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The Trade Magazine for the Asia-Pacific & Middle East Regions Vol. 27, No. 9, September 2011
Air Niugini Cargo
takes off
TAP Portugal targets the Americas
DHL Forwarding takes to SE Asian roads
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COVER STORY
Air Niugini Cargo takes off
Certainly small by international airline standards, Air Niugini will never make the headlines
like the ‘big boys’ of either the passenger or cargo industry. But growing alongside
the surging natural-resources business in Papua New Guinea, the carrier’s CEO has a
bold vision to make Air Niugini’s brand known in the US, Asia and Australian markets
and that includes a maindeck foray by the carrier’s cargo division. By Donald Urquhart.
Until only a few short years ago,
this ambition of the 38-year old
state-owned carrier would have
not only seemed impossible, but probably
would have been as well. Air Niugini’s
current CEO, Wasantha Kurasiri came
on board nearly four years ago and from
that point began the development of the
carrier that now uplifts over a million
passengers and 11,000 tonnes of cargo
each year with a fleet of 21 aircraft.
Owing to the nature of the country –
extremely rugged and mountainous with
virtually no road network connecting
its cities – the carrier is in an enviable
position of being virtually the only means
of transport to much of the country’s
hinterland. The small size and basic
infrastructure of country naturally leads
to a fleet comprised of smaller aircraft
for its domestic routes, including Fokker
100s, Dash 8 Classics and three new
Q400s.
“As the Nation’s flag-carrier, we have
a fundamental obligation to serve the
people of Papua New Guinea – especially
since the country lacks national road and
rail infrastructure. This creates unique,
wonderful operational challenges for
the airline and it may be one of the few
countries in the world that has really
developed off the back of an airline,”
Wasantha Kumarasiri
says Kumarasiri.
As part of its international expansion
it recently added three B767-300ERs
leased from Icelandair which mark
the starting point of its international
expansion which will get a further
boost in 2014 when it takes delivery of
a solitary B787 Dreamliner.
Currently the carrier operates widebody
B767 passenger services to Tokyo,
Hong Kong, Manila, Malaysia, Singapore,
Australia, Fiji and the Solomon Islands.
Due to the historic and important
economic ties between Australia and
PNG, the carrier has direct daily flights
to Brisbane and Cairns and twice a week
to Sydney.
The PNG story
Most readers would likely have,
at best, a vague notion of this small
country of Papua New Guinea (PNG).
For those that do have an inkling, they
would possibly think of its historical
head-hunting tradition, its chronic
underdevelopment, or the recurring
violent secessionist revolt that claimed
tens of thousands of lives from 1975-
1997 on Bougainville Island.
But the winds of economic change
sweeping through Asia have also
swept into PNG and the country and
its culturally diverse seven million
population is now facing a new era and
brighter future. Much of this is due to
its rich endowment of natural resources
including oil and gas, copper and gold –
which together now account for 72 per
cent of PNG’s export earnings.
A new key factor to its nascent
economic growth is a massive LNG
project being undertaken by Exxon
Mobile. Kicked off in 2009 with a target
of the first LNG cargo in late 2013, or
early 2014, the project has a predicted
production lifetime of nearly 30 years
and will entail major infrastructure
development.
The positive economic outlook for
the country was signalled as early as late
2008 when the International Monetary
Fund noted that “a combination of
prudent fiscal and monetary policies,
and high global prices for mineral
commodity exports, have underpinned
Papua New Guinea’s recent buoyant
economic growth and macroeconomic
stability.” The IMF went on to note that
real GDP growth, at over six per cent in
2007, would likely continue to be strong
in the coming years.
The small size and basic infrastructure of country naturally leads to a fleet comprised of smaller
aircraft for its domestic routes, including Fokker 100s, Dash 8 Classics and three new Q400s.
Cargo focus
This of course is all good news for the
national carrier both on the passenger
26 PAYLOAD ASIA | September 2011

COVER STORY
and cargo sides of the business. Indeed, a new era for Air
Niugini kicked off earlier this year when Kumarasiri brought
on board Nalin Rodrigo – as regional manager for Asia Pacific
& Americas –who many in the industry will know from his
cargo tenure at Emirates SkyCargo and more recently Sri
Lankan Cargo.
“They are investing in all these aircraft and also going to
build a cargo centre, meaning there is quite a lot of investment
going into freight, including investing in Emirate’s SkyChain
cargo system. There is a fair bit of focus on freight at Air
Niugini at the moment and with all this investment going in,
they needed a cargo specialist,” Rodrigo says, explaining his
joining Air Niugini Cargo.
The optimism for growth in both the passenger and cargo
side is clearly well-founded in this increasingly natural resourcehungry
world. Three or four major mining projects are in the
works which along with the current LNG project are firing the
PNG economy and driving both domestic air cargo demand
and the necessary international cargo links.
Resource driven cargo demand
“What is really changing PNG is this LNG project – it’s a
massive investment by Exxon Mobile and its actually making
a lot of difference in the day-to-day lives of people and the
economy in various ways,” Rodrigo says, pointing to hotels
being expanded, new hotels being built, roads being built and
so on. For the national carrier it’s translated into expansion in
order to meet the demands of bringing in the people who work
at the mining and LNG projects along with the equipment and
supplies. “A lot of things are happening as we speak,” he adds.
In the last year he notes all the camping site material like
housing and other infrastructure was flown into the various
camps with the carrier now doing charters into those camps
with the various supplies like food and fresh vegatables and
fruit from the main cities of Lae and Port Moresby.
Supplies for the mining business come mainly from
Australia’s Queensland while materials like components and
chemicals generally come by ship from the US and Western
Australia. And once in Port Moresby there’s only one option
to get it anywhere else in the country – by air. He added that
equipment will also be coming from Texas and “while we do
not participate fully yet, we do anticipate participating in that
the movement as well.”
Clearly the LNG project will be a boon for air cargo,
particularly considering the lack of road and rail infrastructure
in the country. Rodrigo notes that while much of the cargo
needs for the LNG project were originally planned for sea
freight, delays and other urgent needs pretty much guarantee
a significant spill over for air freight.
“So we anticipate there will be significant cargo movement,”
he says adding that the project will also entail building a new
runway at Moro. “That airstrip will be built for the LNG project
and they plan to bring in some serious material which has to
be air freighted from Port Moresby into Moro, most likely by
an AN124-type of aircraft,” he says.
This will come together in about a year’s time, by next August
he says, along with some expansion at Port Moresby airport
as well. “So we see this growth and we are also planning our
own expansion and partnership with various operators,” says
Rodrigo.
“We are partnering with them for these projects and are
charting aircraft from various other suppliers on an ad hoc
basis – this is not what we do normally , but we will get involved
in this project as a serious player as well,” he says.
Other expansion plans in the works include a new cargo
centre to replace the current facility which was the old Ansett
cargo terminal. Ansett along with Qantas and Trans Australia
Airlines were the original investors along with the PNG
government in Air New Niugini. “It’s a tiny building built 30-
40 years ago which handles both domestic and international
cargo movements so it’s quite cramped.” The additional space
will come from a converted hangar that will double the 11,000
tonnes per annum currently handled once it’s completed in
two to three months.
The ‘flying truck’
In the meantime the carrier continues with its domestic
operations which are crucial for getting supplies inland from
Port Moresby. “We have a very difficult terrain to get to the
various cities. Some are in the islands, some in the highlands,
so the road network is not as developed as we would like it to
be so there is a major demand for air lift of materials which
we use our four tonne capacity Dash 8 small freighter like a
truck – we go at least twice a day to Lae to Mount Hagen
delivering newspapers, vaccines, medical supplies, fruit and
vegetables and bring back fruit and vegetables. It is like a little
truck that goes up and down,” he says with a laugh, adding that
around a tonne of belly cargo is also carried on the airline’s
linehaul flights.
The carrier also moves various domestic export products
both to Port Moresby and beyond, including ornamental fish
for the US market, crocodile skins, wood and mineral samples,
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COVER STORY
Nalin Rodrigo
gold on special charters and limited fruit
and vegetables. Imports consist mainly
of medical supplies, spares and parts for
the aviation, mining and energy sector
as well as supplies for the tourism and
hotel industry.
As for competition, Rodrigo says
there is one B737 freighter operator –
Pacific Air Express – which operates
weekly flights between Brisbane and
Port Moresby, “but I wouldn’t consider
them as competition as such, because
they have maindeck capability on that
route which we don’t have.”
Air Niugini Cargo also has a
partnership with Lynden Air Cargo
which operates Hercules aircraft based
in Lae and “we work with them and
they support us if we need freighter
capacity both domestically and on the
international routes and we also work
with Chapman Freeborn for all the large
charters.”
The cargo division also has comprehensive
interlining agreements with
Qantas, Continental (now merged with
United), Air New Zealand, Cathay
Pacific, Singapore Airlines, Malaysia
Airlines, Emirates and others. “We are
generally very well plugged in because
we need to reach Europe, North Asia
and the US and of course Australia. We
would like a few more partners probably
across the Pacific as well,” Rodrigo says.
Strategic growth
The new cargo boss says the next stage
of growth for the cargo division will take
place within the next six months when it
adds a small freighter aircraft to the fleet
– likely another Dash 8 – “because we
are promoting this ‘flying truck’ concept
within the domestic sector,” he says.
“We also see a need to have a bridge
between one of the Asian points
probably Singapore and Sydney, linking
Port Moresby because we have realised
there will be a maindeck need for goods
coming from the US, as well as Northern
Asia for these mining and LNG projects.
That is not very far away and I would say
that in less than a year we will have our
own maindeck freighter on an ACMI
basis – most likely an A300-600F type
of aircraft,” according to Rodrigo.
While currently the cargo division
generates around 10 per cent of the
group’s revenue of which 55 per
cent of cargo revenues are generated
domestically and the remaining 45 per
cent from international cargo carriage,
this will change within the next year with
the international component equalling
or surpassing the domestic.
Rodrigo notes that the carrier’s CEO
is very keen that the freight division
operates as a separate business under
the group’s umbrella. “We will have a
model where we are charged for the
capacity used on the revenue sector
flights,” he adds.
Brand visibility
Looking ahead definitely the brand
will be more visible in the US, Australia
and Asian markets, Rodrigo says.
“The CEO is a major driver in these
developments and is very, very keen to
bring the airline onto the world stage and
he does a lot of things to support that.”
“We will continue to expand the wide
body operations into the markets we
operate probably with some adjustments
and we would also open one or two
more routes in Asia,” he says declining
to say which, but clearly China would
be of interest.
“Definitely we will grow domestically
because we’ve already identified the lack
of infrastructure within the country and
there’s a lot of pressure on us to open up
capacity for commodities to move up and
down,” he says pointing to the natural
resource projects that clearly boost the
need for moving goods domestically and
internationally.
“Normally what happens when a
new project comes it creates a surge
of activity for about three years – it
creates a surge of movement in terms of
shipping activity and air freight and then
tapers off and stabilises. But now there
are three or four projects at same time
and it’s creating a lot of activity both for
shipping, as well as air.”
Security
Security concerns at the carrier
naturally mirror those of any other
international carrier, but for Air Niugini
there is the added challenge of the
local environment. “Domestically we
also have a very concentrated effort at
securing the freight because everything
we carry within the domestic ports is
mainly valuable cargo that attracts the
attention of various people and also the
not so developed infrastructure at some
airports is also making it vulnerable so we
do have quite an investment in securing
this movement of freight,” he says. While
the carrier has its own security he notes
that many of the companies shipping
cargo with Air Niugini also have their
own security, especially for shipments
of gold.
28 PAYLOAD ASIA | September 2011