The fledgling partnership of Air Canada Cargo and Cargojet came up roses in its first joint foray. In May Cargojet flew one of its B767 freighters to Bogota to load up with flowers in time for Mother's Day.
It was a fit that suited both partners. Air Canada had recently reduced its capacity to Bogota, so Cargojet could provide the additional lift to have a strong go at the flower surge that comes with Mother's Day. On the southbound leg Canada's largest all-cargo airline was carrying mostly freight that Air Canada had hauled across the Atlantic from Europe.
The partners intend to build on this in the months ahead. "We are looking at a number of opportunities this summer," says Jamie Porteous, executive vice president of sales and service at Cargojet. "A couple of opportunities in Mexico and South America" are on the radar, he added.
Cargojet, which generates the lion's share of its business hauling express traffic across Canada for the large integrated carriers, has been steadily building up its charter business. "We doubled our ad hoc charter revenue every year over the past three years," Porteous says.
The cargo airline is getting a significant boost in its capacity, as it virtually doubles its lift. Over the past couple of months it has leased or acquired a number of Boeing 767 and 757 aircraft, some of them in passenger configuration that will be converted into freighters. According to Porteous, it will have added six, possibly seven, B767 freighters to its line-up by November 1. In addition, it is procuring three B757Fs, of which two are due this year and the third in the first quarter of 2015.
The fleet expansion is in preparation for the seven-year contract with Canada Post to provide nationwide lift for the postal agency's traffic, including volumes of Canada Post subsidiary Purolator. The $1 billion contract kicks in next April, but the agreement stipulates that Cargojet should have the capacity in place by the fourth quarter.
With the new planes entering the picture, Cargojet has ample capacity to operate charters, especially before next April. Moreover, unlike now, the 767s will not all be stationed at the carrier's home base at Hamilton. Some will be operating from Vancouver and Calgary, which will give the airline more flexibility to respond to charter demand in these markets, Porteous says.
He is looking to ramp up his sales force and is considering hiring a person with a strong focus on the charter segment. "Our charter business has been strong with two 767s," he remarks, adding that customers have indicated that they anticipate a strong peak season this year.
Not everybody is bullish. Charter demand has been erratic, notes Ron Buschman, managing director of Calgary-based charter broker and airline GSA Aerodyne. Some months this year have been above expectations, whereas others were disappointing, he reports.
Moreover, he has noticed a change in direction. Traditionally most charters out of Alberta were outbound, but nowadays the majority are coming into the province, for the most part carrying equipment to the oil sands, he says.
Stan Wraight, executive director of Strategic Aviation Solutions International, predicts that Cargojet will control its exposure to the charter market. "Their priority is with the overnight linehaul. They won't do anything to jeopardize this," he comments.