Austin’s first trans-Atlantic flight reinvigorating cargo market
Posted: 5:57 p.m. Sunday, May 18, 2014
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By Laylan Copelin – American-Statesman Staff
As 200 or so passengers fly directly to London or return to Austin each day, about 25,000 to 30,000 pounds of freight — everything from computer equipment to Mexican peppers and Norwegian salmon — goes with them.
Austin’s first trans-Atlantic passenger flight is giving international shippers an alternative to trucking goods to airport hubs in Dallas or Houston — as well as direct access to London’s Heathrow Airport, one of Europe’s major cargo hubs that serves markets in Asia, Africa and the Middle East.
It also will help reverse a 13-year decline in air freight at Austin-Bergstrom International Airport and, if it succeeds, make the case for the city’s first trans-Pacific flight.
“This is the biggest story in logistics since the airport was built,” said Ray Brimble, who helped build Austin’s cargo port in the mid-1990s. “It changes where Austin sits in the global supply chain.”
Brimble is betting money on that assessment. His company, which sold the cargo port’s three buildings in 2006, bought them back as of May 12. A subsidiary of Brimble’s company, Lynxs Holdings LP, has been managing the facility since its opening.
Total cargo tonnage at Austin-Bergstrom has fallen by half since 2001 as Dell Inc. moved most of its manufacturing out of state and overseas, ground transportation became more competitive, and there was a consolidation of airlines and cargo shippers, Brimble said. International shipments fell by even a larger percentage at Austin-Bergstrom, but have been rising since 2009.
“There has been a sea change in how logistics works,” Brimble said.
Despite those structural changes in the industry, Brimble is expecting improvement at the Austin airport: “It’s been a long drought, but we’re expecting an upturn.”
The arrival of British Airways 787 Dreamliner and IAG Cargo, the freight arm of British Airways and Iberia, in March is expected to grow Austin’s international market.
Robert Harrison, deputy director of the Center for Transportation Research at the University of Texas, said one daily round-trip flight to London is a modest but significant start.
“It’s perfectly in keeping with Austin attracting Google and other leading-edge companies,” he said.
The 787’s technical advantages make the Austin-to-London route possible. It can fly more than 7,800 miles and use 20 percent less fuel due to better engines and lighter composite materials in the plane’s structure. With only a couple of hundred passengers, it is easier to sell out than larger planes, but its wide-body structure helps airlines realize 20 to 45 percent more cargo revenue than similarly sized airplanes, according to Boeing.
In March, British Airways started the trans-Atlantic service five times a week and increased it to daily service this month.
IAG Cargo officials say the route already is successful.
They said the cargo holds are 90 to 95 percent full — both ways.
David Shepherd, IAG Cargo’s head of commercial sales, said that’s unusual for a new route.
Unlike passengers who tend to fly from and return to the same airport, cargo is a one-way trip.
“The beauty of this route so far is that it has been fantastic both ways,” Shepherd said.
IAG Cargo’s loads were first reflected in March’s report released by airport officials.
Air cargo was up in March, with international cargo seeing a jump of 213 percent over the same month last year to 2.2 million pounds.
Shepherd predicted the Austin-London route would account for 8,000 to 10,000 tons per year — or about the same level for all of international cargo at Austin Bergstrom in 2001.
So far, only about 18 percent of each outgoing load is from the Austin-area market. The remainder is being trucked from as far away as Denver, El Paso, Tulsa, Laredo, San Antonio and Mexico as well as overflow from the Dallas and Houston international hubs.
“We basically had gridlock” at IAG Cargo’s facilities in Dallas and Houston, said Joseph LeBeau, IAG Cargo’s commercial vice president for the Americas.
Outgoing cargo has been largely oilfield and computing equipment, pharmaceuticals and Mexican peppers. Arriving in Austin have been automotive parts, pharmaceuticals and Norwegian salmon.
Brimble said today’s air cargo reflects the growing demand for fresh goods from around the world.
“People like fresh food and pharmaceuticals shipped fresh,” he said.
The goal is to grow Austin’s share of each load.
Given Austin’s economy, LeBeau said it shouldn’t be too hard: “This (market) is a no-brainer for air cargo.”
Jim Smith, the Austin airport’s executive director, said the city began courting British Airways in 2009.
“In essence, we had to persuade British Airways to fly over Dallas,” he said. “We have to demonstrate they won’t lose money in Dallas and that Austin will support it.”
Smith said the airport is now pursuing a trans-Pacific route.
“The success of the British Airways flight will determine how soon we’ll get a direct flight to Asia,” he said.
Harrison agreed.
“Other airline companies are going to keep an eye on Austin,” he said. “If they can make it work, there will be others.”
Brimble said Austin-Bergstrom has long runways and ample cargo facilities for expansion.
“We have very good infrastructure that hasn’t been utilized over the past few years,” he said. “It’s not a diamond in the rough. It’s a diamond.”