Air Canada have pivoted quickly to new and unique commercial opportunities in response to evolving market conditions over the past 11 months and was the first airline globally to transform aircraft and double freight capacity by removing seats to enable cargo transport in the passenger cabin. The headwinds to its passenger business have prompted the airline to ramp up its cargo-only flights with widebody passenger aircraft for cargo missions by removing seats to boost cargo capacity and other modifications to support cargo-only flying. On July 05, Air Canada reached a milestone 10,000th cargo-only flight since the start of the crisis— a mix of regular and special on-demand freight flights. Currently, the carrier is converting part of its retired Boeing 767-300ER fleet to freighters—Air Canada’s first dedicated freighters—and expects to take delivery of two this year with more to follow next year. Jason Berry, Vice President– Cargo at Air Canada in an exclusive conversation with Ritika Arora Bhola, informs how the airline had remodelled order of operations and flight schedule to provide stability to the global supply chain in an era when the distribution of goods was important, and that collaboration and creativity across branches and teams has been a defining moment nourished by learnings and experiences along the journey.
Bringing unprecedented impact on freight operations, how do you continue to react and respond to the COVID-19 pandemic?
As a belly carrier, Air Canada Cargo had to pivot rapidly at the start of the pandemic to capitalise on the airline’s passenger fleet for cargo-only flying. That programme kept volumes high in 2020 and the trend has continued in 2021. In fact, in July we marked our 10,000th cargo-only flight, which is a remarkable accomplishment given that the first flight was launched in March 2020. Cargo-only flights allowed us to put scheduled flights on routes where passenger flights were grounded, and add capacity on routes where passenger flying continued (for example: London, Paris, Frankfurt).
What is less talked about is the on-demand programme we launched in tandem. These are flights typically booked entirely by a single forwarder for a specific mission on a route not typically served by scheduled operations. Our 10,000th cargo-only flight was such, operated between Toronto and Buenos Aires.
As for post-pandemic growth, our focus for the rest of 2021 is adapting to cargo-only flying and ramping up operations for the integration of our first Boeing 767 freighter arriving in the ‘Fall’ 2021. The programme is key to our post-pandemic strategy, as it will enable us to provide consistent capacity in markets where there is fluctuations in terms of passenger operations. It will allow us to sell main-deck capacity and feed our widebody passenger belly routes.
How are you gearing up for the expected demand and trends that are taking centre stage in aviation and cargo growth, especially in the near- to mid-term?
In 2020, we pivoted our business successfully. However, this impacted our operations as we adjusted.
Operating a network of cargo-only flights is quite different than a network of belly loaded passenger flights and there are many adjustments to make. We had widebody operations for places that had previously only been served by narrowbody flights, like Halifax and Edmonton. We had to quickly learn how to safely load the passenger cabins in our converted Boeing 777s and Airbus 333s, which is done entirely manually, while adhering to health and safety regulations.
Despite the general chaos and disruption to the global supply chain, our service levels were consistently good in 2020, thanks to extensive training and collaboration with our airport colleagues and ground handling partners. We opened new stations, developed new relationships and strengthened existing partnerships.
Now, in 2021, we look forward to continue our operations with much more efficiency and resiliency.
Cargo handling capabilities supported by improved facilities, and the introduction and integration of business friendly policies are becoming urgent actionable agendas. How are you going about that?
We are engaged in infrastructure improvement initiatives at our Canadian hubs, including Toronto and Vancouver. Renovations to accommodate larger volumes, upgrades to enhance our cool chain handling and technology investments are ongoing. Additionally, our US hub at Chicago O’Hare International Airport (ORD) benefitted from extensive renovations that were completed in 2020, which added additional flexibility at an otherwise very congested airport, while enhancing customer experience.
On the international front, we are proud to have partnered with world-class ground handlers with whom we work closely to provide seamless operations and handling. While efficient cargo handling relies on physical infrastructure in our facilities and the right agreements in place to provide the best possible service, it is also about internal processes that support continuous improvement, including training and operational excellence.
How did you reconnect with your customer in a world of COVID-19, redefining customer experience nourished by newer experiences?
Our relationship or approach towards how we work with our customers hasn’t really changed. Despite not being able to meet in person, I believe our relationships have only strengthened. This was a difficult year and while we didn’t have enough capacity to maintain a complete pre-pandemic network, I’m extremely proud of the collaboration and work that went into doing all possible to keep the supply chain intact. We’ve always taken a highly collaborative approach and have leveraged our flexibility and agility to find ways to continue support customers despite the challenges we’ve faced.
How is Air Canada Cargo taking advantage arising out of the increasing trade volumes to/from India?
We see great opportunity in India and have benefited from our passenger service presence in the country. This has supported Air Canada with the ability to connect India with the world through our hubs in Vancouver and Toronto. As the pandemic subsides, we intend to continue to support the local market to the best of our ability.
What are you basically doing to offer and ensure improved market access to push the overall demand from India?
In May, Air Canada operated a cargo-only flight with 40 tonnes of essential supplies from Toronto Pearson Airport to Delhi, including critical medical equipment like Oxygen cylinders, Oxygen generators, ventilators, and Personal Protective Equipment (PPE), all consigned to the Red Cross in India. It was an honour to be able to contribute to the fight against COVID-19 through this mission. There was a lot of engagement and pride from Air Canada employees who worked for this operation. We are anxious for the return of passenger services to India to serve Delhi and Mumbai soon again. Typical air freight from India includes electronics and pharmaceuticals, and flights to Vancouver and Toronto connect to our network to move shipments on to the United States and Latin American region.
Besides the need to adapt, how are you tapping additional opportunities to reach the next horizon of operational effectiveness, to leverage emerging tech-led business models, and to transform everything to digital?
There are multiple ways in which we use digitalisation to enhance service and the customer experience, and our use of artificial intelligence (AI) is a great illustration of that. In 2019, our Cargo division developed the first end-to-end AI-driven application that forecasts capacity. The application provides real-time available cargo space and weight capacity for each flight in our network on any given day. It helps our capacity control team to make better decisions based on capacity predictions due to continuous learning from the model, helping maximise space and building operational reliability that ultimately benefits our customers.
We continue to develop and roll-out more solutions within Cargo—powered by AI—and see tremendous benefit in many areas of our division, including procedures and systems improvements within the freight acceptance process, thereby providing an improved customer experience. All this to say that AI’s benefits are far reaching and what we have achieved so far is just the tip of the iceberg.
Freighters have now joined the green revolution to make CO2 neutral flights, leveraging the advantage of SAF seen as a substitute for fossil kerosene. Could you elaborate on Air Canada’s footprints?
Air Canada is focussed on investing in innovative, long-term, sustainable emission reduction solutions. The airline has built a solid foundation in energy sustainability through numerous comprehensive initiatives to reduce its environment footprint, and since 1990 has improved fuel efficiency by 43 per cent. From 2016 to 2019, Air Canada reduced more than 135,000 tonnes of greenhouse gas (GHG) emissions from its air operations through fuel efficiency initiatives.
Sustainable aviation fuel (SAF) and clean energy is one of the key carbon-reduction pillars identified by Air Canada. We will invest US$50 million in SAF and in the development of other low carbon aviation fuel (LCAF), and evaluate the practical applications of renewable energy sources such as biogas and renewable electricity, as well as energy transition measures. Other pillars include fleet and operations innovation and carbon reductions and removals.
In March this year, we announced our long-term commitment to advancing climate change sustainability and set ambitious climate targets to achieve the net-zero carbon goals by 2050. Considering the same, we have set absolute mid-term GHG net reduction targets by 2030 in our air and ground operations. This will ensure meaningful progress towards Air Canada’s ambitions net-zero goals, as aviation, technology and energy sectors transition to low carbon alternatives.
At present, Air Canada reports its carbon footprint, targets and climate protection strategy through the CDP and will also be reporting through the Task Force on Climate-related Financial Disclosures (TCFD) framework as of 2022.
In the enterprise context, how are you addressing business-critical needs and building a thriving culture led by innovation?
Like every major passenger carrier, the pandemic has been devastating. Passenger activity came to an abrupt halt. Our pivot to cargo-only flying was one of many steps the leadership team took in an effort to limp through the challenging times. As the world reopens and passenger activity begins to resume, the biggest untapped opportunity lies ‘within the talent we have at this great airline to ensure we continue to foster and encourage the environment’, embracing the creative culture and driving change by thinking beyond the norms to solve problems. We have so many great examples of employees jumping in and finding new ways to run the business better. Therefore, it is our duty to continue to empower and support the entrepreneurial spirit that has helped us get through the worst of 2020.
Looking at the current changing environment, what’s seems critical to you to build a sound business that’s resilient to change and uncertainty?
It has been quite some time since a legacy carrier in North America has operated a combination fleet of widebody passenger and freighter aircraft. It is a complex undertaking and we know there will be a lot of eyes on Air Canada as we launch more freighters later this year. While adding freighters may have become a “fashionable” move recently, this is something we’ve had in the planning stages prior to the pandemic. For that reason, it will be even more critical that we maintain our focus and commitment to utilising these assets for supporting our forwarding customers across the globe with dependable, year-round capacity.
