IAG Goes Cool & Critical

IAG Cargo called and about a dozen people from the media flocked to the carrier’s headquarters at London Heathrow Airport in anticipation of hearing something new. Their expectations were not disappointed because the managers had a lot to announce like the building of a state-of-the-art premium freight facility, a new product that will go online soon and an insight outlook on IAG Cargo’s strategy and business perspective.
It was worth, participating!

Image of New Premia  -  courtesy IAG
Image of New Premia - courtesy IAG

No signs of moroseness or pessimism. In contrast to most European competitors that are repeatedly moaning about poor load factors, declining yields and tough economic times, the IAG Cargo bosses seem to look beyond the horizon in anticipation of a bright future for their business. 
Their optimism is based on four solid pillars, presented by leading executives at last week’s press meeting at the freight carrier's London Heathrow premises:

  • The construction of a “New Premia” called facility for handling temperature sensitive items, particularly pharmaceuticals.
  • The forthcoming widening of the product portfolio by adding "Critical" to the segment of premium offerings.
  • An offensive fleet policy, allowing a constant network expansion in the years ahead.
  • Finally, IAG Cargo's success story as one body ensuring that all group members are pulling together for the benefit of the unified division.
Drew Crawley is heading IAG Cargo since January 2016  -  photo: hs
Drew Crawley is heading IAG Cargo since January 2016 - photo: hs

It's worth putting the individual bullet points tabled by the IAG executives at their London meet under the microscope to not only pinpoint details but to illustrate their importance for IAG Cargo’s general strategy.
 
New Premia
The upcoming freight facility of 8,500 sqm doubles the carrier’s space for handling premium shipments at Heathrow Airport. Its completion, expected for Q2 or Q3 in 2018, will cost IAG Cargo 55 million pounds. The building will be equipped with 11 landside truck docks, 20 build and break stations inside, contain a new pharma center and be overseen by a dedicated team. Important to note is that operations at the existing (2005 built) Premia will not be affected by the construction of the neighboring new facility for premium freight. The entire building will be temperature controlled, while the climate centre consists of separated areas for the storage of pharmaceuticals, vaccines or blood plasma at temperatures ranging from two to eight degrees Celsius and 15° to 25° Celsius, depending on the requirement of the individual product.
Despite an overall tough market, IAG Cargo is experiencing high growth rates of their premium products.
As their CEO Drew Crawley pointed out, the need for building the new facility is there since the existing Premia terminal is close to reaching capacity.
In his first meet with the press since he joined Cargo last January the manager said that their two special products have seen unprecedented growth, with Constant Climate growing 55% in 2014 and 44% last year respectively, while the express product IAG Prioritize went up from 5% in 2014 to 32% a year after.
And the journey seems to be far from over. “We decided to focus on premium products to meet the unique needs of the industry,” emphasized Drew.

IAG head of commercial Dave Shepherd introduced „Critical“  -  company courtesy.
IAG head of commercial Dave Shepherd introduced „Critical“ - company courtesy.

Critical
Having said this he and Head of Commercial Dave Shepherd announced the introduction of a new product called “Critical” for filling a black hole in the carrier’s global portfolio. This way, IAG Cargo intends tapping into the special and lucrative market of emergency shipments, be it ship spares, aircraft components, urgently needed medical instruments or car parts.
The demand for this new service is there, stressed Mr Shepherd, shown by the fact that a number of customers have already committed to fly critical goods on board the IAG Group of airlines, once the product is online. David assures that Critical will become IAG Cargo’s first non-off loadable product, guaranteed to be flown as booked.
It will be available across IAG Cargo’s entire network, covering over 350 destinations worldwide, allowing globally acting industries to minimize downtime costs and continue operations.
Clients using the carrier’s Heathrow and Madrid hubs will benefit from a dedicated check-in desk whose members will speed up the critical items’ drop off and collection times.
 
Fleet expansion
The upcoming fleet enlargement is another important step forward in IAG Cargo’s aim to capture new markets and/or serve the existing ones more efficiently. Over the next ten years, 47 new aircraft are scheduled to join the fleets of the group’s member airlines, among them 12 A380s, 42 B787s and 34 A350s.
That is a lot of additional capacity even when considering the fact that a number of aging jetliners will be taken out of service by then. In this respect, the IAG Cargo executives emphasized that it was a wise decision back in 2014 to step out of freighter operations, thus minimizing commercial risks, while collaborating with other carriers on key routes instead by co-loading and sharing capacity.  
 
One company
CEO Drew Crawely summarized the press meet with an optimistic outlook: “We believe that the blend of our next generation aircraft, new freight facilities and our expanding network means that IAG Cargo is extremely well positioned in the market to meet the current and future premium freight demands.” His colleague Shepherd added to this that cross-border e-commerce shipments that enjoy an unprecedented growth rate will stimulate the carrier’s Prioritize (express) product further. When it comes to special products Drew Crawley says "IAG Cargo has gained an excellent reputation,” confirming that it’s high yield freight the management is targeting.
 
Finally, what differentiates IAG Cargo, for instance, from the Air France-KLM-Martinair Cargo model?
CEO Drew Crawley's immediate answer: "There is no Iberia, Air Lingus or British Airways Cargo any longer. We all have become IAG Cargo, showing one face to the customers, acting as one body." Period!

It was not necessary to elaborate further!
 
Heiner Siegmund

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