Former Charter Service Takes Cargo HoldThu, 12/01/2016 - 13:53
Q: What is the extent of AeroUnion services in Mexico?
A: After more than 20 years in the industry, we are leaders in the cargo business. Unlike our competitors that use passenger planes for their cargo operations, we have six cargo airplanes for imports and exports. Our main service is international air cargo transport. Our flight routes to Central and South America primarily end in Guatemala, San José, Managua, Panama, Bogota, Quito and Lima. To the US, we usually fly to Los Angeles, San Francisco and Chicago, although Detroit also is a popular destination for automotive industry content.
AeroUnion started as a charter service company for other cargo airlines. Since we were operating flights for other airlines and knew which destinations most needed our services we decided to initiate our own operations. That led to the route between Mexico City and Los Angeles. It was a heavily neglected route, so we decided to take the step toward operating it on our own. At first we only operated routes we knew to be profitable but our business has evolved and now we design our flights to meet industry needs. For instance, the Bajio region needed flights to Asia so we used our interlineal tariff agreement with 14 Asian airlines to move products between companies in the Bajio and Asia.
We still provide charter services but that only represents 20 percent of our annual income. Our retail operations with large cargo operators in the country account for the remaining 80 percent. All the economic sectors of the industry benefit from AeroUnion’s services, including the perishable food products sector and the high-technology industry. We transport equipment for Sony, Samsung, LG and Apple among others.
Q: How do infrastructure challenges impact the company’s operations?
A: The lack of infrastructure is an impediment. We sometimes cannot help customers because there is no infrastructure in their local airports to load and unload the airplanes. This forces us to move our own equipment to the site, increasing the cost of our services. Even though there is cargo infrastructure for smaller airplanes, the structure needed for our Airbus 300 and Boeing 767-200 models is almost non-existent. For instance, we had to invest almost US$500,000 in the Bajio region to perform the loading and unloading operations required. As of today, only Merida, Cancun, Mexico City, Queretaro, El Bajio, Tijuana and Toluca airports have the necessary loading bays.
Q: How could the federal government contribute to improving cargo operations in the country?
A: For AeroUnion’s operations, the federal government could support us by completing the construction of the NAICM on time. AICM is our operating base, which means that almost 95 percent of our flights depart from and arrive to Mexico City. Having our base in AICM is somewhat problematic. Since we perform nonregular flights, we are required to operate during the least saturated hours. This means flying between 11pm and 6am giving us a total of seven hours to operate. This is not always enough to make roundtrips and that leads to inefficiencies and reduces our competitiveness. In that sense, NAICM will be a plus because we will be able to perform more flights.
Q: What are AeroUnion’s growth expectations for 2016?
A: We expect that by the end of 2016 we will have grown 2-3 percent. Among the reasons for this small percentage is the US dollar exchange rate. Our export operations benefit from the current price of the dollar but imports are suffering, which reduces our growth. Even though low jet-fuel prices have allowed us to improve our tariffs, this does not compensate for our lower rate-related income. As a countermeasure, we are prioritizing cost savings and controlling expenses while optimizing our resources.
The company has healthy finances and we are confident that the period of turbulence will not last any longer than six or eight months. We expect that by 2017 we can start fleet renovations and the company plans to have at least two more fuel-efficient Airbus 330-200 to move almost 70 tons of cargo.