Dubai: Emirates, the world’s top airline by international traffic, is betting on the pharmaceutical industry to boost its cargo division with the opening of a new 4,000 square metre cool storage facility at Dubai International on Sunday.
Dubbed “SkyPharma”, the cool storage is part of a wider Dh600 million expansion of Emirates’ cargo facility “SkyCentral” at the airport. The opening comes less than a year after the airline opened a 4,600 square metre cool storage at Al Maktoum International at Dubai World Central and is certified under European Union guidelines.
“We believe that this brings us in a different league,” Henrik Ambak, senior vice-president — cargo operations worldwide, told reporters at a news conference in Dubai.
Emirates is looking to tap into the growing pharmaceutical trade from India to the United States and from Europe to Asia. It hopes that the opening of the Dubai International facility will attract potential customers who have been deterred by the Gulf’s soaring summers where temperatures can reach north of 50 degrees.
Today, pharmaceuticals account for about six to seven per cent of all cargo carried by Emirates’ 231 passenger jets and 15 freighter aircraft, according to Nabil Sultan, divisional vice president of cargo. Emirates carried 2.5 billion tonnes of cargo in the fiscal year to March 31, 2016. Sultan said the new facility would give Emirates an opportunity to grow its pharmaceutical business “much faster” than 25 per cent annually.
Emirates will look to court the industry this week. The airline plans to give pharmaceutical executives who will be in Dubai for a conference and a tour of the facility. But its investment comes amid an ongoing slowdown in the global freighter market.
Demand for airfreight contracted in three out of the first seven months of the year, according to the International Air Transport Association. Demand has weakened due to a mixture of overcapacity in the market, low interest rates that make shipping more affordable and weak global growth, particularly out of China and Europe.
“The biggest challenge, of course, is the capacity,” Sultan said, which globally grew by an average of 6.14 per cent in the first seven months of the year.
The International Monetary Fund (IMF) signalled earlier this month that it would soon downgrade its outlook of the global economy for the year from the current 3.2 per cent growth. The global economy grew by 3.1 per cent in 2015.
“It’s a question of when will world commerce come back into the swing that it used to be in,” Ambak said.
Emirates expects a “very marginal” increase in cargo carried this fiscal, according to Ambak, who declined to say whether the division would be profitable. “Like everybody else we are trying to up our game and provide the best possible service so the customers will still buy our services instead of choosing someone else,” he said.
Factbox: Good year for the airline, says Shaikh Ahmad
Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman and CEO of Emirates airline and Group, who opened SkyPharma, said the facility was a long-term investment. “We have to think about the future. It is not about today. It is not about this year,” he told reporters.
Overall, Shaikh Ahmad said, it “should be a good year” for the airline, but admitted that it would be a “tough year”. He did not elaborate.
The opening of SkyPharma comes as Emirates is planning to move its operations over to Al Maktoum International, the future mega hub airport in Dubai’s south that officials say will one-day handle more than two hundred million passengers a year.
Emirates, which moved its freighter operations to the airport in 2014, has said that it plans to move passenger services by the mid-2020s.
“We’re going to be here for quite some time,” Nabil Sultan, divisional vice president of cargo, said about the new SkyPharma facility at Dubai International.