Weak dollar, oil price stems Emirates SkyCargo growth
Emirates SkyCargo, the world’s third biggest air freight operator, is hoping for a flat performance this year as a weak dollar and the high oil price take their toll on the worldwide air cargo industry.
The half-year results reported by Emirates Airline, of which Emirates SkyCargo is a subsidiary, showed that the volume of cargo uplifted was in line with last year, after a 27.6 percent increase year-on-year in 2010-11.
“Right now, flat is good, purely because the world air cargo industry, and the shipping industry, is very down,” Emirates’ divisional senior vice president for cargo, Ram Menen, told Arabian Business during the Dubai Air Show.
“It’s very unpredictable – you can’t even find a reason for why it’s performing as it is. The only thing I can think of is that with dollar parity being so weak, oil prices are kept up, which is hitting everyone’s wallets, so people are not spending money.”
Menen said that the cargo division’s results had been helped by relatively stronger performances in the Middle East, Africa, Latin America and the Indian subcontinent. He said that the carrier, which operates eight freighters as well as belly-hold capacity in Emirates’ 153-strong wide-body passenger fleet – had shifted extra capacity to those markets.
The latest data from global industry body IATA shows that international freight traffic fell 2.7 percent in September, the fifth consecutive month of contraction.
On Sunday, SkyCargo confirmed that it would lease a further nine Boeing 777Fs from Dubai Aerospace Enterprise. Menen confirmed that the carrier would not take up the option of leasing five new 747-8Fs - which has faced concerns from other airlines over its performance – instead converting those orders to the smaller 777F.
The Emirates official also said that infrastructure in some existing sheds at Dubai International Airport would be revamped as the carrier aims to squeeze the most out of strained capacity at the facility.
When questioned as to whether SkyCargo’s freighter operations would be the first section of the Emirates Group to make the switch over to Al Maktoum International, the mega airport development near Jebel Ali, Menen answered: “It looks like it.”
“It could happen in the next few years. We’re looking at various options at the moment, but there’s nothing that’s firmed up. We’ve got a team of people working on that.”
Menen also said he was “cautiously optimistic” about the air cargo industry’s performance next year.
“We are hoping we will be able to keep it flat, but having said that, if there is a Christmas rush in December, and if the sales are strong in Europe and the US that could trigger demand in the first quarter,” he added.
A $2.4bn business, SkyCargo contributed around 18 percent of overall revenues to the Emirates Group in the last financial year.