By any account this year’s Farnborough International Airshow 2018 was a stunning event, if for no other reason than the deluge of aircraft orders that surely imprinted smiles on the sales teams of Boeing and Airbus (even though these deals are already a fait accompli long before the airshow spectacle begins).
But most of all, on the cargo front, it was nothing less than a stellar event for Boeing.
With Volga-Dnepr’s ‘confirmation’ of an order for five B747-8 freighters and a ‘letter of intent’ with Boeing to acquire an astonishing 29 B777 freighters, the champagne corks must surely have been flying across Boeing offices.
So now that the champagne bottles have been drained and confetti dust has settled, the obvious question is just what does the Russian carrier plan to do with nearly 3,000 tonnes worth of B777F capacity? Imagine the market awash in that kind of extra capacity.
Obviously, as the Donald (Trump) would say… not going to happen. At least not overnight as an order this size will take years to fully deliver – and interestingly enough, not one word has been uttered as to when these aircraft will be delivered, nor of course, what V-D’s end-game is.
One thing is clear when taking the order at face value – it’s easily enough main deck capacity to create a whole new cargo airline, probably more like two actually.
Will Volga-Dnepr take all 29?
The question that bears asking is: Will Volga-Dnepr (V-D) actually acquire all 29 of the B777Fs? The five B747-8Fs are more of sure thing, given it is a ‘confirmation’ of an existing order and as some freighter market analysts have pointed out, the availability of the four-engine freighter may have an end-point that is rapidly approaching.
In other words, if you’re going to be wanting some of these freighters at some point in the future, you better buy them now before the switch on the production is flicked off, as it surely will be in the coming years.
The B777F order is a trickier proposition. A ‘letter of intent’, is a fairly loose agreement with little in the way of obligation, making it entirely possible that anything from the entire 29 freighters to only a handful are ever actually purchased.
One only need look at V-D’s earlier order at the 2015 Paris Air Show where the V-D Group signed an MoU for 20 B747-8Fs of which six have been delivered so far. Whether the remaining 14 will be taken up is unclear, but it seems fairly likely, otherwise why would the group have ordered five more at the Farnborough?
But for now, lets assume the whole kit and caboodle will be purchased as stated and ultimately delivered.
Back to our original question – what is the grand plan? While the Group has largely built its business on very large, four-engine freighters, the expansion into a whole new fleet type – in such a overwhelming fashion – is a bit perplexing.
It’s possible to discern some inherent logic – the addition of the new freighter type strikes a balance between capacity that can handle outsize cargo and the efficiencies of the B777F.
The Liège angle
Perhaps then it was no coincidence that the airline group concurrently signed a deal with Liège Airport for the provision of both physical infrastructure and management resources to handle some 30 cargo flights per week that Volga-Dnepr aims to develop over the next “three to five years”. This includes 23,000 sqm of warehousing with the capability to handle some 300,000 tonnes of cargo.
Could this be the embryo of a new Volga-Dnepr cargo airline and its nascent hub? Or rather, is the V-D group simply planning for the ongoing growth of its current airlines along with consolidation, particularly after the Schiphol debacle.
The Russian cargo group was one of the first to start making a move out of Amsterdam Airport Schiphol – to Liège – when the slot constraints started kicking in last year. The necessity for ABC to find a new ‘second’ Euro home was made clear earlier this year when it lost a full ten slots at AMS.
Only two years prior, AirBridgeCargo was the largest all-cargo operator at AMS, as well as the second-largest operator at Frankfurt (FRA). This totals up to some 1,000 flights a year through both airports – quite a bit more than the 360 flights a year the new Liège agreement specifies. Realistically speaking, those 30 monthly flights only require half a dozen freighters to reach that number. As such it seems unlikely that Liege is to be the incubator for a new V-D carrier, unless this is the first baby step in that direction.
Volga-Dnepr with a German AOC
It’s also no secret that the V-D group is working to set up another cargo airline with a German air operator certificate (AOC). And in fact, this was understood to have been Ulrich Ogiermann’s task working in Leipzig as a consultant (prior to his recent official hiring) to the group’s CargoLogicManagement (CLM) freighter management company.
But presumably with the German AOC, there would be a necessity for the carrier to be based out of a German airport, which would put paid to the idea that Belgium’s Liège would be home to a new V-D airline, at least for now.
Sergey Lazarev, general director, AirBridgeCargo has been quite candid on the where the future of the carrier lies. As the group’s business continues to expand, there is a potential need for new hubs in both Europe and Asia, he has said. This is being driven by the “evolving demand from the e-commerce sector, and other special cargoes in these regions.”
This illuminates another possibility, that the B777Fs are intended as an e-commerce vehicle – either as an entirely new airline, or the new German AOC airline, or as part of the existing structure V-D structure of AirBridgeCargo (ABC)/ CargoLogicAir (CLA).
Plugged into the, by-then completed, Liège facilities they would be in a perfect situation to work with Alibaba’s logistics company, Cainiao Smart Logistics Network that has established Liege as one of its six global hubs.
And if the B777Fs were to go to the German AOC, based out of Leipzig, that would work nicely too, Leipzig being as it is, DHL Express’ European hub. This could then see a new V-D airline (or the newly installed B777F capacity) feeding DHL with e-commerce volumes, or operating on some form of ACMI model.
Tough to call, but it’s likely safe to assume that e-commerce, in one way or another, features into this B777F order. Time will tell.