Rocketing fuel prices ground Alaskan volumes

The top US cargo airport, by landed weight, is feeling the bite of high fuel prices as cargo volumes decline and expansion is put on hold. Wong Joon San has the story.


Soaring fuel prices are taking their toll on the aviation industry the world-over and the Ted Stevens Anchorage International Airport (ANC) is no exception. ANC may be the No.1 airport in the United States for landed weight of cargo aircraft and the No.3 airport in the world for cargo throughput, but it is also feeling the impact of the energy crisis.

Between July 1, 2007 and June 30, 2008, the airport reported handling 2.67 million tonnes of cargo, a 5.5 per cent decline compared with the previous corresponding period. “The decrease is attributable to the current global economy and fuel prices,” according to Linda Bustamante, ANC’s communications director.

While cargo is very important to ANC, however, the current sky-high fuel prices have reduced landings at ANC this year and the airport is not forecasting any growth until the energy crisis stabilises, she says.

Looking at a scenario in which fuel prices are not too excessive, the key growth driver at ANC is clearly cargo, specifically in the Asia to North America market where annual international cargo aircraft operations have steadily increased – the market that ANC is capitalising on.

“ANC is located 9.5 hours from 90 per cent of the industrialised world. Asia-North America air cargo operators are able to realise additional revenue per flight by stopping in ANC.

“For instance, if a cargo flight was to fly nonstop from China to Oakland, it could carry a payload of 65 tonnes but by planning a stop in ANC, the same flight could carry a payload of 110 tonnes – and this could translate to additional revenue of US$90,000 per flight,” Bustamante says.

“And if you multiply this number by numerous carriers with five flights a day/ five days a week, this additional revenue reaches well into the millions of dollars annually,” she contends.

Deferred expansion

Asked about the airport’s facilities, Bustamante says the advantages of the airport, which is owned and operated by the State of Alaska, are its location and customer service. ANC has three runways – runway 7L/25R which is 10,600 feet long/150 feet wide; 7R/25L which is 10,900 feet long/150 feet wide and 14/32 which is 11,584 feet long/150 feet wide.

ANC covers 4,837 acres and its freight area under lease covers about 200 acres. However, it has about 200 more acres ready for development when needed. Cargo terminals at ANC are privately operated on leased airport property.

Airlines flying between Asia and North America use the airport as a vital refueling stop. For this purpose, ANC has over 60 aprons served by hydrant fueling.

In May this year, ANC said due to the uncertainty and current instability in the aviation industry, it decided to defer a decision on a Master Plan preferred alternative to meet forecast capacity growth.

The airport said it is to continue its dialogue with the public and other stakeholders through public meetings and other forms of community outreach including public comments, although no meetings have as yet taken place. “We’re waiting for stabilization in the industry and economy before we complete the new Master Plan,” Bustamante explains.

While ANC itself may not be expanding, its customers including – UPS, FedEx, Northern Air Cargo and Alaska Airlines continue to expand with the market. DHL and Polar are planning market in the near future. Separately, UPS offi cially opened its newest flight training facility, a 27,000-square-foot centre at ANC to reduce the time spent away from home for training by Anchorage-based pilots.

Strategy

Asked about the ANC’s strategy for the short, medium and long term cargo growth, Bustamante emphasises the payload-range benefit to carriers and underlines the fact that the benefi t increases in proportion to the increase in fuel prices.

“The higher the price of fuel, the less sense it makes to use more fuel in Asia- North America non-stops. Secondly, the airport plans to continue to serve the carriers with relatively low airport rates and fees and efficient, reliable operations in all weather conditions. Th e airport has not been closed due to bad weather for over 15 years.

“Thirdly, through sound planning the ANC will continue to bring runway, parking and terminal facilities on line on a timely basis, neither too early, nor too late.”

The strategy for passenger airlines, which provides belly-hold cargo capacity, is to continue promoting Alaska as a once in a lifetime destination.

Customers

ANC serves 30 major air cargo carriers and 15 passenger carriers. Among the cargo operators, FedEx, UPS and NWA Cargo all maintain key operations at the Alaskan airport. Other top revenue producers from Asia include China Air, Korean Air, Cathay Pacific, Eva Air and Japan Airlines. Photo: Keith Gaskell

The leading cargo agents at the airport include Airland Transport, Alaska Air Forwarders, Commodity Forwarders, Danzas/DHL, EGL USA, Lynden International, Movers Inc. and Panalpina.

ANC has continually received the Air Cargo Award of Excellence for the airport category of 1 million or more tons of freight. This award is based on a survey from the airport’s cargo customer base of airlines and airfreight forwarders that ship to or through Anchorage.