Jim Butler, president of American Airlines cargo, is based at the airline’s Fort Worth, Texas, headquarters, but he visits Miami four to six times a year to keep track of the burgeoning cargo operation.
“I probably spend more time in Miami than any other city in our system,” Butler said. And it’s a big system: American provides 100 million pounds plus of weekly cargo lift to cities in the United States, Europe, Asia, Canada, Mexico, the Caribbean and Latin America.
“The city is unbelievably important to us,” he said. “Miami is not only the most important cargo location for us, but I believe it will remain that way. The Latin American network is something we uniquely provide our customers.”
Around the world, American has more than 4,000 workers devoted to cargo services and at Miami International Airport, there are about 500 cargo workers — between AA employees and partner employees.
Butler recently sat down with the Miami Herald to discuss the world cargo situation, the Miami hub, American’s growing business transporting pharmaceuticals and the airline’s plans to launch commercial service to Cuba on Sept. 7. Passengers and their luggage will be making those first flights to Cuba, but cargo service won’t begin until later.
Q. If Miami is No. 1, who is No. 2?
A. It’s usually a fight between Dallas and London Heathrow. London has a lot of large, heavy freight, but Miami is by far No. 1.
Q. Why is that?
A. Over 80 percent of our freight travels to or from a non-U.S. destination, and while Miami isn’t our largest hub as an airlines, it is our largest international hub. Because of that, we have the most offerings for our customers in the extensive network we have in Latin America. [Our Latin American network] plus the connections we have to Asia — and Europe — is the reason why Miami is such a focal point for our operations.
It’s also the most complex [hub] with the variety of commodities we handle from pharmaceuticals to a large perishables business to high-value goods and electronics. We say that if Miami is running well, cargo is running well.
Q. How is cargo through Miami doing compared to previous years? Certainly in Latin America some of the biggest economies — Brazil, Argentina, Venezuela — aren’t doing particularly well.
A. Obviously we’re not immune from economic challenges in Latin America, especially Brazil. So we work with our customers to make sure they’re selecting American because of the investments we’ve made in our facilities and the focus that we put on the cargo business.
That being said, we have seen some good signs in Argentina recently. We see Santiago showing some signs of improvement, but even in Brazil, at a time when the U.S. dollar is strong and the real tends to be weak, we are seeing more exports because [those trends] cause Brazilian exports to be more competitive.
Q. Are cargo volumes up or down compared to last year?
A. We are taking more traffic than we did last year. We just finished the second quarter, and we’re up 3 percent year-over-year globally. We were up for the first quarter, too.
The yield environment is difficult, and we’ve seen cargo yield decline everywhere around the world over the past 12 to 18 months. We are perhaps more susceptible on the cargo side to the decline in global economies than the passenger side and we’re seeing a lot of capacity coming into the market while global demand is not up as much. It’s causing a weak yield environment.
Q. What percentage of AA revenue does cargo represent?
A. It’s small — only about 2 percent. The reason for that is that over 80 percent of cargo is international. While we do have cargo revenue on the domestic network, it’s very focused on the international flights.
But if you look at percentage of revenue on wide-body flights, it can be double-digit. And if you look at percentage of revenue in some of our more important markets, it can reach at times 15 to 20 percent.
It’s a very important piece of our performance — although it looks relatively small on the books. There are some markets we wouldn’t be able to serve without the cargo component.
Q. Tell me a little about your facilities in Miami.
A. We’ve got a great facility that is just off the southern runway. It is over 200,000 square feet, and it not only handles general freight but we also have three coolers in the facility. We’ve done a lot of work on that facility in the last year . . . and to improve the operation, we’ve invested a lot. We’ve opened a whole new set of dock doors, and we’ve taken a side of the building and expanded it. That has allowed us to improve flow, and it is working so far better than ever before.
It has potentially eliminated the customer lines and allowed in-and-out access so that we can take advantage of the hub in Miami to move as much freight as we can.
Q. What types of cargo are you carrying to and from Miami?
A. The types of commodities vary northbound and southbound. From Latin America, we have a lot of perishables and carry both live tropical fish and fish for consumption. We have a very large salmon business from Santiago and Buenos Aires. Then we have a lot of berries, fruit, vegetables, seeds — you name it — and, of course, fresh-cut flowers.
Southbound from the United States, but often originating in the Far East and Europe, we have a lot of high-value goods — electronics, laptops, phones and pharmaceuticals. We are sending everything from medicines to corneas. We have found that as countries continue to develop, it is often a lot faster for them to develop medical capabilities by shipping out samples and having the diagnosis done elsewhere and then shipping in the medicine.
We’ve invested a lot in cooling facilities for pharmaceuticals. Our flagship in Philadelphia is probably one of the largest in the world for handling pharmaceuticals, and we have wide-body service between Philadelphia and Miami so we can flow all of that in and out of Latin America.
Q. Are there particular ways you need to handle pharmaceuticals?
A. Pharmaceuticals are obviously incredibly valuable, and a lot of times, we are shipping vaccines that need to be maintained at constant temperatures. We have focused on three different temperature ranges that the pharmaceutical companies need for their various products. The aircraft the products go on are also capable of keeping them at a constant temperature.
Our pharmaceutical products business is a very quickly growing segment, and we’re proud to say Miami is one of the key focuses of that.
But it’s not just having the right facilities. It’s also training our employees to handle cargo properly. Every single person who handles the ramp anywhere goes through extensive training.
Q. Do you transport live animals?
A. Since 100 percent of our cargo is in the belly of our planes, we don’t take very large animals like some other carriers. We take pets and animals about to become pets. There is a lot of demand from customers for this as pets more and more become almost like having a child. [Among the more exotic animals AA has transported are a cheetah, an injured turtle that needed to recuperate in the Keys, and a shark that traveled in a special round container so it could swim on board.]
We put a lot of focus on this area of the business. Employees have checklists on how to handle live animals. Our policies tend to be even more restrictive than the guidelines of veterinary associations. For example, we won’t take live animals on any flight over 12 hours. We also do temperature checks [in the areas where animals are held] at all the stops along the way to make sure temperatures are well within the acceptable range.
Q. Many people in Miami are eagerly awaiting the resumption of commercial air service to Cuba. How does cargo fit into this?
A. We’re very excited to start cargo service to Cuba. We have a long record of serving Cuba from a passenger perspective with more than 1,200 flights last year, but this will be our first foray from a cargo perspective. [American has leased its planes to charter companies flying to Cuba.]
It won’t be Day One [American plans to launch its first regularly scheduled flight to Cuba on Sept. 7], but as soon as we’re capable of doing so, we’re going to start offering cargo services on some, if not all, our flights, to Cuba. There’s the opportunity to fly to Cuba and then there are all the various embargo restrictions that will still apply but that will be relaxed over time. We don’t know exactly how this will play out. But when we begin, we expect to be able to quickly ship humanitarian cargoes such as pharmaceuticals and food.
Q. Food — lots of frozen chicken — is one of the things now sent to Cuba by ship. Do you think some of that ship traffic will shift to air?
A. We will be flying narrow-body aircraft to Cuba so our capacity will be limited. I wouldn’t expect to see a huge shift to air because obviously the transit time by ship isn’t incredibly long, but I think there will be primarily express and pharmaceutical opportunities. When we go into a new market, usually there is industry data to pull and see what exists. Obviously with Cuba being brand-new to this type of operation, we are doing our research to figure out what the market will be in the future. We’re looking to adding 12 flights a day from Miami to Cuba and 13 total. [AA also will have a daily flight from Charlotte.]
Q. When passenger service begins, American will be transporting passengers’ luggage. Do you have a time frame when you expect other shippers to be able to send goods?
A. No, I don’t think so. We will start as soon as we can in partnerships with the various governments, and as soon as we know we can do it the right way. Obviously it will be helpful as well to see how much baggage we get on the airplane [when passenger service begins]. We’re learning as we go. But we will start cargo the second we can.
Jim W. Butler
Position: President, American Airlines Cargo
Career: Has been head of cargo operations since Dec. 9, 2013 — the day American and US Airways merged. Before that, he was managing director of commercial planning and performance for the airline. In 2013, Butler was one of six executives appointed to the leadership team responsible for the integration of American and US Airways. Since joining AA in 1996, he has worked in a variety of departments including sales, marketing, pricing and finance.
Education: MBA from Kellogg School of Management at Northwestern University and a bachelor of arts from Cornell University.
Personal: Lives in Lewisville, Texas, with his wife and two young children. “Naturally we like to travel,” he says. Avid snow skier and a licensed private pilot. Speaks fluent Spanish; his mother is Peruvian.