Volga-Dnepr shakes up European airfreight market with huge investment

The Russian cargo airline Volga-Dnepr has announced what amounts to the creation of a new air cargo network in Europe, with a huge increase in its potential air fleet and an investment in a new air cargo hub.

On Tuesday July 17, Volga-Dnepr stated its “confirmation” to buy five Boeing 747-8 freighters and exchanged a ‘letter of intent’ with Boeing to acquire a further 29 Boeing 777 freighters. In addition, there was an agreement to purchase “Crew Pairing” software from Boeing, “to support the planning and operation of the airline’s 300 crew members”.

The price of the deal for the five 747-8 Freighters is US$2bn, whilst the further 29 777 freighters will be US$9.8bn, according to Boeing.

On Wednesday, Volga-Dnepr and its UK subsidiary CargoLogicAir signed a Memorandum of Understanding with Liège airport to establish a regional cargo hub. Liege Airport Group will provide the physical and management resources to handle the 30 cargo flights per weeks that Volga-Dnepr hopes to develop over the next “three to five years”.

Liege Airport Group described the facility as the “AirBridgeCargo hub” and said that they would add 23,000 sq m of warehousing with the capability to handle “approximately 300,000 tonnes”, presumably annually.

This contract is an important win for the cargo focussed Belgian airport which in one leap has fulfilled its medium-term growth ambitions. It also creates a new option for customers looking for higher volume airfreight capabilities.

Bearing in mind congestion at major airports in Europe and their disinterest in freighter operations, the Liege hub deal is not too surprising. Rather, it is the size of the deal that is notable, while the purchase of aircraft is also impressive. Just the five new 747s would represent a significant expansion on Volga-Dnepr’s core Europe-China route, let alone the 29 777s. That said, ‘letters of intent’ do not necessarily mean that the aircraft will be purchased.

Even if only a proportion of Volga-Dnepr’s ambitions are realised they will have a noticeable impact on the global airfreight market. Not only is belly freight capacity continuing to grow rapidly but the freighter market would also appear to have life. The question is whether demand will be able to keep up.

Source: Transport Intelligence, July 19, 2018

Author: Thomas Cullen


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