Leading Airline Expands Its Cargo Operations

Q: How does Aeroméxico Cargo contribute to the growth of the country’s economy?

A: Aeroméxico Cargo plays an essential role in the entire supply chain. In the domestic market, one of every two kilos of cargo is transported by Aeroméxico. We strengthen Mexico’s exports market and support international commerce by transporting one of every five kilos of imports and exports. Aeroméxico Cargo is the main exporter of Mexican perishables, technology and fashion and we support local industries including automotive, aerospace and pharmaceuticals. No other airline or consolidator moves as much cargo as Grupo Aeroméxico. Our business model uses mostly the cargo belly of our passenger airplanes but we have one specific aircraft for cargo.

Q: What challenges does the air cargo industry face and how does the company overcome those?

A: The global air cargo market has grown for the past two years as the amount of shipped merchandise has increased. To handle this growth most airlines are increasing their capacity, which has caused a reduction in transport rates. Much of our operational costs are dollar based and the increasing value of this currency is posing a challenge. We used to capitalize on lower jet fuel prices but the dollar has been reducing these gains. These costs have increased for pure freighter flights. Thus, while we expect to transport a growing amount of merchandise, revenue will be impacted and we have to increase efficiency and productivity to reduce operational costs and remain competitive. However, Grupo Aeroméxico is receiving 10 more widebodied Boeing 787-9, greatly increasing our capacity and market penetration.

Another significant part of our strategy is to improve our load factor because all unused space in the cargo hold is waste. In 2013, our load factor was 54 percent but we have improved it to 67 percent and expect it to continue rising. Our fleet has one of the highest load factors globally, even though we have a significant number of narrow body aircraft.

Q: How is Aeroméxico Cargo addressing specific needs for different manufacturing industries?

A: We direct our logistic solutions to different markets and we have strong alliances with many members of the production sector. Aeroméxico Cargo works with the aerospace industry because it also requires specific solutions, such as the delivery of landing gear from Mexico to Europe. We are working with clients at five aerospace clusters and we expect to continue offering a solid product to this buoyant industry.

Q: How is Aeroméxico Cargo identifying and addressing client concerns to improve its services?

A: Aeroméxico Cargo prides itself on providing the best customer service in Mexico. Three years ago, we developed a methodology to measure client satisfaction and performance on our operational key performance indicators (KPI). Our timely deliveries were at 88 percent, a significant number considering the amount of cargo we manage, but this number has grown to 95 percent and we have the most punctual delivery in the market.

To increase our profitability, we are investing in improving our systems and training our human capital to empower our team and provide the best service. Standardizing customer service protocols is a complex process as it involves over 1,000 direct employees and almost 2,000 indirect employees. Aeroméxico Cargo has grown more than 100 percent in three years. This was achieved by the continuous improvement of our market share and better and more reliable planes including the Boeing 787-8.

Q: What alliances were necessary to consolidate the company’s global presence?

A: We have partnerships with almost all airlines in the world. For instance, if we want to move an object from Tuxtla Gutierrez in Chiapas, to Lyon in France, we fly it first to Mexico City and from there to Paris, where we have an agreement with Air France to continue the dispatch to Lyon. Alliances of this kind allow us to connect with areas to which we do not have direct flights. We have other allies that transport merchandise by land from the airport to its final destination.

Our existing alliances with UPS, FedEx and some pharmaceutical companies are one of our greatest strengths and we expect this collaboration to keep growing. Our challenge is to create different alliances that address different market niches, such as our recent partnership with Lumen to cater to customers who want to mail documents. They can conveniently print, sign and mail them from a single location. We also are targeting high value niches, such as the cold chain and the pharmaceutical industry