Emirates SkyCargo to have 18 freighters in fleet by 2024 as it plans DWC facilities boost

Emirates airline's cargo arm expects to grow its fleet to 18 freighters by 2024, up from the 11 Boeing 777Fs it currently operates, as the airline remains confident of the continued growth in demand . Emirates SkyCargo is also studying the expansion of its facilities at Dubai World Central airport to accommodate an anticipated rise in exports and imports, according to Nabil Sultan, divisional senior vice president. Emirates has reinstated its cargo hub at DWC for dedicated freighter aircraft operations. Its facilities there span 60,000 square metres and have a total cargo capacity of about one million tonnes per year, that can be raised to 1.3 million tonnes. "We started to look at future stages and how we can increase the size of the facility," Mr Sultan said. "We are studying the long-term plan for the next 10 years and undoubtedly, there will be an addition of a new facility to absorb the volume of the country's imports and exports." The planned expansion will cater to the "substantial growth" in segments such as pharmaceuticals. "Dubai has become a major hub now for moving pharmaceuticals, as we sit in a strategic location between India, a large pharma manufacturing hub, and transporting it to Europe, the US and the rest of the world," he said. Air cargo demand remains strong, despite the current macroeconomic conditions such as higher inflation, Mr Sultan said. "Dubai is unique in the way we're positioned geographically in such a strategic place, where even if one or two markets slow down, we have the capability of shifting capacity elsewhere and being able to cater to emerging markets," he said. Despite economic recession fears, some segments within the air freight business, such as e-commerce, are growing "exponentially", he said. "The boom in e-commerce will continue over time. The question is how do you change your business model and infrastructure to accommodate these new industries?" Mr Sultan said. "There are enough industries growing that will fill up all the capacity, provided we have the infrastructure and we understand these industries." Emirates SkyCargo's performance in the first half of the financial year was "excellent" with growth in demand, particularly for pharmaceuticals, medical supplies, foodstuffs and manufacturing-related goods, according to Mr Sultan. The unit expects to record similar growth in the second half of the fiscal year ending March 31, he said. "The next half year still looks quite solid, even though it has neutralised in terms of both rate and tonnage, but we still see some steam moving forward," Mr Sultan said. "We're still seeing a double-digit increase over pre-pandemic levels in terms of revenue and yield ... it's a question of activating these key industries to fill the gap and that will be part of the strategy moving forward." The airline's busiest cargo routes still include China, which still produces "substantial" volumes of cargo because it remains the world's factory, Mr Sultan said. "We've seen big demand pick-up from places like Hanoi, Beijing, Shanghai, Cambodia, India and Bangladesh, where certain industries have relocated their manufacturing hubs into these countries," he said. Based on current demand, Emirates SkyCargo expects cargo rates to "stabilise" and even "decline slightly" going forward, but despite this, they remain about 50 per cent to 60 per cent higher than their pre-pandemic levels, Mr Sultan said. "These rates are appropriate for continued investments in the air cargo sector because prior to the pandemic, many companies underinvested and then during the pandemic there was a crash in the entire supply chain logistics," he said. "But the stabilisation of cargo rates now will encourage investments in this sector to support future demand." This year, Emirates SkyCargo expects to carry two million tonnes of cargo during the full financial year ending in March 2023, up from 2.5 million tonnes prior to the pandemic, Mr Sultan said. Air cargo was a rare bright spot for airlines during the travel-starved years of the Covid-19 pandemic, prompting many to convert older passenger jets to freighters and to invest in new cargo planes. Strong e-commerce demand and the slower return of passenger flights with cargo belly capacity drove airlines to snap up freighters during the crisis. However, cargo demand globally has begun to "rationalise" from its peak performance during the pandemic as more passenger jets, which carry cargo in their belly-hold, return to the skies. "It's absolutely realistic that demand has to rationalise. Obviously, during the pandemic, demand was irrational, clearly because of the capacity constraints globally and the grounding of passenger jet capacity and so, the industry globally was facing an acute shortage of capacity, so demand outpaced the supply that was available," Mr Sultan said. "Now that the airlines have started to launch more passenger flights into key markets, it's natural to see the rationalisation of demand. That's precisely what it is. I don't think it's a decline in demand, we're still seeing stronger demand across the world surprisingly, despite inflation and the economic downturn in a lot of markets." Emirates SkyCargo operates 11 Boeing 777 freighters, in addition to the belly-hold cargo capacity on its fleet of widebody Boeing 777 and Airbus A380 passenger aircraft. Emirates ordered two new Boeing 777 freighters at the Dubai Airshow in November last year, which have already joined the fleet. It also signed a deal to convert 10 Boeing 777-300ERs into freighter aircraft, with work on these scheduled to begin in 2023. Last week, Emirates also placed a firm order for five Boeing 777 freighters valued at more than $1.7 billion at list prices. Mr Sultan said he is confident that there is enough projected cargo demand to fill the additional freighters joining its fleet. "Most of the key industry indicators have shown that cargo demand will continue to grow over the next five to 10 years simply because they still see a very strong trajectory," he said. Aligning freighter capacity is critical as the industry phases out older, less fuel-efficient aircraft, he added. "A large portion of existing capacity will eventually retire. Today, most freight forwarders or freighter airlines operate older generation aircraft, so with the focus on the environment now and reaching zero-emission objectives, a lot of carriers will have to replace these freighters," Mr Sultan said. About half of the existing freighter capacity globally will have to be grounded in a few years, creating capacity shortages in the market, according to him. "Even though you see demand tapering out and neutralising, capacity is still quite constrained in most of the key production markets," he said.

Emirates SkyCargo to have 18 freighters in fleet by 2024 as it plans DWC facilities boost

Dubai airline's cargo arm currently operates 11 freighters and expects strong demand in second half of financial year