Breaking out

Rus Aviation's successful operations to Iraq and Afghanistan have allow it to launch itself into India and China.

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Rus Aviation, based in Sharjah, has become a major player in the charter cargo carrier market within the Middle East. The reason behind the company's success is consistent investment and willingness to break out of its usual markets and tackle new destinations. Since it started operations from Russia to Sharjah in 1999, with a fleet of just four aircraft, the company now operates 19 Russian Antonov and Ilyushin freighters. Recently Rus ordered four new Russian aircraft, Illyushin 76s and Antonov 12s to support increasing demand for cargo transportation.

The company has also invested up to US$15 million by launching itself into India and China. Hussam Namou, Rus' deputy general manager, says: “We are aiming to generate more than $17 million in the first year from these two markets. Both India and China are forecasted to see a huge rise in cargo and Rus Aviation is making sure it gets a piece of the pie."

Last month the company broke into the Indian market by launching a weekly flight into Delhi. It is also tackling the Chinese market by launching a twice-weekly flight to Urumgi this month.

So how has the company managed to obtain the finances to expand so rapidly in the last three months?

Namou has the answer: “Rus Aviation's growth is mainly down to serving the Iraqi and Afghanistan markets. Obviously, due to current conflicts, business has grown rapidly, as demand for cargo is very strong."

Supplying Iraq and Afghanistan has become a key issue with some serious limitations operating from Asia and the European Union directly into Iraq. Right now materials are transhipped via Bahrain and Dubai into Iraq. Rus Aviation is just one of the companies benefiting from the situation.

“Most of our cargo load is now going to Iraq and Afghanistan, with daily flights to each destination, normally carrying vehicles and other equipment needed for reconstruction efforts," says Namou.

Flying to these countries is clearly a risky business, and the company has to pay a high price to insure its planes and crew. However, bureaucratically, it is less of a challenge than flying to some other countries in the region and further afield. The company is receiving support from the RMCC (Regional Movement Control Centre).

The real target for Rus Aviation is to be able to fly straight into Europe. According to Senan Saltaji, Rus' marketing executive, approximately 35,000 metric tonnes of cargo goes to Europe each month. Rus Aviation currently negotiates with other companies to fly the transshipments that arrive in Dubai into Europe.

Namou says he would like to bring this in-house. “In the future we will be looking at acquiring a more modern fleet, with Western aircraft. Our Russian aircraft cannot fly into Europe, due to noise restrictions,"? he says.

At present the company can only operate into Eastern Europe, because of the noise restriction regulations for in Western Europe. This means that while Rus Aviation can handle some humanitarian flights, it is unable to carry commercial loads to half of the continent. The company is looking at acquiring two Airbus 320s to break into this important market. However, Namou says the General Civil Aviation Authority's plans to introduce a ban on planes over the age of 25 years, as reported in Air Cargo in May, has postponed the fleet expansion.

He says: “It is still not clear when and how severe their plans are. It is a lot cheaper to run Russian aircraft than Western aircraft, and if the ban does not come into force, then we will continue to run our Ilyshun and Antonov aircraft, because it makes financial sense. It's a question of wait and see. We should have a decision by 2007."

Helping to expand its fleet, Rus became the GSA for Click Airways, which operates four IL-76s and three An-12s. Saleh Al-Aroud, Rus' general manager, says: “Last year we signed an agreement with them to handle their commercial department. We have been doing consultations with them, plus we are handling all types of commercial agreements on their behalf."

The extra aircraft has allowed the company to push into the new markets, such as China and India.

When Rus Aviation made the move to Sharjah, it had two Ilyshun IL-18s and two Antonov An-12s, which primarily served Russia and countries in the CIS. The company made the switch to the UAE from Russia, as it wanted to leverage on the country's business-friendly environment and advantageous geographical position to further expand its business. “There is big support from the government to do business here, says Al-Aroud. “Secondly, the UAE is in the heart of the Middle East, so it's near Afghanistan and Iraq."

The company flies from all of the airports in the UAE, and it also has services to Kuwait, Jordan and across the region. However, Sharjah was chosen as the hub for the operation because of its strong cargo facilities and quick handling times. “All of the airports in the UAE provide good handling facilities. However, Sharjah airport is not so big, and it is not so complicated, which makes it easy to operate cargo. If you have a transshipment, for instance, it only takes two hours to clear it and then load it onto another aircraft. At airports it would take 12-14 hours,"? says Al-Aroud.

Rus has also managed to bring its own storage in-house by acquiring Oman Aviation in July this year. The acquisition has given Rus a warehouse within Sharjah Airport, groundhandling facilities, permits, and several staff having more than 20 years of experience. Namou says: “Not only can we now store our own cargo, which has driven down costs of outsourcing, but we are also using the warehouse for trans-shipments for other companies."?
The company says this has already generated a substantial amount of business. Rus has also expanded its ground-handling service through the acquisition and is currently working with several companies to create one of Sharjah's top ground-handling companies.

"It took us a year to come up with a plan to acquire Oman Aviation, which has a strong reputation and has been around for more than 25 years. We are very pleased with the outcome and the extra services we can now offer to our customers,"? concludes Namou.

“We are aiming to generate more than US$17 million in the first year from these two markets. Both India and China are forecasted to see a huge rise in cargo."

 

"The Chinese market is really big, and there are more than enough speace for everyone to work there."
New headquarters

Rus Aviation recently moved into its new purpose-built AED 6 million headquarters in Sharjah's Free Zone. The 1500m² centre building has allowed the company to consolidate its sister company, Click Airways, and its three subsidiaries into one centralised unit. Manou says: “Our continued growth has allowed us to become the region's leading cargo charter operator. Our new headquarters has given us greater presence in Sharjah, which has allowed us to expand."

The building is being shared with Global Aviation Services, which has become a partner company for the cargo airline. Prior to the deal, Rus Aviation and Global Aviation were both offering chartering, as well as a range of aviation services, such as arranging overflight permits and refuelling for other operators. However, last year the two companies agreed on a partnership deal, which has allowed them to focus on one area each.
 

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