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The weekly newspaper for air cargo professionals Volume: 18
Issue: 30
3 August 2015
Finnair, IAG LTN-HEL joint service
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AG Cargo and Finnair Cargo have entered into a block space agreement for a LondonHelsinki route using a leased Airbus A300-600 Freighter from DHL Aviation, to start in September and to fly twice a week. Operated between London Luton Airport (LTN) (see picture) and Helsinki International Airport (HEL), the A300 freighter has a capacity of 43 tonnes, giving a total weekly tonnage of 172 tonnes. Every year, that will be a capacity of more than 8,000 tonnes. The block space agreement between the two cargo carriers follows Finnair joining IAG Cargo’s Partner Plus partnership in February. Partner Plus is a type of interline agreement where airlines agree to carry each others cargo. Six carriers have been members of the Partner Plus programme, including Qatar Airways, Japan Airlines, the Avianca group and American Airlines. Finnair tells Air Cargo Week (ACW) that the A300F is a new aircraft for the airlines’ fleets, it will operate from September and
it has been: “subcontracted from a third party, namely DHL Aviation,“ adding, “there’s a lot of available freighter capacity in the market at the moment”. With the start of the service, London becomes Finnair’s third cargo hub in Europe, in addition to Helsinki and Brussels. Finnair operates seven narrowbody services between Heathrow Airport and Helsinki. IAG Cargo has two daily narrowbody services between Heathrow and Helsinki. Finnair says it transports
145,000 tonnes of freight and mail annually. It has sales teams in more than 40 countries. Finnair Cargo serves 15 Asian and North American long haul destinations out of Helsinki, and more than 50 destinations in Europe. With the Airbus A350 Finnair is operating from October, the airline says it will eventually double its long haul capacity by 2020. The first A350 route this October is Helsinki to Shanghai (China). Finnair vice president and head of Finnair Cargo, Antti Kuusenmäki,
says: “This partnership with IAG Cargo does not only offer our customers considerably improved connections between Asia and the UK, but also adds tens of new great connections between our Nordic home market, Northern America and Asia.” For Finnair, its customers gain access to markets in South and North America and Africa. For IAG Cargo, Finnair provides additional capacity to destinations in North East Asia. IAG Cargo chief executive officer, Steve Gunning, says: “We have once again expanded our network through an asset-light solution and provided our customers with access to an even greater range of destinations.” In June last year, IAG Cargo started using capacity on Qatar Airways’ Boeing 777 Freighters operating between Hong Kong International Airport and London Stansted Airport. It purchased the capacity after ending its use of Global Supply Systems (GSS) Boeing 747-8 Freighters on a multi-year wet lease agreement.
ACAS pilot programme extended again The US government’s Customs and Border Protection (CBP) agency’s air cargo advance screening (ACAS) pilot programme is asking for new participants as it has been extended again, pushing back the date by which its implementation becomes mandatory for the airfreight community. The ACAS pilot is a voluntary test in which participating companies submit a subset of required advance air cargo data to CBP at the earliest point practicable prior to loading of the cargo onto the aircraft; destined to or transiting through the US. The ACAS data is used to target high risk air cargo. The CBP also says of the advance information, that it must be submitted no later than the time of departure of the aircraft for the US or four
hours prior to arrival in the US, depending on the point of origin. The data is known as seven plus one. The one is the air waybill number. The other seven bits of data describe the cargo and who the shipper and consignee are and their locations. Originally, from October 2012, ACAS was to have run for six months with the first expanded set of participants. It was repeatedly extended to Sunday 26 July this year. The 27 July 2015 US government extension anouncement says: “The CBP continues to receive a number of requests to participate in the pilot.” The new one year extension has an end date of 26 July 2016. The US government is also reopening the application period for new participants for 90 days. The closing date is 26 October 2015. The International Air Cargo
Association (TIACA)says: “Each extension of the pilot period and reopening of the application period has allowed for a significant increase in the diversity and number of pilot participants. TIACA urges industry members to apply to the programme, and especially encourages forwarder and airline participants to actively align in specific lanes or markets to fully test the dual filing procedures. “Dual filing will enable forwarders to file in advance of physically tendering cargo to their carriers, a key benefit in keeping shipments moving smoothly.” The US government anouncement adds: “CBP is considering possible amendments to the regulations regarding advance information for air cargo.”
fish for north america are in demand opportunities across the pond additional freighters, routes and services ongoing asia pacific slowdown continues
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Lithium battery fire contained AMSAFE BRIDPORT claims to have successfully conducted a fire containment cover (FCC) system test, withstanding a lithium-ion battery fire. The UK firm says the blaze was suppressed for more than six hours using its FCC and fire containment bag (FCB). AmSafe Bridport says: “Dangerous goods, including lithium batteries continue to be packed incorrectly, with a large number of accidents and near misses directly attributed to fire from these types of batteries.” The company explains the fire containment range includes the FCC, designed for full protection of a pallet load, and FCB for smaller shipments. Both products provide passive protection from the risk of fire giving the crew additional time to make an emergency landing. Last week, Boeing advised airlines not to carry large quantities of lithium ion batteries in bellyholds until improved packaging is developed. The aircraft maker sent guidance to carriers urging them to not to carry such batteries, “until safer methods of packaging and transport are established and implemented”.
NEWSWEEK
Revenues rise 6.2% in Q2 at TNT
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NT’s new strategy appears to be paying dividends after its second quarter (Q2) revenues rose 6.2 per cent year on year (YOY) to 1.7 billion euros. The Dutch integrator says underlying revenue growth for the quarter was 4.1 per cent, which was driven by the continued growth of revenues from small medium-sized enterprises (SMEs). Operating income was 19 million euros, compared with three million euros in the second quarter of 2014. TNT’s international Europe segment revenues increased 5.1 per cent YOY to 719 million euros, despite lower fuel surcharges. The revenue increase was driven by continued growth from SMEs and improvement of on-time delivery performance. The international Asia, Middle East and
Africa revenues rose 16.3 per cent in the second quarter to €257 million, because of stronger local currencies. The segment saw strong growth from SMEs in Q2. In the domestics segment, revenues increased 4 per cent year-on-year to €655 million. During Q2, TNT says it continued to invest in sorting machinery, vehicles and IT. Next to investing in Liege (Belgium), the company is completing new sorting facilities in Madrid, Eindhoven (Netherlands),
Swindon (UK), Brisbane and Melbourne (both Australia), opening later this year. TNT chief executive officer, Tex Gunning, says: “TNT’s turnaround is progressing well under our Outlook strategy. Service levels and customer satisfaction scores further improved. We are achieving good growth in the SME customer segment after years of decline.” Gunning expects 2015 will be a “transition” year in terms of bottom line performance, as it continues to invest in the transforming the business. “As for the macro economic backdrop, we have experienced some positive developments in Western Europe, but we remain cautious given the economic volatility in China, Brazil, Australia and Greece. During the quarter, FedEx announced its intention to acquire TNT [Express]. The management team believes this is a very positive development for all our stakeholders.”
Aeroflot on target to hit goals
THE Aeroflot Group says it remains on track to deliver, “ahead of schedule,” on its goals to be a European top five and global top 20 airline by 2025. Aeroflot’s Strategy 2025 calls for the targets to be met and the carrier’s chief executive officer, Vitaly Saveliev, says: “Our global targets are ambitious yet realistic. This is underscored by impartial statistics from the most reliable international sources. Aeroflot Group has demonstrated its ability to deliver on its strategic goals even in a challenging environment.” Last week, the Russian carrier also announced its operational results for June and for the first half of 2015. In June, the group carried 13,401 tonnes of cargo, a year on year (YOY) rise of 11.4 per cent on June 2014. For the first six months of 2015, it handled 75,257 tonnes, which is a one per cent fall on the same period last year. In June, the revenue cargo tonne kilometres were 56.6 million, a YOY surge of 9.1 per cent. In the first half of the year it was 317.1 million, a YOY fall of 2.7 per cent. During the first half of 2015, the group added eight Boeing 737-800, one Airbus A319, four Sukhoi Superjet 100 and three Boeing 777-300 extended range. Among the aircraft phased out were nine other 737-800 and one Airbus A320.
Cargolux union agreement CARGOLUX AIRLINES INTERNATIONAL has reached an agreement with Luxembourg’s OGBL trade union on the main points of a new collective work agreement. The carrier says the agreement is effective for three years from October 2015 and the declaration of intent was signed on 24 July. It represents a breakthrough in the negotiations, which have run since September 2014. Both parties intend to finalise the details and final text of the collective work agreement with the aim of signing it on 16 September. Cargolux says as part of the agreement, the number of aircraft at Cargolux Italia will be capped and it will implement the new European flight time limitations to increase flexibility and productivity. Cargolux says the agreement means an improvement in the flexibility and economic efficiency of the carrier and increases competitiveness of Luxembourg as a logistics hub in Europe. Cargolux president and chief executive officer, Dirk Reich, says: “It will not only strengthen Cargolux’s position as a leader of the airfreight industry, it will also secure present and future jobs in Cargolux and will give our customers the certainty that Cargolux shall be a very reliable, flexible and highly competitive airfreight partner in the next decade, well positioned to outperform intensive global competition.” The European carrier says it also remains in dispute with the LCGB pilots union over reaching a working agreement, whose Cargolux members called a 24-hour walk out that begun in the early hours of Thursday 23 July. Despite the industrial action, Cargolux says 73 per cent of its pilots reported to work and 76 per cent of the flights were operated.
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Positive and negatives for United
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nited Airlines saw its cargo revenue fall in the second quarter (Q2) of this year, but in better news it is up for the first half of 2015. The airline’s revenue for Q2 was $229 million, a decline of 1.3 per cent on the $232 million, which was achieved in Q2 last year. United’s cargo revenue for the first six months of the year is up year on year (YOY) by 6.8 per cent to $471 million. This compares to cargo revenue of $441 million in the first six months of 2014. The carrier’s cargo tonne miles (CTM) in Q2 saw a YOY rise of 4.8 per cent to 633 million, up on the 604 million in Q2 last year. For the first half of the year, CTM was 1.29 billion, a YOY increase of 8.9 per cent on the 1.18 billion registered in the same period in 2014. United saw an overall profit of $1.3 billion in Q2. Total revenue was $9.9 billion, which is a YOY decrease of four per cent. In the first half of the year revenue fell to $18.5 billion, a YOY fall of 2.6 per cent. United Airlines vice chairman
and chief revenue officer, Jim Compton, says the carrier will continue to improve its network by focusing on its strengths, while investing in the airline’s people, fleet and products to increase revenue.
NEWS WEEK Profit and margin rise for UPS UPS saw operating profit and margin rise in the second quarter (Q2) of this year, fuelled by international supply chain and freight performance. The integrator’s operating profit in Q2 increased $1.2 billion to $1.9 billion, and total shipments rose 2.1 per cent over Q2 of last year to 1.1 billion packages. Despite the better operating results, the company’s revenue in the quarter fell 1.2 per cent to $14.1 billion, due to currency exchange rates and lower fuel surcharges. UPS chief executive officer, David Abney, says: “During the quarter, UPS continued to invest for the future by expanding capacity and launching new capabilities that provide higher value to customers. “The strong momentum in our International segment is expected to continue and gives us confidence in achieving the upper
end of our guidance range.” UPS says US domestic operating profit in the segment was $1.2 billion, up $35 million. International operating profit increased 17.2 per cent by $81 million. Supply chain and freight revenue fell 4.5 per cent to $2.2 billion, due to forwarding revenue management initiatives, currency and lower fuel surcharges at UPS Freight. Operating profit improved $31 million over Q2 in 2014, driven by gains in forwarding. UPS Forwarding operating profit and margin expanded due to it implementing a, “disciplined pricing strategy across key trade lanes,” as it benefits from improved market conditions and customer mix. But the integrator says tonnage and revenue dropped during Q2, because of revenue management initiatives and the impact of currency fluctuations.
Cargo revenue fall in Q2 at American Airlines, but carrier achieves high quarterly profit AMERICAN AIRLINES’ cargo revenue fell year on year (YOY) by 12.3 per cent in the second quarter (Q2) of this year compared to Q2 in 2014. The carrier’s revenue was $194 million, which was a decline on the $221 million that was achieved in the same quarter last year. For the first six months of the year, the airline’s cargo revenue fell by 9.2 per cent to $388 million from $428 million in the same period in 2014. American Airlines cargo tonne miles (CTM)
in Q2 saw a slight YOY fall of 0.1 per cent to 594 million. The CTM figure was down on the 595 million in Q2 last year. In the first six months of the year, the carrier’s CTM was 1.1 billion, a 0.7 per cent drop on the same period last year. The decline in cargo results came despite the airline achieving the highest overall quarterly net profit in its history of $1.9 billion, up 27 per cent on Q2 in 2014. American’s total revenue in Q2 for the carrier was $10.8 billion, a decrease of 4.6 per cent on Q2 last
year. American Airlines chairman and chief executive officer, Doug Parker, says: “The overall results are especially remarkable considering the significant and successful work underway to integrate two airlines (American and US Airways)” American Airlines invested in its cargo operation in June when it opened a new $5 million 25,000 square foot pharmaceutical cargo cold storage facility in Philadelphia International Airport, in response to rising demand for transportation of complex
pharmaceuticals. The airline explains it will continue to upgrade its fleet and expects to spend $5.4 billion on new aircraft this year. During Q2 it took delivery of 24 new mainline aircraft and nine new regional aircraft and retired 34 older mainline and eight older regional aircraft. In quarter four this year; American will start new bellyhold routes from Los Angeles International Airport to Tokyo Haneda International Airport and Sydney International Airport.
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NEWSWEEK
dnata buys Aviapartner at Schiphol
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nata has agreed a deal with Aviapartner to buy its cargo handling operations at Amsterdam Airport Schiphol. The agreement sees the Emirates Group subsidiary takeover full cargo handling operations, and several specialist product lines. These include the Schiphol Animal Centre and Temperature Control Centre, as well as its freighter ramp handling operations. dnata’s divisional senior vice president of international airport operations, Stewart Angus, says: “Our strategy is to offer the highest level of service excellence in each market we operate. The Aviapartner operation in Amsterdam certainly fits the bill and will enhance our growing international cargo network.” Aviapartner’s cargo operations at Amsterdam comprises 44,000 square metres of cargo warehouse space. It handles 360,000 tonnes of cargo each year, employing 430 staff. “Amster-
dam is a key European cargo hub. We look forward to working with Amsterdam Schiphol Airport to support the continued growth at this important hub,” adds Angus. dnata has expanded its European cargo service in the past two years and with the acquisition in Amsterdam, it will have more than doubled its footprint from four to ten European stations in the past two years. It will now handle more than two million tonnes of cargo at 26 airports worldwide. Completion of the acquisition is subject to competition approval in the Netherlands, which is expected by the end of September 2015. In June, dnata started passenger and ramp handling at Gatwick Airport and provides a full range of airport operations services to airlines flying to the London airport. In the 2014/15 financial year, dnata made a profit of 906 million dirhams ($247 million). Revenue was 10.3 billion dirhams.
Volumes fall at Changi in June CHANGI AIRPORT’s monthly cargo volumes dipped in June for the second consecutive month. The airport handled 151,300 tonnes in June, which was a 2.2 per cent year on year (YOY) fall on the same month in 2014. Changi Airport (see picture) saw more positive news for the first half of 2015, as cargo volumes increased YOY by 0.2 per cent to 912,300 tonnes. This growth was driven by rises in imports and transshipments across Changi’s top five markets, China, Australia, Hong Kong, US and Indonesia. This year the airport has seen unpredictable monthly volumes due to the Asia Pacific slowdown and the impact on cargo markets of the weakening Chinese economy. June’s figure was down on the 157,000 tonnes in May, which itself was a YOY de-
cline of 0.3 per cent. It was also down on April when 153,400 tonnes were processed, when Changi posted a YOY rise of 1.6 per cent. The record month for the year so far is March, when 162,7000 tonnes were handled, which was still a 4.2 per cent YOY on fall. February remains the slowest month of the year for volumes at Changi when 136,000 tonnes were processed, but this was still the biggest YOY monthly increase of the year at 7.3 per cent. In January, Changi handled a similar amount of cargo to June with 150,300 tonnes, which was a YOY uplift of one per cent on January 2014. In last week’s Air Cargo Week, Changi Airport Group (CAG) assistance vice president for cargo and logistics development, James Fong, explained the airport plans on developing its cargo operations and “leveraging” its location in South East Asia. He said growth will come from North East Asia and South West Pacific markets and also highlighted the opportunities for Changi in pharmaceuticals and perishables. Traffic is set to rise at Changi, and last week, CAG signed a memorandum of understanding with Xiamen Airlines to grow bellyhold traffic and connectivity between Changi and China. Last year, Changi handled around 1.8 million tonnes of cargo.
SIA Cargo halves losses in Q1 SINGAPORE AIRLINES (SIA) CARGO halved its operating loss in the first quarter (Q1) of the financial year compared to Q1 last year. For that April to June quarter, the loss was down 50 per cent to nine million Singapore dollars ($6.5 million), compared to 18 million Singapore dollars in the financial year’s Q1 of 2014/15. SIA Cargo carried 282,000 tonnes in Q1, which was a year on year (YOY) increase of 0.4 per cent on Q1 last year, when it handled 278,500 tonnes. Capacity saw a YOY rose in Q1 of 2.6 per cent to 2.56 billion tonne kilometres, up from 2.5 billion in Q1 last year. The cargo load factor fell YOY by 1.3 percentage points in Q1 to 61.1 per cent. The carrier says despite lower revenue stemming from a 7.6 per cent reduction in cargo yield, this was more than offset by the fall in expenditure, mainly from lower fuel costs. As for the future outlook of the business, SIA Cargo, explains: “Air cargo yields are unlikely to see an upturn as industry over-
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capacity persists. SIA Cargo will continue to manage capacity carefully, while actively pursuing opportunities in special product segments to stimulate yields.“ The Singapore Airlines Group as a whole earned an operating profit of 111 million Singapore dollars in Q1. This was 72 million higher than Q1 last year. Group revenue declined by 117 million Singapore dollars to 3.5 billion, a YOY fall of 3.2 per cent. Cargo revenue across the Group saw a decline over last year by 37 million Singapore dollars or 7.2 per cent, because of a 7.6 per cent fall in yield. The Singapore Airlines arm made a profit of 108 million Singapore dollars in Q1, up from the 45 million profit in Q1 in the 2014/15 financial year.
NORTH AMERICAN LOGISTICS
Looking west for new business
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s the US economy has picked up, airfreight volumes across North America have followed in the same fashion, but with the improvement, deals are also being done with markets further west. This is the case at Vancouver Airport Authority, (Vancouver Airport pictured left), where its director of cargo and business development, Raymond Segat, told Air Cargo Week earlier this year that 2014 saw strong growth. The airport handled 256,934 tonnes, an increase of 12.5 per cent over 2013. Segat explains: “2015 has got off to a great start. We recently signed a partnership agreement with Shanghai Airport Authority to study the cold supply chain between the two markets. At the same time, we are looking at the services and facilities employed in the movement of perishables and working with Canadian customs to meet growing industry needs.” The signing of a free trade agreement between South Korea and Canada has also seen Korean Airlines start a twice-weekly freighter service to Vancouver, further boosting traffic. As for where the increased volume has come from, Segat said: “There
has been an increase in perishables including salmon, cherries, geoduck clams, and Dungeness crab.” Further opportunities exist in perishables, Segat said, with high demand from Asia Pacific for seafood and agricultural products. Segat explains that the authority plans on building more facilities: “We aim to build on our strengths, particularly our perishables markets. We are looking at redevelopment opportunities at our cargo village and also working with integrators to address their facility needs.” The Vancouver Airport Authority’s primary target markets for growth are Asia Pacific and the US. On 8 July, Air Canada announced a non-stop three times a week service between Brisbane International Airport and Vancouver that would start in June next year. At the time, Vancouver Airport Authority president and chief executive officer, Craig Richmond, said: “Air Canada is our long time anchor partner and we value their commitment to developing a West Coast hub.” Air Canada operates a daily service to Sydney from Vancouver using a Boeing 777. The Brisbane route will use a Boeing 787 Dreamliner.
Fish for North America are in demand ICELANDAIR CARGO can deliver fish into the US market in 36 hours and according to the airline there has been a year on year increase in seafood volumes to the US every year since 2011. On 22 January, Icelandair started a weekly scheduled Boeing 757-200 Freighter service to Boston Logan Airport (US) from Keflavík Airport. Icelandair Cargo managing director, Gunnar Már Sigurfinnsson, tells Air Cargo Week that demand exists to operate more freighter flights to North America. He says: “Exporting fish continues to be strong, and there is good potential to North America and to Europe. I believe there are a lot of opportunities with fish and we will see that demand continue. Icelandic fresh fish is well received and we can build on that.” He explains that due to the slow pace of imports to Iceland, it has not been viable to operate more freighter flights. But, he is optimistic that as the economy grows, it will
lead to more demand for the importing of goods. In May, Icelandair Cargo announced that, “to service customers Air Iceland even better and seize international opportunties in the North Atlantic area, Icelandair Cargo... will take over the freight department of Air Iceland.”
Ireland is a natural trans-Atlantic bridge TRANS-ATLANTIC routes are a primary goal for Aer Lingus cargo. In April, Aer Lingus announced its midyear daily Dublin to Toronto (Canada) service, which was its fourth trans-Atlantic route launched since late 2014. The route is the latest part of its trans-Atlantic growth plan in 2014, adding to the new San Francisco-Dublin service launched in March. In April, Aer Lingus’ director of cargo, Peter O’Neill, said: “Toronto is a very important market in terms of business links. Aer
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Lingus has a long established supply route to Canada via Boston and New York.” Unrelated to Aer Lingus, but also announced in April was Turkish Airlines using Shannon Airport for flights to North America. On 27 April, Shannon said: “Exporters to the US are to benefit from the launch of Ireland’s only direct all-cargo air service to North America following the announcement today that Turkish Airlines has been granted permission to carry air cargo from Shannon [Airport] to Chicago [US].”
NORTH AMERICAN LOGISTICS
Network expansion to Europe
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edEx’s takeover of TNT Express will give the North American integrator access to the Dutch TNT’s European network, transforming, “its European capabilities”. The 4.4 billion euro ($4.8 billion) takeover is only awaiting European Union (EU) regulatory approval. The EU competition commission rejected a 5.2 billion euro offer for TNT Express by UPS two years ago, but the firms believe the deal will be given the green light as FedEx has less activity in the EU market. On 26 June, FedEx gave an update on its progress to acquire TNT Express. FedEx announced that it has submitted the required filing to the EU Commission to obtain regulatory clearance. As TNT Express is Dutch, FedEx also has to get approval from the Netherlands Authority for the Financial Markets. The integrators say they reached a conditional agreement on Tuesday 7 April for a recommended all-cash public offer of eight euros per ordinary TNT Express share. FedEx and TNT Express say the offer price represents a premium of 33 per cent over the closing price of 2 April 2015 and a premium of 42 per cent, over the average volume weighted price per TNT Express share of
5.6 euros, over the previous three calendar months. FedEx says that customers will enjoy global network access combining TNT Express’ European service and FedEx’s strength in other regions globally, including North America and Asia. FedEx chairman and chief executive officer (CEO), Frederick Smith, says: “This transaction allows us to quickly broaden our portfolio of international transportation solutions to take advantage of market trends, especially the continuing growth of global ecommerce.” FedEx says the TNT Express hub in Liege (Belgium) will be maintained as a significant operation. TNT Express’ airline operations will be sold in compliance with applicable airline ownership regulations in the EU. FedEx says it intends to finance the offer by using available cash resources and through existing and new debt arrangements. TNT Express CEO, Tex Gunning, says: “This offer comes at a time of important transformations within TNT Express and we were fully geared to executing our stand alone strategy.” Both companies anticipate that the offer will close sometime in the first half of 2016.
Opportunities across the pond NORTH AMERICA holds promise for general sales agent Airbridge International Agencies (AIA). “Canadian airline Air Transat is a new customer, which started in November and will operate more routes this year,” AIA’s general manager for Europe, Mark Andrew, says. AirTransat operates across Canada, with destinations including, Alberta, British Columbia, Newfoundland, Nova Scotia, Ontario and Quebec. Andrew, explained to Air Cargo Week earlier this year that the agency is forecasting a 15 per cent sales uplift compared to 2014. Last year, it registered 17 per cent growth on 2013. Andrew says opportunities also lie in the Far East and Europe.
US boosts Cathay Pacific
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est coast seaport congestion in the US helped Cathay Pacific and Dragonair handle 435,429 tonnes in the first three months of 2015, up 12.3 per cent on 2014. The January to March figure for 2015 was up from 387,602 tonnes handled in the same period of 2014. In March, the group’s airlines handled 157,688 tonnes, up 1.5 per cent on the same month of 2014. This follows tonnage figures of 147,275 tonnes in January and 130,467 tonnes in February. January registered a year on year (YOY) rise of 12.5 per cent and February was up by 28.8 per cent on the same month of 2014. Cathay Pacific general manager for cargo, sales and marketing, Mark Sutch, says: “Once again the main focus of our business was on the trans-Pacific lanes, with traffic into and out of North America spurred by the continuing congestion in sea ports on the West coast of the USA.” The year to date load factor increased by 3.2 percentage points to 65.8 per cent. In March it was up by 1.7 percentage points to 68.4 per cent. The load factor has improved throughout 2015, starting at 63.4 per cent in January, before increasing to 65.5 per cent in February. The load factor has risen YOY in each month of 2015, January was up by 2.9 percentage points, February by 6.2 percentage points and March followed with that smaller 1.7 point increase.
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GCC COUNTRIES
Additional freighters, routes and services for Qatar
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atar Airways Cargo is set for strong growth in the second half of 2015 when it welcomes a new freighter and starts additional cargo routes. This upward trend looks set to continue thereafter, as the carrier announced an order for four Boeing 777 Freighters at the Paris Air Show on 18 June, following on from earlier orders for four 777F and two firm Airbus 330 Freighters. The carrier’s chief officer for cargo, Ulrich Ogiermann (pictured below), tells Air Cargo Week this year has been a success and the airline has been, “growing aggressively,” and moved more than 420,000 tonnes in the first half of 2015. Growth has been global for the airline, Ogiermann explains: “The market into Africa is growing, especially out of Asia and the Middle East and this will continue to see growth with the launch of our Airbus 330 Freighter service to Djibouti starting on 3 August. Djibouti is an important market for Qatar Airways Cargo and for the Middle East. This new route will further open up the African market to our customers.” Ogiermann says import and export volumes are developing well in India overall, and Delhi has been strong over the past six months. The first half of the year has also seen strong volumes to
and from Hong Kong (China), Frankfurt (Germany), Amsterdam, Chicago (US), Incheon (Korea) and Dubai. He explains there has been strong growth this year in its QR Pharma service and new freighter routes to Ahmedabad (Pakistan) and Los Angeles (US) are proving a success. A third frequency has now been started to Los Angeles.
The best returns for Qatar Airways Cargo are coming from its specialist service for transporting horses. Ogiermann says: “QR Pharma is also an important product for us and is now available in 54 destinations worldwide, and we have transported 14.1 million kilos of QR Pharma cargo between January 2014 and 1 April, 2015.” Qatar Cargo operates eight 777Fs and six A330Fs, but will introduce its first Boeing 747-400 Freighter to its fleet on 1 August 2015 for its on-demand charter services. The carrier says this will complement its expanding freighter fleet providing 112.5 tonnes of capacity dedicated to worldwide charter services. Ogiermann says in the second half of this year the airline will also continue to receive a strong influx of widebody bellyhold aircraft, which will, “strongly reinforce its global presence”. An additional A330F later this year will also further help reinforce its regional and African network. “We will continue to grow by matching the quantity of our capacity with the quality of our product, with a particular focus on a successive launch of exciting new products, backed up by state of the art ground infrastructure and a team composed of the best talent in the industry,” Ogiermann explains. Gulf carriers are growing strongly and benefitting from the location and connectivity opportunities, but Ogiermann says there are challenges and it is important to maintain a, “consistent, high quality, transportation flow of perishable products”. He says Qatar is the only airline in the region offering quick ramp transfer and refrigerated reefer trucks to eliminate temperature exposure risk and maintain temperature controlled transfers. Ogiermann concludes by saying that he only sees more growth and additional infrastructure, routes and specialist cargo services will be delivered as part of its strategy, including in August a new express airfreight service for door-to-door and time critical shipments, called On Board Courier.
Etihad Cargo continues to grow ETIHAD CARGO is tapping into new cargo markets and has extended its reach into Africa. In June, it started a route from Abu Dhabi International Airport to Maya Maya Airport, Brazzaville, in the Republic of Congo. A Boeing 777 Freighter operates twice weekly from Abu Dhabi to Brazzaville via Lagos Airport in Nigeria. The aircraft has a capacity of 100 tonnes and transports tools, machinery, general cargo, electronics and project equipment. Etihad Airways chief strategy and planning officer, Kevin Knight, says: “Our new freighter service will allow us to capitalise on trade between the Republic and the UAE, and better connect Africa with markets in Europe, the Middle East and Asia.” Etihad Cargo saw 17 per cent growth in freight tonne kilometres in 2014, which it claims was over four times the industry average. The carrier is forecasting significant growth during 2015, which it says will be, “driven by key initiatives to expand its capacity and scope, and to leverage equity and other partnerships”. The airline says it is also exploring opportunities for cooperation with, “like minded cargo operators,” to forge partnerships with. Etihad Cargo has also launched a new service in conjunction with the World Cargo Alliance (WCA) and IT provider Worldwide Information Network. The platform offers instant pricing for all online Etihad origins and destinations, e-booking, electronic air waybill plus track and trace. Etihad Cargo vice president, David Kerr, says the carrier’s future growth will be underscored by its, “ability to meet the needs of our customers, in a rapidly evolving cargo market, whether they are a large company, or small and medium sized enterprise”.
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GCC COUNTRIES
Emirates cashing in on location and network
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mirates SkyCargo’s freighter and bellyhold networks continue to branch out and this shows no signs of slowing down in the years ahead. The airline is making use of its prime location between East and West and the strong growth in the Middle East. The carrier’s cargo manager in the UK, Phil Rawlings, tells Air Cargo Week expansion will continue, “in the face of strong demand, we will continue to add capacity to our cargo network, and are confident this will lead to continued growth throughout 2015 and in to 2016.” Emirates SkyCargo launched a weekly freighter services to Rickenbacker International Airport in Columbus (US) in May and to Ouagadougou Airport in Burkina Faso in January. These have boosted cargo volumes and in the 2014-2015 financial year to 31 March, Emirates SkyCargo handled 2.4 million tonnes, up on the 2.3 million in 2013-2014. Revenues grew from $2.8 billion in 2013-14, to $3.4 billion in 2014-15. Rawlings says the carrier has seen steady growth in both the Middle East and Africa and to traditional markets such as Australia, New Zealand and China. He says a mix of industries, which vary from region to region, are driving growth: “The clothing and pharmaceutical sectors have a significant impact on trade volumes across our global network,” Rawlings notes. “We have the advantage of operating in an economically growing region, with lots of investment in infrastructure and development taking place – all of which bodes well for our cargo operations,” Rawlings explains. “Being based in Dubai means we have the strategic advantage of our geo-centricity. We can move cargo across our network, between East and West and vice versa, with just one stop at our hub in Dubai, which is equipped with state of the art cargo facilities.” Emirates SkyCargo operates bellyhold services to more than 240 destinations and Rawlings says capacity will continue to grow as more routes are added. “In addition to new routes, we can increase cargo capacity by deploying larger aircraft, or increasing the frequency of services on an existing route. For example, the introduction of a Boeing 777-200LR [longer range] to our Barcelona route in May added significant cargo capacity, with just over 230 tonnes added per week.” Emirates continues to renew its fleet and last week it announced that it was retiring its last Boeing 777-200. The airline plans to enter into service 26 aircraft this year. Its fleet at the moment is 234 aircraft. In 2014 and so far this year, Emirates has retired three Boeing 777-200 and eight Airbus A340-500. Depending on
the aircraft agreement, Emirates either returns them to the lessor or sells them on the market. The move of its freighters from Dubai International Airport to Al Maktoum International Airport at Dubai World Central’s
(DWC) has improved operations. Rawlings notes the new cargo terminal at DWC offers the capacity, which positions Emirates SkyCargo for “future growth” and enables the cargo division to provide a “better experience for its customers”. An issue the carrier is at the heart of the debate about is the subsidy and unfair competition allegations levelled at Gulf airlines by US carriers, Delta Air Lines, United Airlines and American Airlines. Emirates president, Tim Clark, says the methods employed by the US legacy carriers to discredit Emirates have been “surprising and frankly, repugnant”. He feels there are no grounds to ask the US government to freeze Emirates’ operations to the US or pursue other action under the countries’ Open Skies agreement. Clark explains: “We are absolutely not subsidised, and our operations do not harm these legacy carriers, but instead benefit consumers, communities and America’s national economy. “The subsidy allegations put forward are patently false. We have been profitable for 27 years straight, and unlike our accusers, we have never depended on government bail-outs or protection from competition.” Clark adds that expansion is funded through cash flow and debt obtained via banks and financial institutions.
Dubai freight strategy paying off DUBAI continues to grow its cargo volumes through freighter traffic gains at Al Maktoum International Airport at Dubai World Central (DWC) and bellyhold growth at Dubai International Airport. All freighter operations have been moved from Dubai International Airport to DWC, where there are now more than 25 carriers. The latest to join was China Airlines in April. Cargo volumes at DWC have risen significantly since freighters were moved to it from Dubai International, and it became Dubai’s cargo hub. In the first quarter of 2015, freight volumes at DWC surged 177.3 per cent to 213,006 tonnes, up from the 76,816 achieved in the same period last year. Dubai Airports chief executive officer, Paul Griffiths, says Al Maktoum has emerged as one of the top 20 busiest international cargo airports, which “demonstrates the growing importance of the airport as a vital hub between east and west”. The airport operator is expanding Al Maktoum in a project worth $32 billion and once complete it will have capacity to handle 16 million tonnes of cargo a year by 2030, up from the one million capacity it has now. Dubai International’s cargo volumes have been on the slide due to the shift, but in May volumes rose by 15.5 per cent in May compared to the same month in 2014. Dubai Airports says the gateway handled 216,712 tonnes in the month, up on the 187,688 tonnes in May last year. In the first five months of 2015, Dubai International handled just over one million tonnes of bellyhold cargo, which is a one per cent fall on the same period last year.
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MARKET ANALYSIS
Yielding to the inevitable
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oeing’s order from EVA Air Cargo for five of its Boeing 777 Freighters, confirmed in July, would seem to point to an airfreight market confident of its future and expecting to meet the positive expectations outlined by the likes of the US aircraft maker in its industry predictions, but is it a true reflection? At the Paris Air Show in June, Boeing published its 20 year forecast and announced an order of 20 Boeing 747-8 Freighters for Volga-Dnepr Group’s AirBridgeCargo Airlines, as well as nine more freighters split between Qatar Airways and EVA Air - the order later confirmed in July. The Boeing forecast, its current market outlook 2015-2034, predicts a need for 920 production freighters over that period. This is higher than the 800 it predicted at the Farnborough Air Show in July last year with a current market outlook stretching out from
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2014 to 2031. That saw a reduction from the Boeing World Air Cargo Forecast, which was last published in 2013 and had predicted 5.2 per cent freight tonne kilometre (FTK) growth over the next 20 years. The July forecast also cut the FTK prediction to four per cent. But, this year’s outlook sees cargo traffic growing at about 4.7 per cent per year. This is more conservative than the International Air Transport Association (IATA) analysis for this year. In the same month as this year’s Paris Air Show, IATA published its mid-year report about the state of the airline industry, including airfreight. Forecast to grow 5.5 per cent this year, airfreight yields are expected to fall by about seven per cent as capacity increases by 6.2 per cent, a rise of 0.8 percentage points against last year, says IATA. The forecast was announced on 8 June at IATA’s 71st annual general meeting and world air
transport summit in Miami. IATA published its first mid-year report. The mid-year report foresees the 5.5 per cent growth leading to 54.2 million tonnes being transported in 2015. Despite the expected tonnage increase, the cargo related revenue is going to be $62 billion for 2015, one billion dollars less than 2014. The revenue stagnation reflects those squeezed yields. The Airports Council International (ACI) quarterly report for January to March 2015, published in May, gave more conservative figures for airfreight. It said, this year has seen total airfreight volumes grow by 4.4 per cent from January to April, compared to the same period last year, according to ACI. The association says a slowed growth in April came after an upsurge in February, due to the timing of the Chinese new year celebrations, and the modal shift from sea freight to aviation resulting from congestion at West coast US sea ports - which has since ended. Of that 4.4 per cent for the total airfreight, domestic was lower and international was higher, with a substantial increase of more than 12 per cent in February. Such double digit growth would seem to indicate good revenues, but as the IATA data shows, revenue will probably be lower this year than last. Freight, rates and the inclusion of what had been fuel surcharges, has been hotly debated for many months and in IATA’s report it shows that at slightly more than $2 per kilogramme the market’s rates are 66 per cent less than they were in 1994. In 2014, IATA estimates that yields shrank two per cent. It is because capacity continues to grow as bellyhold space is added to the market with the expansion in passenger services, which has been averaging six per cent per year for the last five years. With this average of six per cent growth, the freight load factor is expected to remain at a weak 47.4 per cent this year. IATA says: “The longer term prospects for air cargo remain challenging with a continuing post-financial crisis trend of slower trade growth relative to [gross domestic product].” With such market analyses and forecasts, the freighter orders seen in June would not seem to be representative of the potential future demand for new aircraft. In contrast to Boeing’s 29 freighter orders in June, Airbus has not sold a single one of it Airbus A330-200 Freighters in
2015, so far, and did not sell one in 2014 either. It did deliver one aircraft. Like Boeing, Airbus’ own market forecast, the Global Market Forecast 2015-2034, published at the Paris Air Show this year, predicts 1,054 more freighters, a rise in the fleet from 1,633 today to 2,687 in 20 years time, with 804 new freighter deliveries. This is a reduction from Airbus’ first publication of the Global Market Forecast in 2013 when it predicted that 871 freighters will have to be built by 2032. Airbus’ confidence in freighter sales maybe reflected in its announcements about new aircraft programmes over the last 18 months. Airbus’ freighter, the A330-200F, is now one of seven different types of A330 that the European aircraft maker has. In 2014, Airbus announced its Airbus A330 Regional, the Airbus A330-800 new engine option (neo) and Airbus A330-900neo, but no new freighter. In 2012, Airbus, its then conversion company, Elbe FlugzeugWerke, and Singapore-based ST Aerospace, agreed to work on the A330 Passenger to Freighter (P2F) programme. In 2014, the A330P2F launch customer, Egypt Air Cargo, was revealed. The other products being the original bellyhold only, Airbus A330-200 and Airbus A330-300. At the Farnborough International Air Show in 2014, Airbus’ chief operating officer for customers, John Leahy, told Air Cargo Week that there is no plan for an A330-200Fneo. At the Paris Air Show this year, Airbus launched its A320 family P2F programme. According to its freighter order and delivery data, Airbus has 10 A330 production freighters left to deliver. Is Airbus ever going to deliver another or it is going to purely offer converted freighters, either A330s or A320s? While Airbus and Boeing predict thousands of freighters, their forecasts for bellyhold aircraft dwarf the airfreight sector. Ninety per cent of freight can go in the bellyhold. Twenty years from now, Boeing foresees the world fleet growing by about 20,000 to more than 40,000 aircraft - while freighter growth is no more than 1,000. Twenty years from now its probable the worldwide airline network will make it less likely a freighter will be needed to go to a certain airport, because there will be sufficient bellyhold capacity going already. With squeezed yields, a vast bellyhold network, who needs a freighter?
TRADEFINDER Airlines
Charter Brokers
Turkey
United Arab Emirates
Freight Forwarders China
Italy
Freight Forwarders Jamaica
Freight Forwarders Hong Kong
AZura Productions
United Arab Emirates
USA
Industry Events
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NEWSWEEK Ongoing Asia Pacific slow down continues, warns AAPA THE slowdown in Asia Pacific continues with June seeing a slight 0.5 per cent fall in demand, compared to the same month last year, according to the Association of Asia Pacific Airlines (AAPA). The association says preliminary figures for the month show air cargo markets have, “softened,” and the recent moderation in the region’s airfreight volumes extended into the month. AAPA says demand in freight tonne kilometres (FTK) in June was 5.3 billion. Capacity in available freight tonne kilometres (AFTK) was 8.3 billion, up 2.5 per cent. The freight load factor in June fell by 1.9 percentage points to 64.1 per cent. The FTK figure in June was down on the 5.4 billion in May, but slightly above the 5.3 billion in April, and down on March when FTK was 5.9 billion. It was up on February and
January when FTK was 4.8 billion and 5.1 billion, respectively. The AFTK total in June was a decline on the 8.5 billion in May, the 8.4 billion in April and the 8.6 billion in March. June’s figure was up on the 7.4 billion in February and the same as the 8.3 billion achieved in January. Demand for the first half of the year has risen compared to the same period last year. FTK for the first six months of 2015 was up 4.8 per cent to 32.1 billion. AFTK is up by 4.9 per cent to 49.9 billion. The freight load factor for the first six months of 2015 was 64.4 per cent, which is a 0.1 percentage point rise on the same six months in 2014. AAPA director general, Andrew Herdman, says: “Air cargo demand grew by 4.8 per cent during the first half of 2015, but the pace of growth has moderated during recent months
after the earlier boost in demand due to the US West Coast ports strikes wore off.” Looking ahead, Herdman explains the outlook for air cargo markets is uncertain, with signs of a slowdown in global trade. “In general, Asian carriers remain focused on improving profitability, including careful adjustments to route networks in response to changing patterns of demand,” he adds. The AAPA data follows on from Airports Council International’s figures which showed that worldwide cargo volumes in May fell year on year (YOY) at 15 of the world’s 30 busiest airports - by total tonnage. The airport association revealed the figures in its FreightFlash statistics for May, which are based on preliminary data and cover 70 per cent of the total airfreight traffic across the globe. ACI says in May, total YOY cargo growth dipped to a one year low of 1.3 per cent.
Falling cargo at All Nippon Airways
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ll Nippon Airways (ANA) international and domestic cargo revenues both fell in the first quarter (Q1) of the financial year. For this quarter, ending on 30 June, the airline saw international cargo drop year on year (YOY) by 1.6 per cent or 0.4 billion Yen ($3.2 million). Domestic cargo fell YOY 0.4 billion Yen or 5.4 per cent. The carrier’s international cargo revenue in Q1 was 28.8 billion Yen. It carried 191,000 tonnes of freight and its cargo tonne kilometres were 828 million. ANA says internationally it: “Worked to capture trilateral traffic demand between North America and Asian cities via Japan, but as a result of the stagnant cargo market, both on flights departing Japan for China and other Asian countries, and also on flights to Japan, freight volume and revenues decreased YOY.” The airline’s domestic revenue in Q1 was 7.2 billion Yen. It carried 104,000 tonnes and
its cargo tonne kilometres were 106 million. ANA says domestically it: “Introduced a new sales system designed to facilitate space availability at the real time. However, as a result of a decrease in the supply for fresh produce because of typhoons and other inclement weather and a reduced volume of international cargo transferred to domestic flights due to yen depreciation, both freight volume and revenues decreased YOY.” ANA’s total revenues increased by seven per cent in Q1 compared to the previous year, reaching 413.8 billion Yen. The airline says the overall performance reflected expansion in its network and capacity along with improved efficiency and cost restructuring, which drove strong increases. ANA explains: “Despite downside risks to the economy in [the] overseas market, the Japanese economy continued to recover gradually with signs of a rebound in capital investment and personal consumption during the first quarter.”
Hawaiian adopts new IT system HAWAIIAN AIRLINES is to introduce a new cargo revenue accounting system aimed at optimising performance of its freight operations. The carrier will use Accelya’s Revera cargo revenue accounting technology, which it says will, “seamlessly,” interface with its cargo operations system. It will enable the airline to perform data quality checks on information coming from the cargo system. Hawaiian Airlines says the system will also enhance cash flow through accurate and timely billing, maintain integrity
and reconcile all cargo revenue accounts and reduce cycle time of cargo revenue declaration. Hawaiian Airlines vice president of cargo, Tim Strauss, says: “Hawaiian’s cargo business has more than doubled in the past three years, so finding the right partner for our cargo revenue accounting needs is extremely important to the enterprise.” Accelya’s Kale Solutions executive vice president and head of airlines, Neela Bhattacherjee, says he is confident the cargo revenue accounting system will, “add value” to the airline’s cargo operations.