Title: Has Cargo Become
1Has Cargo Become the Dominant cousin of the
Aviation Industry ?
Sushil Baguant Chief Business Support
Executive Air Mauritius Ltd 17th November 2006
2Agenda
- About Mauritius and Air Mauritius
- Cargo Business in Perspective
- Passengers and Cargo Businesses are they Rivals,
Brothers or Cousins - Cargo Business at Air Mauritius
- Conclusion
3About Mauritius
4Dot in Indian Ocean
5Visit us _at_ www.airmauritius.com
6Republic of Mauritius - Island Nation
- Mission of National Carrier
- Air Links
- Geographical Position - A strategic Hub in Indian
Ocean - Assist in developing International Trade and
links - Sustain Tourism Industry
- Promote Up-market and Selective Tourism
- Export/Import of Goods
- Airline to run on a Commercially Viable Basis
- Annual average air traffic growth of 9 since
1980 - Preserve Environment/Ecology of the Island
- Aligned Interest Country and Airline
7Republic of Mauritius Fact Sheet
- Main Pillars of the Economy
- Agricultural mainly Sugar, Tourism Industry,
Manufacturing Sector mainly Textiles and
Garments, Financial Services, Information
Technology and Services - Moving to Service Economy
- New emerging pillars ICT, Seafood Hub and
Offshore development - Main Exports
- Clothing Textiles , Sugar, Flowers, etc.
- Main Imports
- Manufactured Goods, Capital Equipment,
Foodstuffs, petroleum products, etc. - Member of the SADC and COMESA
- Promote bilateral and regional trade
8Past Successes Do Not Guarantee Future ones
9Competitive Environment
More sophisticated Knowledgeable customers
Deregulation Liberalisation
eBusiness
Increased Competition
Mergers Acquisition
New Entrants
Privatisation
Global Alliances
Regulatory Barriers
Increased Capacity
Globalisation
Ecological Pressure
Increasing costs
Worldwide Economic Changes
10Radical Change to adapt in new aviation
landscape arising from technological innovations
and new policies
- Streamlining Business Processes through BPR
- New cost- efficient fleet , adaptable and
responsive organisation structure, cost
effectiveness, yield management - E business and Technology adoption
11Competition and New Policy
- Liberalisation Waves a worldwide phenomenon
getting to our shores - More frequencies and bigger aircraft by existing
operators - AF, BA, EK, SAA
- New players with new business rules
- Corsair
- LTU
- Comair
- Air Europe
- Lauda Air
- Virgin
- Condor
12Resistance to change
Technical/Functional
Security / Comfort Zone
13About Air Mauritius
14Air Mauritius Vision
- To Be a
- World Class Airline
15Air Mauritius
- International Airline operating out of Mauritius
Staff Force of 2800
2005/ 2006
1,156,820 Passengers 35,666 Tons Cargo Euro 416.6
million Turnover
Fleet of 7 Wide-bodied 2 A319 Aircraft 2 ATR 42
1ATR 72 Aircraft 3 Helicopters
28 Destinations 4 continents About 100 weekly
frequencies
16Fleet
5 Airbus A340-300
2 Boeing B767 ER
2 Airbus A319-100
1 DC8-63 Freighter Aircraft (leased)
2 ATR
3 Bell Jet Rangers
17New Fleet Acquisition
- 2 A340-300E in Nov/Dec 2006
- 2 A330 (One in 2007/8 and the other in 2009)
18Route Network
19Cargo Business in Perspective
20Economic Growth as driver of Air Cargo Growth
Source Boeing World Cargo Forecast 2006-2007
- Strong correlation between GDP evolution and Air
Cargo Growth during the past decades
21 Opportunities Constraints for MK Cargo
Operations
Opportunities
Constraints
22Passenger vs. Freight Growth
AAGR 2005-09 AAGR 2005-09
Passenger Freight
All International Routes 5.6 6.3
North Atlantic 5.3 4.6
Trans Pacific 5.8 6.0
Within Europe 5.1 4.1
Within Asia Pacific 6.8 8.5
Europe to Asia Pacific 5.9 5.7
Europe to Africa 5.7 4.5
Middle East to Europe 6.6 5.1
Middle East to Asia Pacific 6.7 8.8
N America to Latin America 4.6 3.7
Within Latin America 4.2 5.0
Source IATA Passenger and Freight Forecast
2005-2009
Higher Growth for Freight as compared to
Passenger!
23Expected Growth for 2006
- World Economy
- 3.1
- Passenger Travel
- 4.9
- FREIGHT
- 6.1
- (source Boeing 2006 Market Outlook)
- Higher Predicted Growth in Freight compared to
PAX business!
24Type of Products
- Growth of air-freight due to time sensitive
products
25World Freighter Fleet
Source Airbus Global Market Forecast 2004-2023
- Number of freighters expected to exceed 3,500 by
2023, representing an annual growth of 4.3 p.a.
26Conversions of aircraft to cater for increasing
freight demand
According to Airbus, higher rate of conversion
for regional freighter fleets to cater for the
rapidly growing Asian Market.
27Relationship Pax and Cargo
28Similarities differences between PAX and Cargo
PAX
CARGO
- Bilateral talks
- Airline to Airline Agreements
- Fleet Planning
- Route Deployment/Profitability
- Bilateral talks
- Airline to Airline Agreements
- Fleet Planning
- Route Deployment/Profitability
- Distribution Channels
- Shipper Freight Forwarder Consignee
- Emergence of Consolidators!
- Logistics
- Warehousing
- Product definition
- Destination Connection Rates Timings
- Development Strategy
- Transshipments
- Distribution Channels
- Tour Operators Travel Agents PAX
- Logistics
- Check-in counter
- Product definition
- Travel Packages
- Development Strategy
- Stop over
29PAX vs Cargo - Technology
PAX
CARGO
- Inventory
- Booking Engine
- Fares
- Decision Support System
- Yield Management
- Technology E business
- Inventory
- Booking Engine
- Fares
- Decision Support System
- Yield Management
- Customer self-service
- Track and trace facilities to know shipment
status - Online Sales B2B
- Handling and Warehousing System
- ULD Management
- Customer self-service
- Flight and Booking status prior to uplift
- Online Sales B2C
- Departure Control System
30AIR MAURITIUS IN THE CARGO VALUE CHAIN
31Sources of Rivalry
- Route definition
- Days of operations and Timing of operations
- Capacity deployment
- Offloading priority
- Type of Aircraft
- Distribution/ Choice of GSA
- Funds for development
- Resources
- Alliances and Partnerships
32Sources of Partnership
- Significantly contributes to the Socio economic
development of a Country - Tourism
- Manufacturing Services
- Transhipment
- Bilateral Talks/ Airline to airline talks/
Holistic approach - Contribution to overall Route /Network
Profitability - operations
- Fleet investment
- Economies of scale for Handling cost
- Treated on Basis of Marginal Costing for mixed
flights - Increase Asset Utilisation by operating Pax
aircraft for freight only on short sectors - Compensating for seasonality
- Security
33Summary
- Cargo is a significant contributor to the Overall
Aviation Industry - Fleet development
- Aircraft Manufacturers New and conversions
- Handling Agents
- Airports
- Airlines
- Supports the Passenger business both in terms of
Logistics and Economic Justification - Competes with the Passenger Business for
resources and often differs in Schedules, route
planning and choice of Aircraft - Has a roadmap of development which can be mainly
based on Mixed aircraft but also dedicated
Freighters - Has its own needs of People skills Procedures ,
Security needs, Yield management process and
Logistics facilities
34Cargo Business at Air Mauritius
35Air MauritiusCargo Objective
TO MAKE CARGO BUSINESS A SIGNIFICANT CONTRIBUTOR
TOWARDS THE PROFITABILITY OF AIR MAURITIUS BY
ENSURING OPTIMUM USE OF CARGO CAPACITY AND
PROVIDING HIGHLY RELIABLE, INNOVATIVE
COST-EFFECTIVE SOLUTIONS TO OUR CUSTOMERS
36Strategic Intents
- To optimise the use of belly capacity throughout
the network as established by passenger
operations complement with freighter operations - To have a Revenue Management process optimising
capacity through a dynamic pricing policy based
on demand - To closely monitor Sales performance/Route
contribution and take proactive actions - To develop Mauritius Cargo Hub through regional
freighter operations - To build loyalty with all stakeholders of the
industry - Develop Incentive mechanisms to promote both
volume sales and growth - Gear the organisation structure to provide
personalised services to main distribution
channels - Develop an effective and efficient Customer
Relationship Management for personalised
services to shippers and consignees - Develop Partner Programs with stakeholders
- To Streamline and improve processes ie Quality
37Strategic Intents
- To develop new products attractive to the
customers - Time-definite services
- Deferred services for price-sensitive customers
- Multi-modal services and Partner Programs to
extend our reach - To develop Product specific expertise
- To develop a flexible Organisation Structure that
promotes accountability, collaboration and
teamwork which fosters decision-making through
the empowerment and continuous development of
staff - Leverage on modern Technologies to develop
systems tools that will enhance processes
thereby bringing us closer to the market and be
more responsive in meeting customers needs. - Information management
- To Develop Modern Logistics Infrastructure
38Evolution of Cargo Business at MK
Weight (Tons)
Revenue (MUR m)
CARGO REPRESENTS 13 OF MKs TURNOVER
39Cargo Business _at_ Air Mauritius
- CARGO CONTRIBUTION
- Cargo represents 13 of the companys turnover
our operations are primarily based on belly-hold
passenger aircraft though increasing importance
of freighter operations.
40Cargo Revenue Breakdown
22
41Cargo Revenue inc Surcharges on Freighter and Pax
flights Eur M
Note Cargo revenue includes Freight Revenue,
Mail and Courier and Surcharges
42Fleet Cargo Capacity
Cargo Capacity Cargo Capacity Cargo Capacity Cargo Capacity
Fleet No of PAX Pallets Containers Bulk Vol. Wgt
A319 120 - - v 1,000
B767 175 3 2 v 9,000
A340 294 6 2 v 12,000
A340E 313 6 2 v 15,000
DC8 - 18 - v 40,000
43Air Mauritius - Cargo Worldwide Offices
US/Canada No of Offices 2
Asia/Middle East No of offices15
Europe No of offices 25
Dakar
Mauritius
Africa/ Indian Ocean Is. No of offices 7
Australia No of offices 3
Worldwide Summary No of offices 52
44HUB STRATEGY
45Enabling Systems for Cargo Business at Air
Mauritius
- To optimise our aircraft cargo capacity
- Implemented a Cargo Reservation System across the
Air Mauritius network. - To provide better customer service
- Integrated to a number of Cargo Community Systems
worldwide. - To better control our revenue processes
- Developed a Cargo Revenue Accounting System.
- To assist decision making processes
- Implemented a Decision Support System.
46MK Cargo Challenges
- NEW MASTER AIR TERMINAL PLAN
- Creation of an AIR CARGO LOGISTICS CENTRE
- Increased Capacity for DRY WAREHOUSING SYSTEM
- Centralised COURIER CENTRE
- NEW COLD ROOM Facilities with Extra Space
- Permanent DISPLAY CENTRE of Products
47Summary
- Cargo is a significant contributor to the Overall
Aviation Industry - Fleet development
- Aircraft Manufacturers New and conversions
- Handling Agents
- Airports
- Airlines
- Supports the Passenger business both in terms of
Logistics and Economic Justification - Competes with the Passenger Business for
resources and often differs in Schedules, route
planning and choice of Aircraft - Has a roadmap of development which can be mainly
based on Mixed aircraft but also dedicated
Freighters - Has its own needs of People skills Procedures ,
Security needs, Yield management process and
Logistics facilities
48Cargo has indeed become a major player of the
Aviation Industry --- Dominant Cousin---
Sushil Baguant Chief Business Support
Executive Air Mauritius Ltd 17th November 2006
49Thank You