Up to now air freight played only the second fiddle within the growth strategy of Muscat-headquartered Oman Air (WY). This however, the management intends to fundamentally change with cargo becoming one of the state carrier’s key business units. The pact with Cargolux (CV) is a key part of this new strategy.
CEO Paul Gregorowitsch frankly admits that up to now Oman Air was fully concentrating on the passenger business leaving not much room for the development of the air freight sector at Oman Air.
Things changed slightly in 2009 with the carrier getting its first A330 widebody aircraft. “Only then we commenced tapping cautiously the cargo arena,” says the manager.
Paul puts air freight on the agenda
That was years before the Dutch national joined the airline and took the chair in August of 2014. With the former Air Berlin executive in command the cargo topic was immediately put on the agenda. The main problem was to overcome the capacity shortage since Oman Air’s long-haul passenger fleet comprises 10 A330 -300/-200), offering very limited lower deck holds for cargo transport. “Meanwhile, we operate 110 weekly flights between Oman and Indian destinations, but all routes are served with narrow body aircraft which are not very cargo friendly due to the limited space their lower deck compartments are offering,” he reasons.
To overcome the shortage in order to push his carrier’s cargo ambitions ahead Paul had to either add freighters to the fleet or secure main deck capacity elsewhere.
WY approached CV
Since the first point is a rather costly undertaking if started from scratch the management opted for the safer way by approaching an airline with sufficient main deck capacity that would be interested in joining forces in one or another way. “It’s true, Oman Air approached us sometime in September or so of last year, asking if we were interested in cooperating in the cargo field in one way or another,” confirms Maxim Strauss, Cargolux’s VP corporate development & strategic alliances.
A step that ultimately led to the cargo joint venture signed by both airlines last Thursday in Muscat (for more see exclusive report in CargoForwarder Global).
According to “Mister Paul”, as the Omanis respectfully call CEO Gregorowitsch Muscat is ideally located at the crossroads of air and ocean traffic between not only Asia and the West but also Asia and Africa. The country’s capital Muscat will get a new airport with two runways and a large cargo area that’s currently under construction and slated to go online in 2017. Further to this, the ports of Salalah, Duqm and Sohar, located at the western shores of the Indian Ocean are geographically well positioned for combined sea-air transports. Finally, the Omani government intends to convert the country into a main logistics hub, to prepare for the time after the petroleum age.
“Together with Cargolux we intend to capture new markets to start with in India but at a second stage also in China and Africa,” announces Gregorowitsch. He also says that Oman Air intends utilizing Cargolux’s extensive European road feeder network for streamlining processes. “This will already happen in the second half of 2015,” he assures.
And why did Oman Air decide to join forces with Cargolux?
“KLM-Martinair are sharply reducing their freighter fleet; BA stepped entirely out of main deck activities. In contrast to these two airlines Cargolux operates a 23 all-cargo fleet that we considered being ideal for joining forces and bringing Muscat as an air cargo hub into the game.”
Costs down, revenues up!
Currently, roughly 130,000 tons of cargo is annually processed at Muscat airport. “Our traffic share at our home base comprises 40 percent,” says Gregorowitsch, adding that Oman Air’s passenger fleet is steadily growing, including widebody equipment. In autumn of this year the first Boeing 787s are coming into the fleet. “By 2020 we will operate 25 widebody passenger jets, enabling our airline to service new routes and double the frequencies on some of the existing legs.”
Mister Paul clearly denies any plans to invest in freighters, an option that became obsolete after signing the deal with main deck provider Cargolux.
Touching financial issues the manager frankly admits that state-aided Oman Air is still loss-making. “We’ve got to further lower the costs and push the revenues up,” he exclaims.
Developing a winning mentality of the 6,200 staff is another major task, he’s working on. Due to the capacity agreement with partner Cargolux, Oman Air’s cargo business is expected to jump to 10 percent of the carrier’s turnover by the end of this year, he predicts.
Last year WY carried 52,340 tons, states cargo manager Sherief Padiyath.
The new airport offers cool rooms
Managing Director Sebastian Almeida of GSA Swift Connections says that a lot of garments from Bangladesh or Sri Lanka together with automotive components but also dangerous goods to and from India are processed via Muscat Airport. These volumes are steadily growing in contrast to sea-air traffic that has gone down lately.
“Particularly India offers huge business potentials. Therefore, I think it was a wise step taken by Cargolux and Oman Air to join forces and mutually capture market opportunities there,” the Tanzanian national believes. This all the more when the new airport in Muscat goes into operation. “The facility will be equipped with a number of temperature controlled rooms, enabling the throughput of shipments that need a cool environment from beginning to end,” emphasizes Cargolux’s Omani sales agent Sebastian.