Stanley Wraight, President and CEO of Strategic Aviation Solutions International (SASI), is well known for plain speaking. “My rule is to tell the truth, always,” he describes his philosophy on life. That is why CFG asked the Canadian cargo and logistics analyst to comment on the consequences of the Russian invasion of Ukraine for the air cargo industry. They are grim and will be for years to come, is his gloomy prognosis in this exclusive interview.
CFG: Stan, in your former role as VP Cargo, you managed ABC's market entry in 2003, and left the company in mid-2007. Since then, you have intensively observed the development of the
Russian freight airline. So, how will the closure of airspace over Canada, the U.S., the EU, and the UK, affect ABC's business model?
SW: Well, I would not isolate ABC for this discussion. It affects all Russian airlines. However, unfortunately, there is no distinction between government-owned and controlled, like Aeroflot, and privately-owned, like S7 or ABC. It could not come at a worse time for the world’s economy, as that cargo capacity is still desperately needed. We are not over Covid-related humanitarian work, and resupplying the global supply chains to get the world’s economies rebooted with hard goods has just begun.
And don’t forget in all this, as you did not mention it: Russia’s airspace is closed to western aircraft as well, and you can imagine what that will do to the operations of western airlines. As recently as last year, the USA-based integrators were petitioning the USA to get more Russian overfly permissions. Think about BA/KLM-AF/LH/OY/SR etc.: they are really hard hit, as well. North American carriers flying to Asia and India - hours and hours added to flight times are also hurting.
CFG: Are there any operational options for ABC to generate revenues and keep the carrier in the air?
SW: Not that I can see, other than the obvious. Certainly, they must be looking at advancing some maintenance work, for example, and I also would imagine domestic flights and the Trans-Siberian route between China and Russia will remain open. Many people may not know it, but one of the biggest markets for e-commerce in the world, is between China and Russia, and a lot of that goes by air.
CFG: What impact do you expect on Russian civil aviation and the Volga-Dnepr Group, following the Russian invasion of Ukraine, and the sanctions imposed by many countries in response to Putin's war?
SW: If I knew that, I would be a very rich man. You state “Putin’s war”: perhaps that is a good distinction between government and private enterprise that could and should be made. I remember very fondly all the management and staff of ABC and the Volga Group, the happy times as we built the airline, and the hard-working people who are still there. Many were the times that I came up against Aeroflot trying to stop us.
I would hate to see the people and staff of Volga and ABC suffer. They have done nothing and do not deserve anything but our sympathy and hopes that life can return to some sort of normality. And the same goes for the people in Ukraine, of course, who are also innocent and don’t deserve a war.
… and what impact on air freight capacity and rate developments?
SW: Prepare for the worst, as it’s not just a capacity shortfall. Longer flying times, embargoes, fuel prices, and restrictions; all will make the mess we have been in since the start of Covid, get even worse. The question is, how long will this last? It could be years. That’s the likely scenario that we should all be regretfully preparing for.
CFG: In a report published on 24FEB22, we spoke of a “New Iron Curtain in the Sky”
Is the warning exaggerated, or are we moving in this direction?
SW: Well, the title is a bit dramatic, but it’s only a headline. I cannot believe that somehow, or that other solutions cannot be found, but one thing is for sure: logistics decisions that were predicated on the shock that Covid brought to supply chains, will again be challenged anew by this new reality.
The danger for all, globally, is inflation: oil prices going through the roof, compounding capacity shortages, and the military use to a greater degree of available freighter lift, for example. Add all that up, and it does not look good for the consumer, or intermediaries. But for those who own the assets (freighters and pax bellies), and who can deploy them, they will remain in the driver’s seat for many years to come.
CFG: Stan, thank you for your insights.
Interview: Heiner Siegmund
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