With any charter business, whether focused on passengers or cargo, companies want to have as much diversity as possible to open themselves up to as many markets as possible, so it’s crucial to offer a wide range of capabilities.
The nature of the charter world dictates that companies never know what small areas will develop, and it is often unexpected or of limited vision, due to… Force majeure, industrial action or any number of other reasons. As such, an agile process that can react quickly is crucial.
“There will always be a demand to move things. The start and end at point A and B will be different, but there will always be a requirement to move goods by air for a variety of reasons, and there will always be pressure to do it as cost-effectively as possible,” Alex Harrington, Director Commercial at Titan Airlines.
“Currently, we do not have the same amount of diversity in terms of aircraft that we have historically, within our charter fleet which is dominated by A321 freighters, whereas in the past, we have had different sized freighters that can do different types of jobs.
“We have just placed an order for two Cessna Sky Couriers, aircraft that offer different capabilities Depending on the type of loading and routing, we are excited about the markets that will open up for us. We are really committed to the charter market, so increasing the diversity of our aircraft is very important to us.
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Excess capacity impacts operations
Right now, there is a very large capacity in the market. While it’s hard to define what “normal” looks like in the air cargo industry anymore, the industry appears to be back to its pre-pandemic status in terms of volume.
During the Covid period, there has been additional cargo volume in the charter segment due to a decrease in the frequency and reliability of passenger services. Demand was also boosted by people spending more money on items at home, since they were not travelling. This situation has led companies to place large orders for cargo aircraft to meet the market opportunity, increasing capacity and putting pressure on prices.
The resumption of passenger schedule services over the past two years also means that demands on casual capacity are lower than during the pandemic.
“When it comes to leasing, there will always be opportunities, but certainly excess capacity means there is currently real downward pressure on prices,” Harrington said.
“Excess capacity in the market is good for customers but not so good for operators.
“Is the market going to change? I don’t know which way it’s going to change, but you can guarantee it will at some point, which is why you have to stay agile and opportunistic,” Harrington explained.
“We are very focused on making sure the contracts and clients we work for are executed really well because that is the thing that will continue to set Titan apart from our competitors over the long term.
“We’ve been pleasantly surprised by what we’ve picked up so far this year. We hope that continues into the second quarter. There are some promising signs that that will happen.”
“We have been awarded the ACMI contract and are looking to start operating in the US in March, so there is definitely more movement compared to last year, which is great to see. So ‘cautious optimism’ is my outlook for 2024! We will see what happens because the recovery can It will always be a bit fragile, but I hope that if you come and talk to me at the end of 2024, I will be smiling!
Regional interaction
The biggest downward trend has been seen in China, which is where Titan Airways is seeing its impact The A330 freighter they operate on behalf of Geodis. Harrington believes this is because the world has opened up again, and more people are using passenger or sea capacity.
“These goods coming from Asia to Europe are the market that, from our point of view, has seen the biggest decline in terms of the price you can get per kilo,” he explained.
Instability in the Middle East also had a significant impact on operations heading to Tel Aviv. Many companies wanted to continue operating to Tel Aviv, while some carriers thought it was too risky. This has had an indirect impact on costs in relation to insurance.
“The evolving situation in the Gulf of Aden will be interesting because obviously a lot of ships are going through the Suez Canal and having to pass through the Gulf of Aden to get to Europe,” Harrington continued.
“Certainly, from a charter perspective, I expect an increase in demand because of that. It’s often that sudden change in the market that occurs when a charter broker can make a difference by bringing in new ideas and capabilities to fill the void. What a charter broker needs to add value is a fast, flexible offering that is What I think Titan can help with.
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Charters vs. traditional airlines
Traditional airlines are increasingly building cargo operations, but Titan Airways is not worried about the impact this will have on the overall charter market.
“I always think it depends on the appetite of the specific service airline. If they start increasing their capacity, and they don’t have a lot of work for their cargo ships, It is a natural step To look at He referred to the working charter.
“For carriers with larger schedules, I’m not sure that freight operations quite fit into their models, because that often means competing with their own passenger capacity.”
However, Harrington believes that hired work is more specialized, requiring agility and flexibility, which is not the usual strength Scheduled service carriers.
“I would be surprised if they attack that space with any real aggression because I don’t think they will He stressed that this represents a worthwhile investment of their time and resources, in terms of crew levels, so they will first look to protect their regular operations for both passengers and cargo.
“That may change, but I think that at the moment, if they have too many cargo aircraft, they can easily reallocate their crew resources to their passenger operations which “It’s doing very well right now, and it makes more business sense for those carriers,” Harrington said.
