Apparently, Hawaiian Airlines cargo management does not read the script. Its latest move runs counter to the prevailing trend in the airline industry. This reinforces a contrarian pattern in cargo fortunes.

The evolution of demand and yields over the past six years has prompted an exodus from the main deck market, but Hawaiian Airlines sees a case for taking on freighters. The US carrier has decided to acquire three ATR-72 cargo planes, which it intends to deploy on routes between the Hawaiian islands, starting next year.

This will enable the carrier to move cargo between overseas destinations and points in Hawaii other than its hub at Honolulu International Airport.

“Our customers have asked for a single-provider solution for movement to all major destinations within the state of Hawaii,” said Tim Strauss, Hawaiian’s vice president of cargo sales and services. “Our ability to handle inter-island containerized and palletized cargo will provide greater flexibility for our customers seeking seamless connections from our long-haul flights, and it will help grow our business on both our widebody and B717 services.”

Over the past years, the airline has grown its international network, launching flights to markets in Asia and Australia, such as Beijing, Seoul, Taipei and Auckland. In the process it morphed from a carrier focused chiefly on US routes into an airline with a significant international footprint.

This expansion went hand-in-hand with a shift in the carrier’s widebody fleet, as it brought in A330 aircraft, and a stronger focus on growing the cargo business. Between July 2012 and this past June, cargo revenues more than doubled, bucking the trend among US passenger airlines during this period.

Strauss conceded that the likes of United Airlines and American Airlines carry more cargo in a month than his outfit does in a year, but in terms of revenue contribution, cargo at Hawaiian has climbed and surpassed the larger rivals.

To Strauss, the new freighter fleet marks another step in the build-up of Hawaiian’s cargo business. The ATR-72s are no B747 or MD-11 freighters, carrying a comparatively modest 18,000 pounds of cargo, which translates into space for five 2.25 metre x 2.75 metre pallets or up to seven LD3 containers. However, they open up the possibility to target cargo beyond Honolulu, which the airline has so far had to hand over to a rival for inter-island carriage. This sector tends to produce higher yields.

“With the ATR-72s we can shift LD3s right across from other aircraft,” Strauss said. This should help with express traffic, one target segment for the freighters, thanks to tail-to-tail transfers at Honolulu taking as little as 45 minutes, according to Strauss.

He pointed out that Hawaiian has led all US carriers in on-time performance for each of the past 11 years (2004-2014), according to figures from the US Department of Transportation.

In addition to allowing Hawaiian to tackle traffic beyond Honolulu, the freighters open doors to customers who hitherto have not considered the airline, Strauss said. He expects e-commerce to be the strongest commodity on the freighters, followed by perishables and general cargo.

Perishables are a major focus for Hawaiian. The airline has been investing in technology to step up its appeal as a carrier for perishables shippers. The new technology is designed to offer better tracking and temperature monitoring to allow corrective action where needed. Trans-Pacific carriers have been bullish on perishables traffic to Asia, pointing to the emergence of a growing middle class, especially in China, that is prepared to pay a premium for imported fresh quality food.

Technology is a key plank in Hawaiian’s growth strategy. The cargo division recently acquired a new IT platform, which went live in late June. Strauss described the cloud-based system as intuitive and logical. He reckoned that it is the first airline cargo system that is entirely cloud-based.

For all the momentum in its cargo growth, Strauss admitted that the decision to embrace freighters was not easy. “We spent a long time thinking about this,” he said, adding that there are not many markets in the world today where such a step would seem viable.

By Ian Putzger

Air Freight Correspondent | Toronto