With experience at China Southern Airlines, China Postal Airlines, Jade Cargo, CDI Cargo Airlines and YTO Express, David Su is no stranger to the Chinese air cargo scene.

Now, as the chairman of YTO Cargo Airlines, Su has grand ambitions for the Hangzhou-based carrier.

“I like cargo,” said Su, speaking at the annual Cargo Facts Asia conference, held for the first time in Shanghai. “When CDI decided to change to Loong Air, from cargo to passenger, I decided it was time for me to go. At the time, YTO was preparing to set up its own air cargo business. I joined and set up YTO Cargo Airlines, and within about two years, we had our inaugural flight.”

According to Su, YTO Express, the mother company of YTO Cargo Airlines, is a relatively small company with a volume of 4.6 billion parcels a year. It is the first listed express company in China and is 30%-owned by Alibaba. It is also one of three express companies to have its own airline in China, along with China Post and SF Express.

In the past six years, YTO Express has been growing at a rate of about 50% every year, but Su said that he is expecting growth this year to slow slightly to 35-40%.

“If we look at the economic picture of China, we see that 47% of e-commerce express business lies in eastern China,” he said. “When Jack Ma gave his speech in New York two years ago, he said he wanted to increase cross-border e-commerce from 5% to 40%, and that he wanted a delivery service of 72 hours globally. Strategically, I think YTO should be one of the key players supporting the cross-border e-commerce business of Alibaba. So we’re not talking about domestic business; we’re talking about creating good and cost-effective products and services for our global customers.”

That will be a drastic change for the airline, which today is exclusively domestic.

“We’re now in the process of applying for our international licence from the Civil Aviation Authority of China, so theoretically we could make our first international flight by the end of this year, but that will be based on the business of our mother company, YTO Express,” Su said. “We’re working hard with them to decide on the country and routing of our first international flight.”

The one-and-a-half-year-old airline operates a fleet of five Boeing 737-300BCFs, with three more 737s and two 757s to join by the end of the year. Starting from 2018, the company expects to receive between six and 10 aircraft every year, depending on regulatory approval.

“One important issue in China is that the whole aviation industry is suffering from a shortage of pilots,” said Su. “You can have the money to buy whatever aircraft you like, but it’s difficult to get enough pilots for your new aircraft. That is a problem.”

As if there aren’t already enough challenges for Su, another major project is in the pipeline. YTO and the government of Shaanxi province are creating a joint venture called China Northwest International Airlines, a cargo airline based in the capital Xi’an.

“I can only say that if you’re in the right place at the right time and have the right partners, why not do business?” Su said. “One Belt One Road is a national strategy and Xi’an is definitely the gateway for it. I think that in the next five to 10 years, Xi’an will be one of the best places for all investment. That’s why we stepped into the market and talked to the government, and now we have some very good partners.”

Su said he expects China Northwest International to be operational in the first half of 2018, depending on CAAC approval. As the name suggests, the focus of this company is intended to be international rather than domestic. Given the location of Xi’an, a flight to destinations in Russia, Europe and the Middle East could be up to four or five hours shorter than one from Shanghai or Hangzhou.

As for YTO, Su said that, while the company is already doing well within China, it is working with Alibaba on improving cross-border e-commerce. But the airline will first look at regional markets that are more connected with China such as Southeast Asia and Russia before reaching further.

“Frankly, we’re not in the position to decide today whether we’ll buy 777s or 747s,” said Su. “I think in about two years’ time, we can start talking about long-haul business to Europe and America.”

By Jeffrey Lee

Asia Cargo News | Shanghai