Airline interview: Saudia Cargo

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Wide-body aircraft deliveries present new opportunities, says operations VP Chris Notter

Saudi Arabian Airlines will take delivery of 30 new aircraft in 2017, the airline’s largest ever delivery in a single year. Of these, 22 are wide-bodies – a mix of B777-300ERs, B787-9s, and A330Rs – and these follow the delivery of 25 aircraft in the last four months of 2016, of which 21 are also wide-bodies.

Although some of these are replacements for the airline’s fleet of 23 B777-200s, the effect overall will be a significant increase to the airline’s wide-body passenger aircraft capacity. And the accompanying influx of additional belly cargo capacity also offers some new opportunities for the airline’s cargo business.

Chris Notter, VP operations at Saudia Cargo, explains: “We are consolidating all of the positive things we have been doing and building further on those, and we are looking forward to the new purchases of the wide-body aircraft that Saudi has announced.”

The “enhanced opportunities” from the extra belly capacity coming on line will prove timely given the current operating environment, which is challenging for everyone in air cargo. This has resulted from an expansion in cargo capacity worldwide outpacing air freight demand growth, much of it coming from growth in cargo-friendly passenger belly hold capacity.

“You can’t complain about it, so you have to consolidate, and then focus on new opportunities and different product orientations – and be positive about it,” Notter says.

Indeed, Saudi’s new passenger belly capacity is expected to open new opportunities for different types of cargo products or commodities. “We will do it in a progressive and phased fashion, to make sure the stability and the foundation is there,” he says.

Meanwhile, a “continuous process of quality emphasis” will also involve a number of elements. “We have identified what we need to do, when, and where we need to be, and now we are moving towards those goals,” explains Notter.

Cargo iQ is among the processes and metrics being used to improve quality. And another key element is redefining Saudi Cargo’s arrangements and relationships with its cargo handling partners.

“We are trying to simplify everything that we do with our suppliers and partners,” Notter explains. “We want to make their lives as simple as possible. We made a commitment to follow the tools IATA is promoting: the standard SLA; the local load plan; we are getting all of our suppliers to entertain the ‘smart facilities’ exercise IATA is driving. We also have a ‘clean flight report’, and we have what we call ‘a record of the trivial many, to ensure that we do not have to experience the critical few’…

“So, we have now held workshops with most of our cargo handling suppliers, to bring them on board and to embrace the concept that they shouldn’t wait to be asked to do things by the carrier – they should do things proactively. This includes reporting, and we are insisting on certain things being done on a monthly basis in a much more formal manner,” he explains.

“And there is a set criteria, a set limit as to what we will accept, and it is working well. People are seeing the benefit now of working with us. We are now pushing and expanding our boundaries.”

Handling strategy

Notter has a flexible strategy in terms of cargo handling agents, favoring a mixture of multinational and local players. “The way that the handling agent part of the industry has consolidated itself speaks volumes about what the big boys feel should be done,” he notes. “The big cargo handling players are always going to be there and exercise certain leverage and capability and common ground – and also multi-site opportunities for contracts. But that does not preclude local heroes, and there are many of them.

“Now, if you balance one against the other, they can complement each other and they can also learn from each other. What we are doing is encouraging and inviting, whether it is a local hero or a multi-site organisation, to enter into our ‘CHP’ programme.”

CHP is one of several multi-use acronyms favored by Notter, which can be variously used to mean ‘cargo handling programme’, ‘compliant handling practices’, ‘competent handling partners’ – or ‘continual handling professionalism’. But the aims are to encourage compliance, competence, and consistent cargo handling quality.

“There are certain criteria for each, and there are seven category demands. So if anything, it makes it a little bit more difficult from a multi-site GHA’s perspective, because they have got more to lose and many more locations that they have to bring up to a level of consistency, and then keep raising the bar,” he notes.

“We feel that if that approach is maintained, that will be good not just for us but also for the industry. But the GHAs have to start taking more responsibility for the services that they give, and to who, and why. And they have also got to say ‘no’ more often when requirements and demands do not make sense.”

Notter believes that a reluctance among GHAs to clearly tell airlines what they can and cannot realistically or sustainably do is behind a lot of the problems within air cargo. “That comes back to the concept of fear and survival within our industry,” he says. “If the total objective is just to survive and not to challenge, it prevents doing the right thing at the right time for the right reason.”

Notter adds: “People need to start making themselves stand out, be different, but be consistent; and if possible, be as simple as they can  – which affects and impacts cost controls, which are important for the business to grow.”

He says it is essentially an 18-month to two-year programme each time a different level or aspect of the operations is addressed. “The level that we are acting upon is compliance and competence,” he says. “So, we are looking to the principle now that if you have a competent service supplier, they will always be compliant. And if they are compliant, you should hope competence is one of the reasons.” 

He continues: “We want to be seen to be regularly checking the performance against the practices; we want to validate and verify; and again, the two primary areas are compliance and competence. So we are looking to make sure that there are robust continuity and contingency plans in place, emergency response plans must be effective, and people need to be prepared.

“And if we are able to do that and keep a controlled oversight on quality, consistency and sustainability, then I expect our customer base to see the difference.”

Geopolitical issues

Notter says the security pressures for Saudia Cargo are essentially the same as for other international carriers. “If you look at the globe, you have got pockets of concerns, pockets of sensitive activity, pockets of risk, pockets of opportunity; it is, therefore, about how you deal with them all collectively that counts. So, from a geopolitical standpoint, obviously there are different elements that you have to put extra focus on, depending on where you live, where you work, where you operate.

“But as far as we are concerned, we see things in a standard, comprehensive fashion. We know what comes first: we focus heavily on safety and security.

“So if you do the basic and pre-requisite actions collectively very well, irrespective of what is going on and what the influences are, you should be able to accommodate the demands and the expected climate within that standard planning.”

Operational priorities

Summarising the priorities operationally for this year, Notter says: “What we are trying to do is complete all the contract consolidation that we are doing; make sure we have a value-focused simplified SLA; and make sure that the CHP programme is embraced by everybody.

“We are trying to make people do things the same way, so they can fit us into their organisation very easily and we don’t become an exception to the rule. Our objective is that Saudi Cargo is easy to do business with, and that is centred on the supplier interaction and the interface with customers, authorities; whoever it may be – any stakeholder: we don’t want to be complex, and we don’t want to have an impact on complexity in anyone else’s business.”

Notter’s views on air cargo handling simplification and standardisation have helped inform, and to some extent have been informed by, his involvement in IATA’s Cargo Handling Council (ICHC – formerly COAG).

“The reason I put myself forward to support things like the ICHC for IATA is because I believe in it,” he says. “I think we (as an industry) have made our business so complex and so confused that in some areas we are complacent, operating as an industry on a platform of professional chaos. We need to break this situation down and be a lot more composed and more controlled, a lot more efficient, and cut out a lot of the extras and self-induced pressure points that can lead to safety and security lapses – because nobody can continue to do it to the levels necessary as it currently stands. If you are a restaurant and you have got an exhaustive menu, you will have a lot of waste. So we should be simple, simple, simple; back to basics!”

One ongoing challenge is airlines understanding the limitations of their cargo handling partners – not least, the fact that they have to serve multiple airlines. “Equally, the fact that carriers have caused some of those limitations in many areas by always asking for differences and exceptions,” adds Notter. “So we just want to get back to basics, return to reason, and have a little more logic than legacy – and try to make it easy for this business to deliver an acceptable level of quality service and consistent performance.”

Notter highlights a recent IATA shipper survey in which the sector only scored 7 out of 10 in terms of customer satisfaction – a result that in some other industries would be seen as unacceptable. “That means 300 customers out of 1,000 are not satisfied,” says Notter.

“You wouldn’t go into an operating theatre knowing that the surgeon’s success rate was only 70%. So, we have to stop accepting, in many areas, mediocrity. Mediocrity isn’t the standard that we should be aspiring to.”

He believes initiatives like Saudi Cargo’s CHP programme will help quality levels by bringing standardisation, simplification, and ultimately better solutions.

Saudi development programme

That initiative also dovetails well with another initiative within the airline, the so-called ‘Saudi Development Programme’. “We are identifying a group of young Saudis that have a commitment to the business and the desire to remain in cargo for some time, and we are ‘internationalising’ their outlook, their capabilities; and we are integrating with some of the CHP partners to do certain implant activities with them – and also to let them see how ‘Fit 4 Purpose’ audits could and should be conducted between a customer and the supplier,” Notter explains.

Expectations for 2017

In addition to the operational focus on compliance, competence, quality, and consistency for Saudia Cargo and its suppliers, Notter says: “One of the things that I am really pleased with is that we have been exercising a very focused cost-management programme across the business, and it has been extremely successful. It is encouraging, because it has also shown that, in certain areas, if you keep things simple and more formal and pay more attention to detail, you can really make a difference. So, we will continue to push the cost management principles. This approach has also benefitted us in process enhancements and various customer experience initiatives.”

He concludes: “And so, although the industry has currently got many dark clouds and a few storms, we are well sheltered and well prepared, and we are looking forward to those blue skies appearing in the not-too-distant future. There is plenty to be getting on with: in this industry, if you stop, then you are actually going backwards.”