Escalating fuel price squeezes profits not volumes

MAJOR DEVELOPMENTS in Africa are creating big growth and expansion opportunities – evident in the increasing number of requests for charter flights into the region from local manufacturers, according to Airline Cargo Resources. Because of the poor road infrastructure, not all destinations in Africa can be reached by truck so airfreight remains a popular choice even though it is more expensive. According to Stuart Tonkin, general manager of ACR, the price of fuel and the resultant increase in surcharges has not significantly affected the volumes of airfreight exports but it has affected the profitability. The surcharges are paid directly to the airlines so when customers ask for a discount it comes off the bottom line of the general sales agent (GSA). Airfreight in general is seasonal and very exposed to market fluctuations. “If exports are quiet then the business is quiet,” says Tonkin. During the summer vacations in Europe in July and August virtually everything shuts down and business only picks up at the beginning of September when everyone has gone back to work," he said. Starting in mid- September and lasting until at least November, the market for the export of perishables also gets extremely busy as fruit, vegetables and flowers are harvested in South Africa during this time. As perishables are obviously very time-sensitive, there really isn’t any viable alternative to reach the market timeously other than by the use of airfreight. ACR represents six airlines which combined allow for the export of cargo to anywhere in Africa and Europe. They include Air Austral, Air Madagascar, Air Namibia, Ethiopian Airlines, Etihad Crystal Cargo and Air Jamaica (off-line).The current cargo mix ranges from mining, military and telecommunication equipment to cigarettes and some perishables which are mainly exported to Europe and the Middle East.