In conversation with IAG Cargo’s Steve Gunning and Juan Ignacio Díez Barturen
Last year was also pretty packed for IAG Cargo, the freight enterprise of the International Airlines Group (IAG), which was formed by Iberia and British Airways (with BMI). The two entities leading figures, managing director Steve Gunning (left photo) and deputy managing director Juan Ignacio Diéz Barturen (right photo), talked to the ITJ about the first few months in business together and their prospects and plans for 2013.
Last year was very eventful, gentlemen, so I’ll start by asking you about the influence of global events such as the Olympic Games on your business.
Steve Gunning: For us as a freight firm the Olympics were practically irrelevant. They neither brought us a rise in the volume of goods transported, nor did we lose any business on account of them.
Another important global event was hurricane Sandy, which had a great effect on the air cargo industry – even though the overall impact was smaller in the end than had been expected. We were able to redirect goods to unaffected US hubs. We were very happy to be able to rely on one of the best networks in North America. I was also pleased with the excellent work of our ground-handling staff, who successfully managed to clear the backlog created by the chain of events in a very impressive two to three days.
What do you consider to be the biggest challenges facing airfreight?
Gunning: Well, putting it as succinctly as possible, I’d say uncertainty, including economic uncertainty. On the one hand we have the notorious fiscal cliff (an expression that was recently voted the negative buzzword of the year in the USA, describing the compulsory budget cuts and simultaneous tax rises that would kick in if the national budget wasn’t passed. The USA didn’t fall off the cliff, as a compromise was arrived at in time. – ed.), whilst Europe continues to reel under the debt crisis. We can try to plan in a tactical short-sighted or strategical long-sighted way, but things are more difficult because we don’t yet know what effects various political decisions will actually have.
Juan Ignacio Díez Barturen: This uncertainty is counterbalanced by the achievement of having merged our businesses into IAG Cargo, which has enabled us to substantially improve our market position. Our market has grown, and we can plug holes as they arise, depending on requirements. The measures we can take to counter negative trends are now substantially more diverse. This also gives us a certain degree of security.
Gunning: Yes, that is a very important point. Our network is now much more robust. We’ve already observed this in the last 20 months, in which one market may have been a little weaker, whilst another one was flying high. We’re now in a better position to balance things out.
To what extent is collaboration between two long-standing airlines a better answer to prevailing challenges than an airline alliance?
Gunning: I think our joint business provides precisely that what partners and alliances will never have, which is the requisite infrastructure, especially in the cargo segment. We’ve got a single network and a unified booking system. The path to where we are now wasn’t easy, it’s true, and necessitated learning processes from all involved. Now we’re ready for growth takeoff, however. The revenue management system which we’ve taken over from Iberia, in particular, will allow us to take on new members in IAG.
Are there any names in the pipeline?
Gunning: I can only confirm that we’re currently conducting exploratory talks.
Barturen: Let me take this opportunity of reminding you of the «G» in IAG...
Gunning: It’s been a fantastic experience, bringing Iberia and British Airways together and thus forming the seventh-largest freight airline in the world. But naturally enough, our strategy goes well beyond this. The integration of BMI was a successful test run, but now we want to go further!
Critical voices, saying that the creation of IAG wasn’t a merger of equals, are being raised in Spain. They say that Iberia was taken over by BA. What is your reaction to these opinions?
Barturen (laughing): You first, Steve – I was brought up to be polite!
Gunning: Thanks. Actually, we believe that this criticism is unwarranted. Equal representation of both companies on the IAG board negates it, for example. But BA was also thrice the size of Iberia in the freight segment, that can’t be argued away. We’re now trying to make the best possible use of each partner’s strengths.
Barturen: Size is an aspect that can’t be ignored, of course. But as we from Iberia are also contributing to IAG Cargo with our strongest suits, I too would call it a situation that’s in equilibrium.
Chengdu a new Chinese destination
IAG Cargo will start offering a thrice-weekly connection between London and Chengdu, the capital of the southwestern Chinese province of Sichuan, on 22 September, deploying a Boeing B777.