alike that will fuel our expansion in the region.”

As for 2016, Kerins says: “While everyone understands the increased pressure on yields, the massive imbalance in capacity globally and the very competitive environment we are operating in, we are extremely happy with our performance thus far.”

The Middle East is proving very strong for HAE when it comes to services into Africa, Gulf Cooperation Council (GCC) countries and areas with difficult trading environments.

Kerins says it is where its “value-added services” to airlines have allowed them to gain “valuable revenues” into specific regions with HAE applying the final sectors via existing operations.

“South America is still a healthy market for HAE and although there are the ongoing pressures with currency exchange rates and overcapacity, our offices in the region still are performing well above budget for 2016,” he notes.

Kerins says globally, while HAE is producing more kilos than in previous years, yields have declined, which mean commissions have declined for GSSAs.

“To combat this HAE has invested heavily in automating our GSSA offerings, which gives our airlines partners greater emphasis on sales, and a lot of our back office activities are now completely automated, supported by an extremely strong customer service team,” he says, adding: “This had led to substantial increases in activities and market share for the airlines we represent.”

HAE acquired South African neutral consolidator Groupair in 2015, and once it started to look at their capabilities beyond their core ‘neutral wholesale’ air cargo products, it found massive opportunities beyond Johannesburg (JNB).

“This has led to introduction of gateways services feeding in from our global network beyond JNB into 10-plus countries in Sub Saharan Africa. This has led to significant increases in revenue and contribution not only for the group, but also for the bottom line for Groupair who provide the line-haul purchasing locally,” Kerins explains.

HAE has always had a strong presence in Africa, but had concentrated on West, East and North Africa, so the acquisition of Groupair was the missing piece from its footprint in Africa – giving it access into Southern Africa.

This move has allowed it to offer its network and partner services reaching almost the whole African continent under one roof. Kerins says this was vital in HAE’s appointment as GSSA for most of Africa for American Airlines (AA) Cargo (pictured above) this year.

He notes this contract has been a success, considering the market forces, offline nature of the product and the aggressive competition in the African market.

Kerins adds: “The team both in Europe and the US have been extremely innovative in establishing routings ex Africa not only via Europe, but also via South America to feed the USA network.

“The pressure in massively on yields particularly in the high volume markets such as JNB etc, but AA has managed to secures good lanes of traffic thus far.  It’s early days, but the signs thus far have been very encouraging.”

HAE was appointed GSA for DHL Aviation in the UAE this year, which was an important win as the UAE acts as a regional commercial hub for all its activities in the GCC, Africa and the Indian Subcontinent.

Kerins says: “We have seen significant increases in revenues on their network ex-UAE within the first three months and are positive this will lead to new areas of expansion as their network continues to grow over the coming months and years.”

He says HAE is seeing massive overcapacity on the ‘traditional’ high traffic lanes globally, the effect of currency volatility, unforeseen variables such as Brexit, US elections, and oil prices, which all impact air cargo.

Kerins says: “GSSAs are tending to take on contracts with very little return, which is only forcing returns for GSSAs down in order to stay competitive. I believe by automating the GSSA business, applying more resources to sales, will ultimately lead to satisfactory returns for both the GSSA and airline partners.

“With all the doom and gloom we hear in the markets nowadays, I think its important to remember this isn’t the first time airfreight, airlines, GSSAs and all divisions of air cargo have taken a hit, and won’t be the last. This is quite cyclical. We are sure we are in a strong position as the world economies recover.”