News Content

Wet leasing still an option for airlines

AS Airlines look to develop new markets, the trend towards wet-leasing freighter capacity is set to continue, according to director of cargo charters at Saudi Arabia airline's, Saudia, Michael Duggan.

Speaking recently at the Freighters and Belly Cargo conference in Abu Dhabi, Mr Duggan said that while Saudia operates a number of its own freighters, wet-leasing gives it "enormous flexibility to ramp up and down", especially when it comes to charter operations.

"The cost of running B777s is so high that it's viable only with an enormous number of operating hours, and the charter market doesn't work like that."

Another speaker, executive vice president and chief commercial officer of Atlas Air Worldwide Michael Steen, said ACMI (aircraft, crew, maintenance and insurance) would keep growing, with express operators in particular choosing to outsource, reports The Loadstar.

Mr Steen pointed to the emergence of long-term partnerships where the operator becomes an integrated part of its customer's operation.

"As well as our relationship with DHL, we also serve UPS and FedEx when they require capacity, even though they have some of the largest fleets in the world. The model is applicable across the entire industry," Mr Steen said.

The main argument for airlines keeping their entire cargo operation in-house is that they have greater control over crewing and maintenance, Mr Steen said. However, factors such as crew shortages can mean carriers, especially in Asia, lack the resources to exploit market opportunities.

He says he sees ACMI playing an important future role in a maturing Chinese market despite China's tight regulation and "antiquated rules''.

Vice president of cargo at Etihad, David Kerr, said the carrier had gone through "several cycles of wet-lease" before acquiring three of its own B747 production freighters, enabling it to grow its network. But ACMI agreements had given Etihad the initial flexibility to develop. "It joins the dots," he said.

Both Saudia and Etihad still call on specialist ACMI operators to supplement their directly managed main-deck business. Speaking as one of the few carriers with dedicated charter capacity, Mr Duggan admitted it was "hard to do business" when peak season Asia-Europe round trips command as little as US$300,000.