Tuesday, January 21, 2014

Air Cargo Deal Sees IAG Drop GSS as Freight Provider and Switch to Qatar

Sovereign State Carrier will Supply Space Which Ends Eighteen Year Partnership
Shipping News Feature

UK – QATAR – Fresh from their success at winning a special award at the recent BIFA ceremony, multinational airline IAG Cargo, has signed a long-term commercial agreement with state-owned flag carrier Qatar Airways to purchase capacity on the sovereign Arab state’s operated air cargo freighters, following IAG’s decision to transfer its freight operations away from current provider, Global Supply Systems (GSS), a move which ends an 18 year partnership between the two. Steve Gunning, Chief Executive of IAG Cargo, remarked:

"We have reviewed our long-haul freighter programme following the merger of British Airways and Iberia freight businesses to create IAG Cargo. The review took account of the growing cargo capacity available to us from our passenger fleet as well as the outlook for the air freight industry overall and we have made the strategic decision to significantly revise our long-haul freighter programme. I would also add that we greatly value the support we have received from GSS over the years."

In 2012 Qatar Airways pulled out of its arrangement with all freight operator Cargolux just eighteen months after acquiring a 35% stake in the Luxembourg carrier and lauding the deal as a ‘sound partnership’ intended to give the Middle Eastern group a greater share of the European cargo market. Qatar Airways is already a partner with IAG through the oneworld global alliance which it joined in October 2013. The airline is taking delivery of a further three B777F aircraft during 2014. With effect from May 1, Qatar Airways will operate five B777F flights a week between Hong Kong and London, via Doha, on behalf of IAG Cargo. Akbar Al Baker, CEO of Qatar Airways, commented:

“Qatar Airways is pleased to be furthering our relationship with IAG Cargo. The growth in the cargo market has fuelled Qatar Airways’ massive expansion in this business and this exchange with IAG Cargo allows us both to deliver optimal level of service, convenience and flexibility to our worldwide cargo customers. Hong Kong is a key market on our route map, and so we have continually made investments in the capacity operating on the route.

“Qatar Airways Cargo is currently undergoing significant development and growth with the induction of new aircraft and freighter routes. The opening of our brand new facility at Hamad International Airport will soon see 1.4 million tonnes of cargo being handled annually. Our expansion plans and innovation initiatives will definitely support IAG Cargo to deliver a high level of service to their customers.”

Global Supply Services (GSS), a 49%-owned subsidiary of UK based Atlas Air Worldwide, intends to pursue new ACMI (aircraft, crew, maintenance and insurance) placement opportunities for three 747-8 Freighter aircraft currently operated for BA. Atlas Air has served British Airways and IAG Cargo over the past 18 years with the last 12 years through GSS. Rod Lynch Chief Executive of GSS said:

"Although we are sorry to see the relationship end, we understand IAG Cargo's decision and will now direct GSS towards new opportunities."

The move has heralded a strong response from the union British Airline Pilots Association (BALPA), which raised concerns for the jobs of the 95 pilots employed by GSS to fly three new 747-8F’s from Stansted Airport on scheduled IAG Cargo services to destinations such as Hong Kong, India, Southern Africa and Germany. General Secretary of BALPA, Jim McAuslan, said:

“UK pilots are dismayed that IAG, a successful airline group predicted to make operating profits of more than £1 billion this year, is putting quality UK jobs at risk by terminating a successful UK-based cargo partnership. We will be working with GSS to support the workforce through this very difficult period and to minimise the impact of this disappointing decision by IAG.”