Justin Burns ACW: How have the first months of 2016 been for IAG Cargo and has business met your targets?
Nichol: Our Q1 2016 results have been respectable in the face of a challenging market. We have continued to focus on premium products, strong cost control and strict capacity management and are confident that our strategy is appropriate for the current market conditions our industry is experiencing.
Justin Burns, ACW: What are your plans to grow your cargo business in 2016?
Nichol: We will continue to focus on growing our premium products this year, in particular our time and temperature sensitive offerings. We are always looking for new opportunities and partnerships and we will continue to do so this year. Our new route launches into Latin America including Lima, Peru and San Jose, Costa Rica will offer our customers greater capacity, flexibility and choice when it comes to shipping goods to Latin America and across our wider network.
Justin Burns, ACW: Are there any particular cargo sectors and markets you are focusing on?
Nichol: We are seeing growth in the pharmaceutical market and expect this upward trend to continue, as a result we offer Constant Climate enabled stations across our network. With the continued growth in e-commerce traffic we are also anticipating continued demand for Prioritise, our express product, across multiple markets. In terms of perishable flows Latin America continues to perform well with products such as asparagus, vegetables, fruits, flowers, fish and meat important exports.
Justin Burns, ACW: Are there any plans to increase the number of routes you operate and to other regions?
Nichol: This summer we are launching three new routes into Latin America. From May 2016, we will operate direct flights from London to San Jose and Lima. We will also have a service from our hub in Madrid to San Juan. In addition to expanding our network in Latin America, we will be expanding our reach in South Africa. From this winter we will operate flights to Cape Town three times a week. New routes on our Iberia network into China will also see us expand our network for customers.
Justin Burns, ACW: How do you see the air cargo marketplace at the moment?
Nichol: 2015 was a year where the market forces of supply and demand became increasingly imbalanced – few would argue that that there has been a shift from this over the start of 2016. From our own perspective, these structural changes to the market further reinforce our strategy of aggressive cost discipline coupled with a focus on growing our premium product offering.
Justin Burns, ACW: What are the principle business challenges?
Nichol: Airfreight capacity growth has exceeded demand for a number of years. To tackle this, we believe that sensible capacity management is the only viable course of action for our business. That is why in 2014, we chose to remove freighters from our fleet and sign subsequent capacity agreements with partners such as Qatar and Finnair, meaning we are still able to grow our network, remain competitive and support our customers.
Justin Burns, ACW: Do you see further consolidation of airlines and cargo operations?
Nichol: We continue to look for opportunities to collaborate with partners where we see such co-operation offers a clear customer benefit.
Justin Burns, ACW: Where do you see the air cargo industry in 10 years’ time?
Nichol: I would certainly expect that the industry would have made significant digital advancements towards a paperless operation. With the predicted continued growth of e-commerce, I would hope that air cargo would be the mode of choice within the supply chain due to its flexibility and timeliness.