Air Belgium Expands Services In the Face of Market Challenges

 - September 15, 2022, 7:07 AM
Air Belgium is adding a pair of Airbus A330 aircraft to its fleet. (Image: Air Belgium)

Air Belgium is still on course to add two Airbus A330-200s this year to support its growing passenger services, despite the uncertain economic outlook and signs of a looming recession on the back of high inflation, spiking energy prices, increased interest rates and Russia’s invasion of Ukraine. “Demand and forward bookings for this winter are very good,” Air Belgium CEO Niky Terzakis told AIN, on the sidelines of an inaugural event this week for the airline’s new service from Brussels airport to Johannesburg and Cape Town, South Africa.

The triangular route will be served twice a week, and marks Belgium’s first direct service to South Africa in more than 20 years. It also marks the beginning of the airline’s first-ever interline agreement, with Airlink.

The 262-seat A330ceo jets are former Etihad Airways aircraft and leased by Air Belgium from U.S. lessor Altavair. The A330-200s—the first one will enter into service with Air Belgium later this month, the second example in November—are joining a pair of new A330-900s, that the carrier is leasing directly from Airbus. Air Belgium took delivery of the Rolls-Royce Trent 7000-powered A330neos in fall last year as part of its strategy to phase out its four fuel-thirsty A340-300s. The airline used the quadjets to launch operations in 2018.

“We actually very much regret that it is no longer possible to operate this aircraft economically,” said Terzakis. “The passenger acceptance of the A340 was extraordinary and we had a very reliable operation. We were very satisfied.”

Air Belgium is deploying the A330s on long-haul scheduled services connecting Brussels to South Africa, Mauritius, Curacao, and Punta Cana in the Dominican Republic; it also will serve the Dutch Caribbean island of Bonaire during the Christmas holiday season. Flights to the French Caribbean islands of Martinique and Guadeloupe are departing from Charleroi Airport, a low-cost carrier-focused gateway in the south of Belgium. Terzakis said that this departure point is beneficial for the area’s largely French-speaking Belgians, and also for travelers from nearby northern France as a convenient alternative to Paris Orly Airport.

The airline, which also undertakes ACMI and on-demand charter work, aims to further expand its scheduled passenger network. “The U.S. is on the horizon and we are definitely looking at opportunities  to resume services to Asia, including China, when the post-Covid recovery there picks up speed,” Terzakis said. “We remain optimistic, but we have to consider the economic circumstances, specifically the price of kerosene and the dollar-euro exchange rate movements. We have, like all airlines, to be concerned about a possible reduction of demand,” Terzakis noted.

The jet fuel price and the weakness of the euro against a strong dollar are weighing on the company's profitability at the moment. Most of Air Belgium's revenues are in euros while most of costs are in dollars, which are now trading close to parity with the European currency. “We will not be profitable this year,” Terzakies confirmed.

In fact, the company has posted a positive operating profit only once—in 2019—since its inception in 2016. Its initial strategy to focus on leisure routes between Charleroi airport and China proved unsuccessful and Covid caused €30 million in losses.  But Terzakis insisted that the company is adapting and reinventing itself to survive.

Last year, Chinese logistics company Hongyuan injected fresh capital into the company. It holds 49 percent of the shares. The other 51 percent remains in European Union hands, including several government entities from the Walloon region of southern Belgium, Air Belgium management and maintenance, repair, and overhaul provider Sabena Aerospace.

Hongyuan’s shareholding also prompted the rapid expansion of Air Belgium’s freighter activities, which now account for 50 percent of revenues. The carrier currently operates two Boeing 747-8Fs and a third example will join the fleet at the end of this year. The aircraft are financed by the Chinese shareholder, which also assumes the commercialization of the capacity, and feature a Hongyuan/ Air Belgium co-branding.

The same set-up applies to three former Etihad A330-200s, which have been converted for freighter service by EWF in Germany. The first A330-200P2F has been delivered to Air Belgium, the second and third examples are set to join its fleet in November and February 2023. “We have taken a bunch of [former Etihad] sistership [Rolls-Royce powered A330-200] airplanes for obvious operational reasons,” noted Terzakis.

The Belgian carrier currently also operates four Liege-based A330-200Fs on behalf of French shipping giant GMA CGM, which purchased the airframes and contracted Air Belgium to fly them. The contract is coming to an end, and “we will start the transfer of the registration to the air operator’s certificate of GMA CGM Air Cargo from October,” Terzakis said.

GMA CGM Air Cargo launched operations in March 2021 and obtained its own AOC from French aviation regulators on June 1. The airline emerged as a launch customer of Airbus’s new A350F freighter at the Dubai air show last November.