Struggling with another year of little growth

Charles de Gaulle Airport terminal two

France had a difficult 2014, with slow growth from last year continuing into 2015, presenting challenges for airlines and airports operating in the country.

For 2014 as a whole, Paris Charles de Gaulle Airport (pictured above), the largest airport in France, saw cargo volumes increase by 0.8 per cent to 1.9 million tonnes, according to Airports Council International (ACI) Europe. Though it was the second busiest cargo airport in Europe, it saw the smallest growth among the top five. This year has started off worse for Charles de Gaulle, with ACI Europe saying volumes have fallen by 4.8 per cent between January and April to 591,843 tonnes, the biggest decline among the top five airports in Europe.

According to ACI Europe, growth in 2015 so far has been variable for France’s smaller airports. Paris Orly Airport saw cargo volumes rise by 16.9 per cent to 39,751 tonnes and Toulouse Airport was up by 1.3 per cent to 21,183 tonnes. Marseilles Airport was down by 3.8 per cent to 17,000 tonnes, Lyon Airport saw growth of 5.5 per cent to 16,283 tonnes and Nice Airport fell by 2.9 per cent to 4,755 tonnes. It is not just France’s airports which are struggling, Air France-KLM-Martinair (AF-KL-MP) has been going through tough times over the past few years.
Between January and May, AF-KL-MP has seen revenue tonne kilometres fall by 10.4 per cent to 3.7 billion, with the biggest fall seen in April, of 14.9 per cent to 703 million. In the first quarter of 2015, the airline’s cargo division lost 63 million euros ($71 million).

It is continuing to shed its freighters, and by 2016 the airline as a whole will have six freighters, two will be Boeing 777 Freighters at Charles de Gaulle. The airline hopes the cargo division can break even by 2017. Despite the doom and gloom, IAG Cargo regional commercial manager for Europe, Chris Nielen says the carrier has been doing well in France, helped by its pharmaceutical product, Constant Climate. Nielen tells Air Cargo Week (ACW): “The whole market was astonishing, very flat in 2014. We did decidedly better than the market, we have grown our pharma product, Constant Climate.”

He says in the first quarter this year, IAG Cargo has grown by 12 per cent in France, due to Constant Climate and its EuroConnector for shipments below 300 kilogrammes, which are suited to narrowbody aircraft. He says pharmaceuticals have done particularly well in places like Lyon. Nielen says for IAG Cargo in France, Asia Pacific has the highest tonnage while Africa and the Middle East has the largest turnover.

Nielen tells ACW he expects IAG Cargo’s growth to continue because of continuing demand for its products like Constant Climate and Euroconnector. “Euroconnector has been really helpful, we expect to see growth continue from the 12 per cent in the first quarter … we are moderately positive for the remainder of the year.”
Nielen says as well as ever rising volumes of pharmaceuticals, IAG Cargo transports a lot of flowers from the South of France, as well as wine, automotive parts, luxury goods and aircraft parts.

AF-KL-MP is hoping its HubExpress at Charles de Gaulle, opened in May, will help it expand in areas such as express and pharmaceuticals. The airline says it will help integrators and couriers, increase cross border e-commerce and increase postal volumes. The HubExpress is close to the passenger terminal as 90 per cent of cargo travels bellyhold and the average ramp time is between five and 15 minutes. The Franco-Dutch carrier says it expects cross border e-commerce to grow by 192 per cent to $307 billion by 2018. It tells ACW: “Pharma and e-commerce are the two main opportunities for growth.”

For future growth, AF-KL-MP tells ACW it expects pharma to increase worldwide, while e-commerce will rise in Asia and the aerospace industry in the US and Mexico will see growth.
American Airlines regional cargo sales manager for Western Europe, Kathleen Lesage says 2014 was a good year, but 2015 is proving harder. Lesage tells ACW: “2014 was a good year for French exports, while 2015 has been a bit more challenging thus far, due to the impacts that shifting exchange rates tend to have on exports and production schedules.”
Lesage says French exports such as aerospace parts, fashion, cosmetics and perishables are in high demand in the US and beyond, in the Caribbean and Latin America. She explains that, “with the strong link between Paris [Charles de Gaulle] and Philadelphia, there is also considerable pharmaceutical traffic between these two destinations because of the numerous manufacturing facilities found in both locations.”

France has been going through tough times since the global financial crisis of 2008 and is struggling to recover. Airlines are pinning hopes on pharmaceuticals and e-commerce, but whether this will be enough to kick start growth remains to be seen.