Which are: building a long-term sustainable network for freight transports, and deciding on the further cargo fleet development. For the cargo chief, who has only overseen the Latin American carrier’s freight division since mid-August this year, these two assignments are major challenges. Managing them successfully will be decisive for Avianca Cargo's operational and financial performance in the years to come.
Avianca Cargo is off to a good start because the freight division has been the carrier’s most profitable unit in the first 10 months of 2021, contributing roughly 35% to Avianca’s total sales. Compared to the average contribution of 10-15% in pre-Covid times, this is a more than respectable figure, Cargo CEO, Gabriel Oliva points out. However, the favorable ratio will likely go south in the coming months when Avianca ups its passenger services again, reproportioning the revenue shares generated by passenger and freight. But that does not worry Mr. Oliva and his team because the passenger aircraft bellies complement the main decks of the carrier’s own cargo aircraft, upping sales. So, the more capacity, the better, since freight rates are going through the roof and are expected to stay there for the coming months.
Currently, Avianca operates 6 A330 freighter aircraft and has access to 5 freighters belonging to its Mexican affiliate, AeroUnion – Aerotransporte de Carga Unión, consisting of 3 A300-BF and 2 B767-200ERF. They are mostly deployed on routes between Mexico and destinations in the Pacific Rim region of the USA.
Fleet issues need to be solved
Adjusting Avianca Cargo’s fleet to the freight division’s needs is high on Gabriel Oliva’s mid-term agenda. “We are pleased with the performance of the A330F. It is an optimal fleet to operate in our core markets,” he says. Defining the future fleet is on the table, he confirms. “We are focusing on this, as it is really important short-term. It is one of our priorities.” The outcome of the evaluation process is still uncertain but tabling results will happen soon, Mr. Oliva assures.
And how about converting some of Avianca’s own A330 passenger jetliners to freighters, in this way adding main deck capacity to the market? Gabriel Oliva would not exclude this step but, as things stand, this is only a theoretical option: “The conversion market is overheated. We know that these are cycles, so we have to be responsible for really understanding what our clients and market need and making a decision on that end,” notes the manager. This sounds like an extended period of evaluation and discussion before
new fleet decisions are made.
It can be expected that the question which freighter variant fits the cargo division’s needs best will depend on the decision on the future market-spanning intercontinental network that Avianca Cargo is eager to set up. “At the moment, we are still in a transitional phase, but with the start of the summer flight schedule at the end of next March, it should already be clear where we are going from here.”
In Europe, the carrier serves Amsterdam and Zaragoza with A330F, and operates passenger flights to Madrid and Barcelona, offering belly hold capacity to the clients. Especially Amsterdam is a key destination for flowers, fruit, and other perishables. These products are high on the list of shipments flown from Latin America to Europe. Avianca Cargo’s ratio out of Latin America is 1.43 times the inbound volumes.
En route to the UK
Regarding Europe: As reported by CargoForwarder Global, the carrier has decided to move its domicile to the United Kingdom and become a UK-incorporated company
Asked for the reason of this intended move, the carrier states: “The initiative to domicile the new holding company in the United Kingdom, is exclusively based on the fact that the said country recognizes and abides by the rules and decisions of the C11 process and on the tax and legal treatment of companies domiciled in such jurisdiction. This change of domicile of the holding company (currently located in Panama), will not entail any adverse effect to the presence or operation of the airlines in their jurisdictions.” The relocation is to take place this year.
iCargo is expected to catapult Avianca Cargo into higher spheres
Back to the cargo unit: Mr. Oliva highlights the talent and commitment of the Avianca Cargo team, and underlines that one great achievement and milestone for the company is the implementation of the IBS Software IT platform, iCargo “We are very excited about our collaboration with IBS Software. Implementing iCargo, the airfreight industry-leading system, is one of the most significant IT developments for Avianca Cargo. With iCargo we will deliver more digital advancements to be more connected to our customers and partners, raise the quality of our service, improve our efficiency, and enhance our decision-making process to a more agile and data-driven one. We will continue and accelerate our journey to digital transformation.” In doing so, Avianca Cargo has unified dissimilar business systems into a single electronic platform used by all group carriers, including Mexican AeroUnion, enabling them to offer customers consolidated routes and bookings. The step is paramount because Avianca Cargo has grown through acquisitions and mergers, which resulted in a range of different systems, tools, and business processes.
Strong in its home market
All in all, Avianca Cargo operates to more than 50 destinations. 150+ routes stand on its itinerary, which translates into approximately 210 freighter flights and 730 passenger flights per week, the latter carrying cargo in their bellies.
On its home turf Colombia, Avianca is the clear market leader, both in cargo and passenger services.
The airline is also a major player in Brazil, offering high frequencies to Sao Paulo, Brazil’s by far largest and economically most vibrant city.
Any USP? “Our geographical position between the two parts of America is ideal, and our extremely knowledgeable team offers our clients attractive, customized solutions depending on their needs,” reasons Mr. Oliva.
Whether the second part of this sentence in particular will be applauded by LATAM Cargo is questionable. There, Gabriel Oliva was part of the management team of the freight division for many years before he recently moved to the top of Avianca Cargo.
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