After a period of low business sentiment, airfreight charter profits are expected to see moderate growth this year. The underlying optimism is, however, tempered by stiff marketplace competition, and it is not a place for the faint hearted.
UK broker Chartersphere’s managing director, Paul Bennett, tells Air Cargo Week (ACW): “As usual there are still uncertainties on the horizon. The future of Greece and the Eurozone generally is up in the air. No one really knows where that will end or if the threat of contagion in the event of a Greek default has really been resolved. Like everyone else we will just have to wait and see and adjust our plans accordingly.
He adds that the fortunes of the Chinese economy and growing hopes that oil prices might finally be on the turn could, “ultimately be more significant to us”, particularly if this results in, “kick-starting investment in stalled oil and gas projects.”
Delta World Charter (DWC), which commenced operations in February 2014 from its base in Dubai, is bucking the trend somewhat as it continues to record significant growth. Its chief executive officer (CEO), Dmitriy Korshunov, describes business as, “terrific,” so far in 2015. “We have already contracted and flown 71 flights, which includes relief flights to Kathmandu, Sulaymaniyah in Iraq and Conakry in Guinea, carrying medical supplies on behalf of humanitarian agencies.” He adds that revenues for DWC have quadrupled from five million United Arab Emirates Dirhams ($1.3 million) in 2014 to over 20 million this year. “The market response reassures us that Delta World Charter came to the market at just the right place, at the right time and with the right people,” Korshunov tells ACW.
He explains that the air charter business is seeing different growth curves and paths in different economies of the world. “In the past much of the growth at global level came from the cargo industry,” he says. “Growth is now coming from all the sectors we operate in – private jet and commercial aircraft, as well as cargo.”
Roman Gilmanov, chief commercial officer for DWC, believes the private and commercial air charter business segment is redefining the business and operations of what was once considered a niche, luxury segment. “Higher economic growth, a rise in corporate spending and infrastructure development are all good signs for our industry. Certain cargo markets are seeing higher volumes for ad-hoc and on-demand flights.”
Air Charter Service’s group commercial director, Justin Lancaster, also paints a, “very good,” picture for the first half of 2015, which was buoyed by business created by the West coast port strike in the US. “What is very encouraging is the underlying growth and that we are seeing growth across all offices and not just in certain regions,” he says. “The charter market has been strong globally in many sectors, but for the future it is always hard to predict. Many factors which affect it are not controllable by us, but indications are good and the second half of the year is normally stronger than the first half.”
A link between Chartersphere and aviation software specialist WebCargoNet in February has created excitement in the market, according to Bennett. “We are pleased with the progress so far and are already seeing a positive impact on our client base,” he tells ACW. “This, along with other initiatives, is helping us build market share and we are confident it will provide long term benefits for our customers and their businesses. We have witnessed a very promising first six months of the year which saw us continue our upward growth trend; something we are proud to have achieved every year since we started.”
In his view, the market has slowed in recent weeks, but it is too early to say whether this is a trend or merely a blip. “Whatever happens we are in a good place to deal with it. We certainly have significant momentum behind us,” he adds.
ProAir general manager, Andreas Wald, also sees positive trends. “In past years our focus has been on the expansion of the passenger charter services and our own airline, ProAir Aviation, with its fleet of 12 business jets and turboprop aircraft”, he says. “This year, on the other hand, we seem to be heading back to our roots. ProAir was primarily a cargo charter broker in the beginning and so far in 2015 we have increased the number of cargo flights by more than 30 per cent year-on-year. This equates to around 150 to 200 extra cargo orders per year.”
Wald explains that both policy and market forces lie behind the increase. His firm decided to invest in additional sales staff despite being in a period where the cargo ad hoc market for bigger charters was rather low, and, fortunately, market demand picked up and led to a return on investment for its sales efforts. “Our market presence of almost two decades and the exploration of new markets, as well as the opening of a branch office in Turkey can be seen as contributing factors to this success.”
The company’s Istanbul office opened in May with a staff of two offering charter services to the Turkish, North African and Middle East markets. “Close cooperation with an exclusive partner in the US have also lead to additional business in North and South America. Our target for the rest of 2015 is a consolidation of the various business segments with a further improvement in 2016,” adds Wald. For charter, it seems, the corner has been turned and the good old days are returning for those with the right approach.