Niche is faster for profit

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British Airways and Iberia aircraft at Heathrow Airport

Freight airlines like IAG Cargo are carving out niche operations in express deliveries to reflect the needs and demands of modern lifestyles and a competitive commercial world, whether it is urgent parts for the aerospace industry or fresh flowers.

IAG Cargo manager of global products, Daniel Johnson, tells Air Cargo Week (ACW): “Our core Prioritise product is predominantly there to serve the needs of a very wide ranging customer base within the express sector. It is ultimately about speed, reliability and assurance, and over the past three years we have continued to develop it.

“Last year we launched our capacity guarantee feature, which guaranteed capacity for anything under 300 kilogrammes and that was really in recognition of the growth we have seen in small packages. There is a need to guarantee capacity for last minute bookings, regardless of how busy the flight is, and we’ve put measures in place for this.

Johnson explains that his firm has developed products in line with market demand and at the end of 2014 launched EuroConnector 24, which uses Prioritise and guarantees customers shipping anywhere into or out of Europe, or within Europe, using a narrowbody aircraft network with delivery from origin to destination within 24 hours. “It is very well documented that e-commerce continues to boom, double-digit growth we continuously hear year on year, so that uses our Prioritise and Courier products.

“We continue to see very strong growth in the smalls, but other industries like oil and gas, aerospace, automotive and fashion have all seen increases in demand for not just the speed element of Prioritise, but also the guaranteed capacity element – the performance guarantee includes a 50 per cent money back if it doesn’t fly as booked.

“Last year we expanded our Prioritise product to allow the carriage of perishables like flowers and seafood. These have a finite lifespan and often speed is required to get it from origin to destination. To achieve those same day connections through London we allow those types of commodities to use Prioritise.”

Prioritise was introduced some 18 months ago and is attractive to customers needing an element of speed. “Typically it might be crabs and razor clams coming down from Glasgow on a same day connection through London and then off to China, where there is certainly a growing demand for European sea-food.”

In terms of investment, IAG Cargo has responded to market needs. “In some instances it may be tweaks to the product but others have required some investment,” says Johnson. “Last year, we made a significant investment at London Heathrow [Airport] to better handle our Prioritise product by improving our break and build capability, storage and racking for smalls, and introducing dedicated drop off and collection areas for anything under 32 kilogrammes.”

Johnson readily admits it is an aggressively competitive market with tight margins and other carriers have their equivalent express offerings. “We are always looking at how we can better meet those changing demands, whether that be something in aerospace or fashion. But, we don’t anticipate there to be any slowing down and it certainly is, as a business, it is where our focus is at the moment, in terms of developing our Prioritise product to meet those demands. “A big focus for us is understanding how we can provide a better express service, not just from Heathrow but across all of our network.”

Johnson admits that the development and growth of experess services for IAG Cargo and its competitors is a reflection of the way the world works now. “It is a fast business evolving and responding quickly to what the market wants. As IAG Cargo we need to be ready to respond to that but what we won’t ever do though is compromise on the quality service just to achieve the speed element.”