Etihad Cargo to start freight services between Abu Dhabi and Moscow

Etihad Cargo will operate an Airbus A330-200F freighter, which has a capacity of 64 tonnes.

Cargo is being loaded on Etihad’s Airbus A330-200F in Toulouse, France. Sammy Dallal / The National

Etihad Cargo will begin twice weekly freighter services between Abu Dhabi and Moscow tomorrow amid tightening sanctions against Russia by the West.

Etihad will operate an Airbus A330-200F freighter, with a capacity of 64 tonnes between Abu Dhabi International and Moscow Domodedovo airports.

“Russia is a key market for Etihad Cargo and our new freighter service will allow us to capitalise on the growing trade between Russia and the UAE,” said Kevin Knight, the chief strategy and planning officer at Etihad.

Russia is accused of violating the sovereignty of Ukraine by backing armed militias in the east of the country that have been linked to the shooting down last month of a Malaysia Airlines flight.

Both the United States and the European Union have imposed sanctions, while Russia has responded by banning food imports from western nations. The measures are beginning to bite on both sides.

The euro-zone member Greece is taking an estimated €300 million (Dh1.47 billion) hit, with farmers badly affected, while the rouble is down 5 per cent against the US dollar during the past month and shares of Russia’s top banks have declined sharply.

Russia’s GDP growth slowed to 0.8 per cent in the second quarter, compared with 0.9 per cent in the first three months of the year, government data showed yesterday.

Economists polled by Reuters expect economic growth to stagnate in the second half of the year as sanctions contribute to capital flight and falling investment, predicting only 0.3 per cent growth for this year as a whole.

“Politics aside, Russia is a huge market to ignore and Etihad is acutely aware of that,” said Saj Ahmad, the chief analyst at StrategicAero Research. “It is likely that this deal would have been thrashed out many months ago, so while the timing may be a little odd given events on the ground, the reality is probably somewhat different as to when this deal would initially have been mooted.”

The UAE is home to almost 25,000 Russians and 400 Russia-UAE joint-venture companies, according to Etihad.

The spillover from the Ukraine crisis has affected tourism in the UAE, which received 750,000 visitors from Russia last year, according to Russian government data.

Plunging demand and the weakening rouble have forced five Russian travel agencies to cease operations in the past two months, with the latest, IntAer, shutting down last week. However, trade between the UAE and Russia is expected to eventually grow to US$7bn from $3bn last year, driven by defence, construction, oil and gas, agriculture and small businesses, according to the Ministry of Economy.

Mr Ahmad said that Etihad would build on the existing economic and business links, and as the new cargo freighter service is twice weekly, not daily, the carrier could have “piecemeal growth” in the Russian market.

Cargo plays an important part of Etihad’s business, contributing significantly to its total revenue. Etihad said it was on track to grow its cargo operations into a $1bn business this year.

Etihad carried 268,713 tonnes of freight and mail during the first half of the year, up 25 per cent over the same period in 2013. Overall, Middle East carriers hauled 7 per cent more cargo in June and 10 per cent more in the first half compared with the same periods last year, according to an International Air Transport Association report.

Worldwide cargo business is stalling, however. European carriers’ freight volumes fell by 1.5 per cent in June compared with the same month last year, possibly reflecting recent weakness in manufacturing and export activity.

Freight volumes for North American airlines also contracted, down 0.1 per cent in June. An overall sluggish performance in the first half was blamed on severe weather events during the first quarter.

selgazzar@thenational.ae

* With agencies

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