Qatar Airways Targets Top-Five Status for Fast-Growing Cargo Arm

Jul 13, 2014 3:36 am ET

July 13 (Bloomberg) -- Qatar Airways Ltd. plans to expand its cargo arm to become one of the top five global operators by 2018 as it purchases freighter planes and adds space in the holds of passenger jets while expanding its Doha base.

Qatar Air, ranked outside the top 10 in 2013 by tons flown, has a freighter fleet comprising six Boeing Co. 777Fs and three Airbus Group NV A330s with six further wide-bodies on order and the potential to add more, cargo unit Chief Executive Officer Ulrich Ogiermann said in an interview. Expansion of its freight terminal at Doha’s new Hamad International Airport should double annual capacity to 2.8 million metric tons by 2017, he said.

“We have a very clear plan to substantially grow our footprint,” Ogiermann said, adding that the hub expansion will allow the carrier to pursue more ambitious targets by minimizing the operational risk of transporting more cargo.

Chief Executive Officer Akbar Al Baker has targeted the establishment of Qatar Air as a major air-freight player by next year, with deliveries of wide-body passenger jets set to propel it to the upper tier based on belly-space alone. A move to leapfrog rivals via investment in freight operator Cargolux Airlines International SA, where Ogiermann once worked, was scrapped after a strategy spat, and the carrier also rowed back on plans to convert up to 20 A330 airliners into freighters.

Leading Players

FedEx Corp and United Parcel Service Inc. are the world’s leading cargo carriers, transporting 6.9 million and 4.8 million tons of freight respectively last year, according to International Air Transport Association figures.

Qatar Air’s Gulf rival Emirates ranks third and leads the way among non-specialist carriers on 2 million tons after building the world’s biggest fleet of wide-body passenger jets, combined with 11 Boeing 777F and two 747-400ERF freighters.

The top-five in cargo among passenger airlines is rounded out by Deutsche Lufthansa AG, Korean Air Lines Co., Cathay Pacific Airways Ltd. and Air France-KLM Group, which all carried more than 1.3 millions tons of freight in 2013, compared with 891 tons at Qatar Air, based on IATA figures.

Belly space remains the most efficient mode of cargo transport and reduces the validity of dedicated freighter operations, Ogiermann said, so that Qatar Air will only add more cargo jets if market growth clearly justifies doing so.

Order Backlog

“For now, there are no firm plans beyond the current delivery stream,” the executive said.

Qatar Air placed a firm order for five A330-200Fs -- a mid- size model that can carry 70 metric tons -- at the Dubai Air Show in November, with an option to add eight more of the type. It will take a seventh 777F by the end of the year, completing its fleet of the larger Boeing model.

Ogiermann declined to say whether Qatar Air is interested in Air France-KLM’s Martinair, the largest cargo-only carrier in western Europe after Cargolux. Martinair may be available as Air France reviews the size and scope of its cargo operations.

Qatar Air Cargo, which serves 140 destinations -- about 40 with freighters -- is also open to partnerships, especially in the Oneworld alliance of which the carrier became a member last year, Ogiermann said.

“We are investigating various countries and what we can do to team up with partners there,” he said. “Oneworld is obviously interesting, there are a lot of strong carriers that are excellent on the cargo side. Discussions are driven by passenger divisions and we look at the benefits for cargo.”

Attractive new markets include Africa, with top-performing existing locations including the traditional cargo hubs of Hong Kong, Frankfurt, London, Amsterdam and Paris, the executive said. Local demand is particularly strong for perishable goods such as fish, meat, vegetables and fruit, with the Gulf relying mainly on imports to meet requirements.