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The weekly newspaper for air cargo professionals Volume: 18

Issue: 23

15 June 2015

2015 to see cargo up, yields down


irfreight is forecast to grow 5.5 per cent this year, but yields are expected to fall by about seven per cent as capacity increase by 6.2 per cent, a rise of 0.8 percentage points against last year, says the International Air Transport Association (IATA). The forecast was announced on 8 June at IATA’s 71st annual general meeting and world air transport summit in Miami (US). IATA published its first mid-year report and announced it was ending its quarterly Airline Financial Monitor report. The mid-year report foresees the 5.5 per cent growth leading to 54.2 million tonnes being transported in 2015. In 2014, the total estimated tonnage was 51.5 million tonnes. But, that tonnage increase is a decrease against 2014’s growth of 5.8 per cent, according to the association. IATA qualifies its data by stating last year’s figures are still estimates. 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. 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].” These lower prices are aiding what IATA refers to as a, “cyclical upturn”. According to the associa-

tion, “a cyclical upturn is evident. Cargo is…expected to see its strongest growth since 2010. The upturn in economic activity driving these expectations is fragile, as weakness in Europe and Asia has shown.” In Asia, IATA says the slowdown in China’s economy seen in the last 12 months has also affected Asia Pacific carriers profitability. The report says Asia Pacific airlines have about 40 per cent of the global air cargo market and as such as, “they have been disproportionality impacted by the weak airfreight market.” With the fundamental problem being world demand, IATA points to an easing of fiscal austerity policies, continued expansionary monetary policy and progress in delivering the private sector, as factors that can boost trade and airfreight – and it cites the US as one economy where these sorts of policy changes are having a positive effect. If the IATA forecast is largely right, this year will have been another year of struggle, but one more step in the right direction.

UK runway decision slips into the distance The UK government has been urged not to delay making a decision on increasing runway capacity, following concerns it will not formally respond to its own Airports Commission for some time. The Airports Commission, which the UK government established in 2012 to examine runway capacity options in South East England, is due to report in the next couple of months. The Freight Transport Association (FTA), campaign group Let Britain Fly, and asset management company, SEGRO, have all expressed concern that the government will not respond promptly to the commission’s recommendations. Let Britain Fly director, Gavin Hayes, tells Air Cargo Week: “The political procrastination needs to stop. The urgency of the situation

requires the government to grasp the moment and respond to the Airports Commission’s final report in a timely manner and get on and make a swift decision.” Hayes says Heathrow Airport is running at capacity, Gatwick Airport will be full by 2020 and London’s other airports will join them by 2030 if nothing is done. He adds: “It is unbelievable that it has already taken the best part of three years for a government commission to conclude that London needs one new runway by 2030. Kicking the can down the road for another year is no longer an option.” The UK government department for transport says: “We are determined to make progress on this vital issue, but we need to carefully consider the Airports Commission’s full body of

work before setting out next steps.” SEGRO chief executive officer, David Sleath, says he supports expanding Heathrow but wants the government to get on and make a decision. FTA chief executive, David Wells has written to the UK prime minister, David Cameron, highlighting the importance of airfreight and saying that if Heathrow declined it would make freight and logistics more expensive. Wells says the FTA supports expanding Heathrow, as it does not think Gatwick has suitable cargo infrastructure. The commission, headed by Sir Howard Davies, has shortlisted three proposals to expand London’s runway capacity. The three options are build a third runway at Heathrow, extend the Northern runway at Heathrow or construct a second runway at Gatwick.

may sees small slip for lufthansa cathay appoints cargo director challenges WITH growth

e-cargo aids forwarders





Heathrow fall fuels runway demands HEATHROW AIRPORT has seen cargo volumes fall year-on-year (YOY) for the first time in 2015, with a 0.7 per cent dip to 125,067 tonnes in May. Though May had the second highest tonnage figure of 2015 after March, all the other months saw growth of over two per cent YOY. January saw a YOY increase of 3.3 per cent to 115,847 tonnes, followed by growth of 7.7 per cent in February to 118,248 tonnes. March was up by 2.9 per cent YOY to 136,842 tonnes followed by a 2.2 per cent increase in April to 122,879 tonnes. Between January and May, cargo volumes increased by three per cent to 618,883 tonnes. Heathrow Airport chief executive officer, John Holland-Kaye says the figures show the need for increasing capacity. “The growth in...exports to emerging markets shows how only Heathrow expansion will keep Britain at the heart of the global economy.” From June 2014 until May 2015, cargo volumes have increased by 4.9 per cent to 1.5 million tonnes because of growth to emerging markets. The airport says trade with Mexico increased by 44 per cent and Brazil was up 21 per cent.

NEWSWEEK Desert irrigation to sow seeds for biofuel


oeing is to start growing halophyte plant in the next few weeks with the goal of producing sustainable biofuel in the United Arab Emirates (UAE) using halophyte plants. Boeing is part of the sustainable bioenergy research consortium (SBRC) and it is planting the halophytes in the desert and irrigating them with seawater from fish and shrimp farms. It says the plant seeds contain oil, which is suitable for biofuel and is more suitable than other feedstocks. Boeing claims this biofuel can reduce carbon emissions by up to 80 per cent compared to fossil fuels. The SBRC is affiliated with the Master Institute of Science and Technology in Abu Dhabi, and is funded by Boeing, Etihad Airways and Honeywell UOP, an oil refining technology company. Boeing Commercial Airplanes

tells Air Cargo Week (ACW): “There is a goal to have the project working fully by later this year with biofuel to be produced and demonstrated with a test flight as soon as possible after that.” Boeing says planting of the plants and related construction of the farming project will start within the next few weeks, but was unable to give an exact date. Once the water has been used on the halophyte plant species, called salicornia, it will be

diverted to mangrove forests. SBRC director, Alejandro Rios, says: “It will provide sustainable food ... it will produce renewable energy in the form of bio jetfuels, bioethanol, biogas and green diesel from oil rich native plants, it can produce ... biochemicals .” Boeing also says its collaboration with South African Airways (SAA) to produce biofuel from the nicotine free plant, Solaris, has produced two harvests with a third one expected this year. Boeing and SAA hope to be able to use the fuel this year, but no date has been given. Boeing has been working on other biofuel projects such as establishing a joint research centre with aircraft maker Embraer in Sao Jose dos Campos (Brazil) to use sugarcane. In Brazil, it has also been working with GOL Airlines to develop sustainable biofuels.

Freight up one fifth in Abu Dhabi

ABU DHABI INTERNATIONAL AIRPORT continues to post significant increases in cargo volumes in 2015 after it saw a year-on-year (YOY) rise of 19.3 per cent in April. The airport’s operator Abu Dhabi Airports says it handled 71,650 tonnes, which was the busiest month so far this year. This was up on the 60,059 tonnes handled in April 2014. April’s total is slightly up on March when 71,581 tonnes were processed, but nearly 8,000 tonnes higher than the 64,067 tonnes in February and the 64,479 tonnes handled in January. The year-to-date volumes figure for the first four months of the year stands at 271,777 tonnes, which is up YOY by 11.7 per cent on the 243,403 tonnes in the same period in 2014. Abu Dhabi Airports chief operations officer, Ahmad Al Haddabi, says the double-digit growth in cargo activity every month, makes it one of the fastest growing aviation hubs in the world. He says the airport is striving towards delivering “optimum services and facilities”. Al Haddabi says that bellyhold volumes were boosted by new services into Abu Dhabi operated at the end of March by South African Airways, which launched an inaugural route to Johannesburg and by Alitalia adding services from Milan and Venice. In April 2015, the top five routes from Abu Dhabi were London Heathrow, Bangkok, Manila, Doha and Bombay. Abu Dhabi also expects volume to increase when it opens its Midfield Terminal Building in 2017. Last year, Abu Dhabi saw cargo volumes rise by 12.8 per cent to 797,069 tonnes, but it is on target to surpass that figure in 2015.

Emirates bolsters Pakistan service EMIRATES is to start flying to Multan (Pakistan) on 1 August using a Boeing 777-300, making it the fourth new destination the airline has launched in 2015. The airline will fly to the city four times a week, leaving Dubai at 18.20h on Mondays, Tuesdays, Wednesdays and Saturdays, arriving in Multan at 22.00h. The return flight will leave Multan at 23.30h and arrive in Dubai at 01.20h. The flights will offer 23 tonnes of capacity each way. The airline says the exports from Punjab province, where Multan is situated, include textiles, pottery and surgical equipment. Emirates will start additional flights to Karachi on 1 July on Wednesdays, Thursdays, Fridays, Saturdays and Sundays. Emirates senior vice president for commercial operations in West Asia and Indian Ocean, Ahmed Khoory, says: “The additional services to Karachi and the introduction of Multan to our network will position Pakistan as Emirates’ fourth most highly served country worldwide with 80 return flights a week operating between Dubai and Pakistan.” This year, Emirates started services to Rickenbacker, Orlando (both US) and Bali (Indonesia). On 27 May it started weekly Dubai - Copenhagen - Rickenbacker flights using a Boeing 777 Freighter on Wednesdays. It started daily flights to Bali on 3 June using a 777-300 Extended Range. Emirates will start daily flights to Orlando on 1 September using a Boeing 777.


ACW 15 JUNE 2015

Improving airline finances get North American boost


orth American carriers drove the improving financial performance of airlines in the first quarter (Q1) of 2015, a report by the International Air Transport Association (IATA)

has found. The association’s Airlines Financial Monitor for April to May, which sampled 56 airlines around the globe, shows the industry improved significantly on Q1 in 2014 at both an operating and net profit level. IATA says airlines in North America fuelled the better Q1 figures, through consolidation and cost cutting, which has boosted profitability and lower fuel costs. Asia Pacific airlines have also improved compared to Q1 2014, and Chinese carriers recorded solid Q1 profit results, which IATA says was due to strong demand and improved operational efficiency. In Q1, the 56 carriers sampled by IATA had an operating profit of $8.3 billion and a net post-tax profit of $5.1 billion. These same air-

lines in Q1 2014 had an operating profit of $708 million and a net post-tax profit of minus $1.3 billion. IATA says worldwide airline share prices were up 12 per cent in April on a year ago, despite some recent weakness due to the strength of the US dollar. Crude oil prices rose slightly in May, buoyed by slowing inventory growth in the US, but are up 15 per cent on March, though still 40 per cent lower than the highs in 2014.

IATA to help Mexico airport

“This increase in oil prices has largely come as a result of changes in supply conditions,” IATA says. As for airfreight volumes, IATA says freight tonne kilometres (FTK) in April rose 3.3 per cent on April 2014. For the first four months of 2015, FTK was up 4.3 per cent compared to the same period in 2014. This was driven by 12.3 per cent FTK growth in the Middle East and 7.3 per cent FTK growth in Asia Pacific. “Volumes were broadly flat in April compared to March, and in fact there has been no acceleration in the growth trend since late 2014. This development is consistent with a trend change in world trade, particularly in emerging Asia, where volumes are down 10 per cent compared to Q4 2014,” IATA explains. The association says airfreight capacity in available freight tonne kilometres (AFTK) was up 5.5 per cent in April on the same month last year. AFTK was up 4.9 per cent in the first four months of 2015, compared to the same period in 2014.

NEWS WEEK WorldNews THE TRANSPOREON GROUP, an e-logistics specialist, has appointed Peter Schmidt as chief sales officer, and he is also a managing partner. He will be responsible for sales in the group. Previously, he was managing director and vice president of the Adobe Group and responsible for business in central Europe, Russia, Eastern Europe as well as the Middle East with a focus on business customers. QATAR AIRWAYS CARGO has unveiled an updated website to showcase a track and trace application that will offer customers real time information regarding their shipments, which can be traced online using Google Android and Apple phones and computer tablets. Customers can access flight schedules, check the route of their airfreight and book charter services.

MEXICO City’s proposed $9 billion airport will get technical and operational assistance for the design and construction from the International Air Transport Association (IATA). IATA has signed a memorandum of understanding (MoU) with the Mexico government’s Ministry of Communications and Transportation. The agreement will also see the association give technical and professional advice to the existing Mexico City International Airport to ensure it continues to operate efficiently until the new facility is completed around 2020. The MoU was signed by representatives of the General Directorate of Civil Aviation (DGAC) of Mexico, the Mexico City Airport Group, and the present Mexico City International Airport at IATA’s 71st annual general meeting and world air transport summit in Miami (US) from 7-9 June. IATA’s director general and chief executive officer, Tony Tyler, says: “IATA is pleased to be working with the Mexican authorities from the early stages on one of the region’s most significant air transport infrastructure projects. By working together we can ensure that the right decisions are made.” DGAC director general, Gilberto López Meyer, says the MoU will allow the Mexican government to understand and adopt global best practices in the design of large scale hub airports, which it can then use in construction of the airport. The MoU also has a provision for the study of the slot management at Mexico City International Airport, where capacity is saturated. IATA will also continue its work with local authorities to ensure slots at Mexico City International are optimised.

Venezuela cash crisis goes on AIRLINES have $3.7 billion in ticket sales trapped in Venezuela due to currency controls in the South American country, the International Air Transport Association (IATA) says. IATA called on the Venezuelan government on Monday 8 June to address the problem and says the blocked money is in breach of international treaties. Venezuela has a system of currency controls in place by which the government dictates when and how much revenue airlines can repatriate from the country. At one stage last year, more than $4.1 billion was trapped in Venezuela, but the government released some money last year. Over the last 18 months this has lead to carriers such as American Airlines, Delta Air Lines, Air Canada, Alitalia and Lufthansa cutting cargo capacity. Airlines have stopped using Venzuela’s bolivar currency. The association is calling on the government to work on a payment schedule to settle blocked funds. It also wants the government to commit to a global best practice of consulting the industry before imposing any taxes or regulations that affect carriers.

ACW 15 JUNE 2015



Double-digit fall for Air France-KLM


ir France-KLM-Martinair has seen cargo volumes fall by 10.4 per cent to 3.7 billion revenue tonne kilometres (RTK) between January and May, though the declines in May were smaller than in April. In May, RTK was 741 million, up from April when it was 703 million, but down on March at 822 million. May was up on January and February when RTK was 713 million and 726 million, respectively. In May, RTK fell by 12 per cent, year-on-year (YOY), which follows a 14.9 per cent fall in April. Each month of 2015 has seen YOY falls in RTK, starting at eight per cent in January, 8.2 per cent in February and 8.7 per cent in March. Available tonne kilometres (ATK) have fallen by 3.5 per cent year-to-date to 6.1 billion. In May, ATK fell by 4.8 per cent to 1.2 billion, with freighter capacity cut by 25 per cent compared to May 2014. Capacity has been cut in every month of 2015, but it has not fallen as quickly as

FTK. ATK in January fell by 1.7 per cent to 1.2 billion, and then by 3.1 per cent YOY in February to 1.1 billion. March saw ATK being cut by 0.9 per cent to 1.3 billion, followed by a seven per cent YOY reduction in capacity in April to 1.2 billion. The load factor between January and May fell by 4.6 percentage points to 60.1 per cent. In May, the load factor fell by 4.8 percentage points to 59.4 per cent. Every month of 2015 has seen the load factor falling YOY. In January, the load factor fell by 3.8 percentage points to 56.6 per cent. February was down by 3.4 percentage points to 62.8 per cent. The load factor in March fell by 5.3 points YOY to 62.4 per cent, followed by a 5.5 point YOY drop in April to 59.4 per cent. In the first quarter of 2015, Air France-KLM-Martinair saw cargo revenue fall by 7.5 per cent to 625 million euros ($697.5 million). The cargo division saw losses increase from 34 million euros in the first quarter (Q1) of 2014 to 63 million in Q1 2015.

May sees small slip for Lufthansa

LUFTHANSA CARGO saw cargo fall year-onyear (YOY) by 1.4 per cent in May as it failed to fill additional capacity. The carrier handled 138,000 tonnes, a rise on the 134,000 tonnes in April, but a drop on the 149,000 in March. The May figure was up on the 127,000 in February and the 117,000 in January. The year-to-date (YTD) tonnage for the first five months of the year is up by 0.9 per cent to 672,000 tonnes. In May, the available cargo tonne kilometres reached 1.1 billion; up YOY by 3.2 per cent and the YTD figures is five billion, up

3.3 per cent on the same period last year. In May, the revenue cargo tonne kilometres were 720 million, a YOY decline of three per cent and the YTD total is 3.4 billion, a YOY fall of 0.3 per cent. Lufthansa Cargo says the figures for May were solid, but it could not sell its additional capacity in May and adds the cargo load factor dropped YOY by 4.1 percentage points. The cargo load factor in May was 64.4 per cent and the YTD figure for the first five months of 2015 is 68.1 per cent, 2.4 percentage points down on the same period in 2014. Lufthansa Cargo operated 786 flights in May, a YOY fall of 4.3 per cent. This year it has run 3,778 flights, a drop of 8.3 per cent on the same period last year. The Lufthansa Group as a whole handled 157,000 tonnes of cargo in May, a YOY fall of 2.4 per cent. The YTD figure is 766,000, a YOY decline of 0.6 per cent. Last month, Lufthansa Cargo posted improved first quarter results compared to 2014. The carrier’s cargo revenues rose 5.3 per cent to 614 million euros ($684.3 million). That month, Lufthansa Cargo chief executive officer, Peter Gerber (see picture), told Air Cargo Week he expects the carrier’s volumes to grow between one and two per cent this year. The airline also announced in April that it has put back plans for its Lufthansa Cargo Centre Neo (LCC Neo) project by two years, due to finances.

9,800 tonne YTD fall for Finnair FINNAIR has seen cargo volumes fall by 16.2 per cent, about 9,800 tonnes, to 50,964 between January and May, with May posting the biggest year-on-year (YOY) decline of 2015 so far. In May, Finnair handled 10,301 tonnes, putting it above January, when it handled 9,346 tonnes. February saw 9,785 tonnes and April 10,233. The May figure is below the yearly high in March, when Finnair handled 11,299 tonnes. Each month of 2015 has seen falls in cargo volumes, with every month except February registering double digit drops, compared to 2014. May saw cargo volumes fall the most, by 20.3 per cent YOY. In January, cargo volumes fell by 17.1 per cent YOY, followed by a smaller YOY drop of 6.8 per cent in February. March was down by 16 per cent followed by a 19.2 per cent YOY fall in April. Finnair says: “The cargo overall figures reflect a structural change from the comparison period, as Finnair withdrew from the use of leased Nordic Global Airlines freighter aircraft capacity in Asian traffic.” From January to May, the load factor fell


ACW 15 JUNE 2015

by 9.6 percentage points to 54 per cent. Every month of 2015 has seen the cargo load factor fall YOY. January had the lowest load factor of 46.9 per cent, a YOY decline of 14.2 per cent. February saw the highest load factor at 57.1 per cent and the smallest YOY decline, of 5.9 percentage points. The load factor was 56.6 per cent in both March and April, which were YOY declines of 12.3 percentage points and 6.3 percentage points, respectively. So far this year, all areas except Asia have seen declines in cargo volumes. Asia grew by 0.3 per cent to 32,008 tonnes, making it the largest region. European tonnage fell by 10.1 per cent to 8,581 tonnes, the North Atlantic was down by 4.1 per cent to 3,161 tonnes and domestic volumes declined by 7.7 per cent to 701 tonnes. In May, Asian traffic declined by 4.4 per cent YOY to 6,644 tonnes. Europe saw the largest decline of 19.5 per cent to 1,785 tonnes. North Atlantic cargo was down by 13.9 per cent to 500 tonnes and domestic volumes fell by 4.8 per cent to 136 tonnes.

Cargo ton miles fall for American Airlines


merican Airlines has seen its cargo ton miles (CTM) fall by 2.6 per cent year-on-year (YOY) in May compared to May 2014. The airline says CTM was 199.6 million in the month, a decline on the 204.9 million recorded in May last year. This was the third consecutive month that CTM has fallen, as in April it fell YOY by 2.4 per cent to 191.9 million. In March, it saw a YOY fall of three per cent to 206.2 million. February is the only month so far in 2015 where CTM has risen, when it climbed YOY by 1.8 per cent to 176.5 million. In January, CTM fell YOY by 1.9 per cent to 170.5 million. For the first quarter of 2015, CTM dropped YOY by 1.2 per cent to 553 million. American Airlines also announced that it will start operating the Boeing 787-8, which it says has benefits to customers as it has 28 positions for cargo and will provide the carrier

with significantly more capacity. The airline says the aircraft contains loftier aft and bulk doors for loading larger shipments, as well as the capability to carry up to 1,000 pounds (454 kilogrammes) of dry ice, which it says is a critical component in the shipment of high-value pharmaceutical and perishable goods. The carrier explains that the aircraft will open up new markets for the movement of cargo. American Airlines started operating the Boeing 787-8

from Dallas Fort Worth International to Buenos Aires International Airport on 2 June, and to Beijing International Airport on 4 June. It will also be operated from Dallas Fort Worth to Shanghai Pudong International Airport from 26 June and from Chicago O’Hare International Airport to Narita International Airport from 18 August. American Airlines Cargo president, Jim Butler, says: “With the addition of the 787, we are able to more effectively utilise our growing network and continue in our efforts to expand our reach. The efficiency of the aircraft allows us to offer more air cargo opportunities, while simultaneously reducing our carbon footprint and enhancing the customer experience.” In quarter one of this year, American Airlines saw cargo revenue fall by 5.9 per cent to $194 million. This came despite overall profit increasing by 94.2 per cent to $932 million.

NEWS WEEK WorldNews XPO LOGISTICS has completed the purchase of a 67 per cent interest in Norbert Dentressangle at a price of 217.5 euros ($245.4) per share. The two companies struck the deal last month, which will see XPO acquire the logistics firm for 3.2 billion euros. XPO says it is a good time to invest because of the strength of the US dollar. AEROMEXICO chief executive officer, Andres Conesa, has taken over as chairman of the International Air Transport Association’s (IATA) board of governors for a one-year term. IATA has also announced International Airlines Group chief executive officer, Willie Walsh, will serve as chairman of the board from June 2016 after Conesa’s term.

RTK fall in May for LATAM

LATAM AIRLINES has seen revenue tonnes kilometres (RTK) fall by 16.6 per cent, year-on-year (YOY) in May, which it says was due to the eight-day strike at the customs office in Santiago. The carrier says the strike stopped cargo traffic in Chile during this period, but in addition, cargo demand continues to be weak, especially in Brazil’s domestic and international markets, which is affecting volumes. LATAM’s RTK fell to 303 million in May, from 364 million in the same month in 2014. This fall continues the decline LATAM has seen throughout each month in 2015. In April, RTK was down by 11.2 per cent YOY to 320 million. In March, RTK dropped by 10.8 per cent YOY to 381 million. In February, RTK declined by 9.7 per cent YOY to 308 million. In January, RTK fell by 8.1 per cent YOY to 322 million. Year-to-date (YTD), RTK has fallen by 11.2 per cent to 1.6 billion, from 1.8 billion in the same period of 2014. LATAM says in May, the cargo load factor decreased by 9.1 percentage points to 51.3 per cent, which continues the YOY monthly declines in each month this year. Every month this year has seen a lower load factor than its 2014 counterpart. In April, the load factor was 54.4 per cent. In March, it was 56.8 per cent. In February, it was 55.1 per cent. In January, it was 52.7 per cent. The YTD load factor for the first five months of this year is down by 5.4 percentage points to 54.1 per cent. Capacity in available tonne kilometres (ATK) was down by 1.7 per cent YOY in May to 591 million. LATAM says: “We continue to adjust cargo capacity through a reduced freighter operation, which resulted in a decline of 1.7 per cent of cargo ATK in May.”

Profit surge in 2014 for Air T AVIATION services firm, Air T made a profit of $2.5 million in 2014, up from $1.4 million in 2013 and the highest yearly result since 2010, despite a decrease in cargo revenue. The company’s 2014 profit is still below the 2009 result of $3.7 million. Air T says air cargo income was down by $984,000 because of declines in heavy maintenance checks and regulatory penalties. Its subsidiary, Mountain Air Cargo, was fined $132,425 by the US government’s Federal Aviation Administration in September 2014 because of improper repairs on the door of an ATR-42 in 2012. Air T chief executive officer, Nick Swenson, says: “We are pleased to report our recent contract renewals with FedEx. The changes will result in increased revenues and costs within our air cargo segment.” The firm increased its revenue to $112.2 million in 2014 compared to $100.7 million in 2013. Cargo revenue decreased by five per cent to $2.5 million in 2014, because of a decline in heavy maintenance at its Kingston (US) facility. Air T says ground equipment revenue increased by 33 per cent to $10.2 million because of sales of de-icer. Ground support services revenue rose by 21 per cent.

ACW 15 JUNE 2015


NEWSWEEK AEA calls for level playing field

Rising cargo at Cathay, Dragonair

THE Association of European Airlines (AEA) is pushing the European Commission to develop a level playing field for the air cargo sector. The association outlines its views in a report on how to improve the sustainable development and competitiveness of European airlines, which it submitted to the Commission on Monday 8 June. The AEA wants the smooth functioning of the air cargo sector, which it says entails, “proper infrastructure, a level playing field for the cargo industry and seamless customs and security legislation.” The AEA explains it is encouraging risk-based pre-loading advance cargo information (PLACI) and implementation of the union customs code (UCC), following the incident in Yemen in 2010, when plastic explosives were discovered on separate

CATHAY PACIFIC and Dragonair saw cargo and mail volumes rise by 6.2 per cent yearon-year (YOY) in May to 147,034 tonnes, with Indian growth making up for slowdowns in China and the US. The YOY growth in May was higher than in March and April, but below the double digit surges seen in January and February, which was because of US West coast seaport congestion. January had seen YOY growth of 12.5 per cent to 147,275 tonnes, before February surged by 28.8 per cent to 130,467 tonnes. The airlines handled the highest tonnage in March, at 157,688 tonnes, but saw the lowest YOY growth, of 1.5 per cent. In April, Cathay Pacific and Dragonair handled 144,579 tonnes, a YOY increase of 5.2 per cent. Cargo volumes have increased by 9.6 per cent to 727,043 tonnes year-to-date (YTD). Cathay Pacific’s cargo sales and marketing general manager, Mark Sutch (see picture), says: “Our cargo business got off to a slow start in May due to the long public holiday in mainland China.” He adds: “Demand into and out of the Indian

cargo aircraft during a stop-over. PLACI programmes exist to provide an early risk assessment of cargo shipments to identify consignments that pose a threat. The AEA says: “For PLACI programmes to be implemented successfully, a framework is needed for the customs requirements laid down in the new UCC that will enter into force in May 2016.” The AEA has requested the Commission cooperate and coordinate with home affairs, customs and security authorities at local, European Union and international levels to share information and make sure customs legislation is robust and to reduce any red-tape. The Commission is carrying out a consultation on its aviation policies to address competitiveness issues and will publish a report later this year.

subcontinent was one of the bright spots in our cargo network in May.” He explains that, though demand picked up in May, it could not keep up with growing capacity. Cathay Pacific and Dragonair saw their combined load factor fall by 0.9 percentage points YOY to 62.1 per cent in May, the lowest figure of the year. The load factor saw YOY increases in January, February and March, but declined in April and May. The load factor was highest in March, at 68.4 per cent, a YOY increase of 1.7 percentage points. April saw a 0.5 percentage point decline to 62.6 per cent. The YTD load factor was up by 1.5 points to 64.3 per cent.

$12 million facility opens at Hamilton JOHN C. MUNRO HAMILTON INTERNATIONAL AIRPORT started operations at its new $12 million airfreight facility on Tuesday 9 June. Hamilton says perishables, such as lobster and fresh flowers, will make up much of the cargo handled at the 7,150 square metre terminal. The development has a common-use warehouse and office space, as well as a temperature controlled storage area. This area will open the door to shipping other perishables like pharmaceutical products and agricultural produce. Cargojet will serve as the anchor tenant, occupying half of the total space, with the balance available to existing carriers, such

as courier company Purolator along with DHL and UPS. The facility was funded through a joint partnership between the Canadian and Ontario governments and TradePort International, the airport’s operator. The airport says it hopes to entice more cargo business as it has round-the-clock operations, “competitive operating fees,” and is located in central Canada’s Southern Ontario region. In 2014, the airport saw an eight per cent rise in cargo volumes to 75,000 tonnes compared to 2013. This was driven by an increase in express cargo, high-speed logistics, growth of e-commerce, and a surge in the cargo charter segment.

80m euro 2015 goal for GROUP7


irfreight and European truck services provider GROUP7 is predicting a turnover for this year of 80 million euros after announcing a 2014 result of 78 million euros, 13 per cent more than 2013. According to GROUP 7, it achieved this 13 per cent increase from above average growth in its air and ocean freight divisions. Automotive and e-commerce were two sectors that drove this growth. GROUP7’s managing director, Günther Jocher, says, “Our logistics areas that now amount to 200,000 square metres at five loca-


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tions across Germany will be one of GROUP7’s growth drivers. We achieved our higher turnover in all business sectors: airfreight, ocean freight, road freight transport and contract logistics.” Jocher adds that customers want transparent processes with web-based access, and, “that is exactly what we can offer thanks to investments in this sector.” GROUP7 has branch offices at nine locations in Germany, which are, Munich, Hamburg, Frankfurt, Stuttgart, Dusseldorf, Nuremberg, Bremen, Hanover and Neuss.

NEWS WEEK Europe, Japan venture extended from August ALL NIPPON AIRWAYS (ANA) CARGO and Lufthansa Cargo will be extending their joint venture to cover shipments from Europe to Japan from 3 August. The partnership, which started in December 2014, allows customers access to both airline’s networks. When the service started, it was just for services from Japan to Europe. The airlines say customers will have access to more than 90 direct flights a week between Europe and Japan. ANA Cargo chief executive officer (CEO), Akira Okada, says: “The cooperation has paid off even within the first few months. Starting to send consignments from Europe to Japan is an important milestone to provide an attractive service to an extended circle of customers.” Lufthansa Cargo CEO and chairman, Peter Gerber, says: “Our customers save valuable

time thanks to the large numbers of additional direct connections and rapid transit times. Demand has been consistently high since the partnership began.” Gerber says up to the end of April, the two carriers have handled more than 800 additional shipments, weighing a total of 940 tonnes. The first shipment was sent on 2 December on an ANA Boeing 777-300, from Haneda International Airport to Heathrow Airport, booked on Lufthansa’s website. On

the same day, the first shipment was booked through ANA’s website, and transported on a Lufthansa Boeing MD-11 Freighter, flight from Narita International Airport to Frankfurt Airport. The two airlines have been upgrading aircraft used for routes between Japan and Europe. Lufthansa MD-11F flight number LH8407 from Narita (Japan) to Frankfurt (Germany) has been stopping at Shanghai Pudong International Airport. ANA has been using a 777-300 on flight number NH203 from Haneda to Frankfurt, replacing the Boeing 787-8 on 6 May. The Japanese carrier started using a Boeing 787-9 on its flight number NH217 Haneda to Munich Airport services, instead of a 787-8 from 31 May. ANA’s flight number NH215 from Haneda to Paris Charles de Gaulle Airport started using a 787-8 from 6 May.

WorldNews ASIA AIRFREIGHT TERMINAL (AAT) has announced that it has reduced its cargo breakdown time by three hours. According to AAT, it can breakdown cargo from a passenger aircraft’s bellyhold or combi freighter in less than three hours if the freight is less than 10 tonnes. If it is more than 10 tonnes, the breakdown time takes less than four hours. IRELAND based ASL Aviation Group is rebranding its four airlines to bring them under one name. Air Contractors will become ASL Airlines Ireland, Europe Airpost is to be ASL Airlines France, Farnair Switzerland becomes ASL Airlines Switzerland and Farnair Hungary becomes ASL Airlines Hungary. The total ASL fleet is about 100 aircraft, of which 75 are flying in Europe and in future will operate as ASL Airlines.

Cathay appoints cargo director

CATHAY PACIFIC AIRWAYS has announced the appointment of Simon Large (see picture) as cargo director. Large is the airline’s general manager for marketing, loyalty programmes and customer relationship management and he has worked in a variety of management positions within Cathay. Large takes over the role from James Woodrow, who will become The China Navigation Company managing director. Cathay has made two other appointments, Paul Loo is now corporate development director and Tom Owen is people director. Loo is Cathay’s China general manager.

10% increase for PACTL SHANGHAI PUDONG INTERNATIONAL AIR CARGO TERMINAL (PACTL) has seen airfreight volumes increase year-on-year (YOY) in May by 10.7 per cent. China’s largest air cargo terminal handled 135,054 tonnes in May with international cargo making up 125,738 tonnes, a YOY increase of 9.9 per cent. Domestic cargo was up to 9,316 tonnes, a YOY rise of 23.2 per cent. Volumes were made up of 53,525 tonnes of inbound cargo and 81,529 tonnes of outbound. These were YOY surges of 10 per cent and 11.2 per cent respectively. May is the busiest month this year at PACTL and continues the monthly increases in volumes. In April, it handled 134,616 tonnes, a YOY rise of 9.8 per cent. In March, 133,221 tonnes were processed, which was a YOY surge of 2.3 per cent, but the lowest monthly increase this year. In February, PACTL handled 104,452 tonnes, a significant 29.3 per cent YOY rise. In January, 124,824 tonnes were handled, a YOY increase of 12.9 per cent. In the first five months of 2015, PACTL has processed 632,167 tonnes, which is a rise of 11.7 per cent, compared to the same period in 2014. Domestic cargo is up 14.5 per cent on the same five months last year, and international cargo is up 11.5 per cent. Inbound cargo is up by 14.3 per cent and outbound is up by 9.9 per cent.

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Challenges with growth


efugees trying to reach the UK on trucks are proving troublesome for companies operating road feeder services (RFS), but despite the ongoing challenges such as this, they are seeing solid growth. Sovereign Speed chief executive officer, Karim El-Sayegh, tells Air Cargo Week (ACW) that refugees hiding on lorries around Calais (France) are a, “massive problem,” and causing major delays to freight being moved to the UK from the continent. This is not the only challenge in Europe he explains, with Eurotunnel delays due to technical incidents, strong demand because of reduced ferry frequencies, and maintenance works all have an impact. “Another challenge is the increasing red tape being imposed on transport companies, such as Germany’s recently introduced minimum wage law, in essence a

good thing, which forces every company in our industry to meticulously record the working time of the office staff in addition to the driving times of drivers,” El-Sayegh says. Despite the operating challenges, El-Sayegh is positive about growth and says his firm will see a seven per cent rise in 2015: “There are many opportunities to grow revenue in our existing marketplace in Europe. We have experienced particularly good growth in the UK, the Netherlands and Germany.” Jan de Rijk Logistics senior manager for air cargo, Robert Kleppers, explains to ACW there are challenges, and believes that to drive the industry forward more collaboration, transparency and the exchange of data must take place in the supply chain. “We would like to see more collaboration and exchange of information about cargo operations by airlines, cargo handlers and other operators. We are fully equipped to share

information. All parties in the supply chain need to be more transparent.” Kleppers says exchanging more data would boost the industry. “We must make sure the final client is the person that matters most. If we can provide the best service, it is good for business,” he adds. He says the first half of 2015 has been positive for Jan de Rijk, and his firm is focused on transporting pharmaceuticals and specialist cargo: “What we see is a focus by airlines on pharma and this is an ongoing trend. The need for strict controls of pharma is going to be a feature for the future.” Kleppers says much of airfreight demand on RFS is seasonal, and this month, Jan de Rijk is seeing a surge in perishables.


Despite RFS challenges there are opportunities and demand is growing for specialist cargo and an increasing need for goods to be moved to more remote locations. El-Sayegh says the strongest demand is for time definite services, especially on Sovereign’s to-door service. “Volumes for traditional RFS remain stable. We have seen more requests for temperature controlled transport.” Soveriegn is targeting growth in Eastern Europe and is seeing high demand to what he describes as, “offline destinations,” and has just launched daily overnight routes from Munich (Germany) to Vienna, Munich to Milan (Italy), Frankfurt (Germany) to Milan, Vienna to Milan and Vienna to Frankfurt. Jan de Rijk has been expanding its RFS contracts with airlines and in April won a threeyear deal with Virgin Atlantic Cargo, extending the carrier’s delivery network to over 50 airports across Europe. Kleppers says Virgin can now offer destinations across the continent and Scandinavia. The firm has also extended a contract with IAG Cargo, to cover RFS for Iberia. Jan de Rijk has 25 offices in 15 countries, and providing widespread local customer service is essential in Kleppers’ opinion, especially with the rising demand for cargo to further afield locations. “Knowing the local infrastructure, speaking the native language and having a personal contact is important as we are a service business,” Kleppers notes. He says Jan de Rijk is always looking to expand trucking services, but plans on moving more airfreight on trains, to add to the two daily trains it runs between Milan Malpensa Airport and Amsterdam Air-


ACW 15 JUNE 2015

port Schiphol. Kleppers says the services are equivalent to operating 64 trucks and trains are a, “cheaper and more environmentally friendly”. RFS are a key component for CAL Cargo Airlines according to the carrier’s vice president for ground operations and chief operating officer, Rami Marom. He says it runs pan-European Union (EU) RFS from Liege Airport, bringing cargo from Italy, Spain, Scandinavia, and Eastern Europe and operates trucking services from New York (US). Marom explains to ACW that Liege gives it good access, as the airport is located between Frankfurt, Paris, Amsterdam and it operates 2,500 trucks a month across Europe. “Relative to other airlines, our RFS service is substantial and we move tens of thousands of trucks per year. We see growing demand in more distant destinations in Europe, such as Eastern Europe, and Scandinavia,” Marom says. CAL specialises in complex and non-standard cargo and Marom says it is focusing on having RFS trucks with high security, maximum insulation, and dual temperature trailers to move high value temperature controlled cargo. RFS is a good solution for cargo carriers, in Marom’s view, as many cannot provide the same level of networks that passenger airlines do. Marom explains: “RFS is a critical element in the value proposition of an all-cargo airline. The ability to offer pick up, deliver cargo from each point is a huge benefit to customers. Knowing a single service provider is on top of shipments from door-to-door means less hassle, less risk.” RFS are an increasingly important part of the airfreight industry supply chain to meet the growing movement of specialist cargo, the demand for door-to-door services and to move shipments to isolated locations.

EL-SAYEGH There are many opportunities to grow revenue in our existing marketplace in Europe


Struggling with another year of little growth


rance had a difficult 2014, with slow growth from last year continuing into 2015, presenting challenges for airlines and airports operating in the country. For 2014 as a whole, Paris Charles de Gaulle Airport (pictured above), the largest airport in France, saw cargo volumes increase by 0.8 per cent to 1.9 million tonnes, according to Airports Council International (ACI) Europe. Though it was the second busiest cargo airport in Europe, it saw the smallest growth among the top five. This year has started off worse for Charles de Gaulle, with ACI Europe saying volumes have fallen by 4.8 per cent between January and April to 591,843 tonnes, the biggest decline among the top five airports in Europe. According to ACI Europe, growth in 2015 so far has been variable for France’s smaller airports. Paris Orly Airport saw cargo volumes rise by 16.9 per cent to 39,751 tonnes and Toulouse Airport was up by 1.3 per cent to 21,183 tonnes. Marseille Provence Airport was down by 3.8 per cent to 17,000 tonnes,

Lyon Airport saw growth of 5.5 per cent to 16,283 tonnes and Nice Airport fell by 2.9 per cent to 4,755 tonnes. It is not just France’s airports which are struggling, Air France-KLM-Martinair (AF-KL-MP) has been going through tough times over the past few years. Between January and May, AF-KL-MP has seen revenue tonne kilometres fall by 10.4 per cent to 3.7 billion, with the biggest fall seen in April, of 14.9 per cent to 703 million. In the first quarter of 2015, the airline’s cargo division lost 63 million euros ($71 million). It is continuing to shed its freighters, and by 2016 the airline as a whole will have six freighters, two will be Boeing 777 Freighters at Charles de Gaulle. The airline hopes the cargo division can break even by 2017. Despite the doom and gloom, IAG Cargo regional commercial manager for Europe, Chris Nielen says the carrier has been doing well in France, helped by its pharmaceutical product, Constant Climate. Nielen tells Air Cargo Week (ACW): “The whole market was astonishing, very flat in 2014. We did decidedly better than the market, we have grown our pharma product, Constant Climate.” He says in the first quarter this year, IAG Cargo has grown by 12 per cent in France, due to Constant Climate and its EuroConnector for shipments below 300 kilogrammes, which are suited to narrowbody aircraft. He says pharmaceuticals have done particularly well in places like Lyon. Nielen says for IAG Cargo in France, Asia Pacific has the highest tonnage while Africa and the Middle East has the largest turnover. Nielen tells ACW he expects IAG Cargo’s growth to continue because of continuing demand for its products like Constant Climate and Euroconnector. “Euroconnector has been really helpful, we expect to see growth continue from the 12 per cent in the first quarter ... we are moderately positive for the remainder of the year.” Nielen says as well as ever rising volumes of pharmaceuticals, IAG Cargo transports a lot of flowers from the South of France, as

well as wine, automotive parts, luxury goods and aircraft parts. AF-KL-MP is hoping its HubExpress at Charles de Gaulle, opened in May, will help it expand in areas such as express and pharmaceuticals. The airline says it will help integrators and couriers, increase cross border e-commerce and increase postal volumes. The HubExpress is close to the passenger terminal as 90 per cent of cargo travels bellyhold and the average ramp time is between five and 15 minutes. The Franco-Dutch carrier says it expects cross border e-commerce to grow by 192 per cent to $307 billion by 2018. It tells ACW: “Pharma and e-commerce are the two main opportunities for growth.”

Pharma continues to grow

For future growth, AF-KL-MP tells ACW it expects pharma to increase worldwide, while e-commerce will rise in Asia and the aerospace industry in the US and Mexico will see growth. American Airlines regional cargo sales manager for Western Europe, Kathleen Lesage says 2014 was a good year, but 2015 is proving harder. Lesage tells ACW: “2014 was a good year for French exports, while 2015 has been a bit more challenging thus far, due to the impacts that shifting exchange rates tend to have on exports and production schedules.” Lesage says French exports such as aerospace parts, fashion, cosmetics and perishables are in high demand in the US and beyond, in the Caribbean and Latin America. She explains that, “with the strong link between Paris [Charles de Gaulle] and Philadelphia, there is also considerable pharmaceutical traffic between these two destinations because of the numerous manufacturing facilities found in both locations.” France has been going through tough times since the global financial crisis of 2008 and is struggling to recover. Airlines are pinning hopes on pharmaceuticals and e-commerce, but whether this will be enough to kick start growth remains to be seen.

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E-cargo aids forwarders


reight forwarding networks are empowering and mobilising independent freight forwarders as they continue to challenge the power of some of the biggest worldwide operators. New opportunities for smaller freight forwarders as part of large international forwarder networks are also being aided as airlines increasingly upgrade and make their data networking and online platforms more accessible. WCA, a global network of independent freight forwarders, tells Air Cargo Week (ACW) that many in the industry have been surprised by a trend that, according to it, has seen the top 20 multinational shippers slip backwards while independent, smaller freight forwarders have gained market

share. “The independent freight forwarding sector is very healthy and networks are becoming ever more important because shippers really value the quality of service independents can provide,” he told ACW. “Large global operators are also increasingly using smaller independents for niche services, such as time critical deliveries. It is not always just about saving money, but also about the value of supply chains and ways of finding efficiencies across the chain.” WCA says that independent forwarders have been criticised for not being at the vanguard of electronic ticketing and e-billing, but says this is unfair. “Airlines have been targeting multinationals first and it’s been a lot more complicated for us. We certainly realise its importance and many members are already using systems with some airlines. But, complexity and being able to cover all airlines and their different systems is the challenge, not a lack of will. The WCA has invested in the WIN [Worldwide Information Network] e-platform and we can now provide e-commerce and electronic airway bills (e-AWB) facilities for members. Airlines now need to work closely with the independent sector to bring them on board,” he says. E-commerce growth is a driver of e-cargo and WCA is holding its first e-commerce workshop in Miami (US) on 20 June. “The intention is to devise a solution by the end of this year, so WCA can offer members a full e-commerce programme. It is a major investment for us,” says WCA. This month Etihad Cargo introduced an online platform for WCA members, offering instant pricing for all online Etihad destinations, e-booking, e-AWB and track and trace. The system applies to WCA members that are also members of its loyalty programme, CargoConnect and use the WIN e-platform. Speaking at the International Air Transport Association’s (IATA) e-cargo conference in Switzerland earlier this month, John DeBenedette, managing director of WIN, challenged airfreight bosses to urgently adopt a, “technology manifesto for change”. He called on the industry to embrace change and says airfreight must abandon, “inefficient, expensive, out-of-date technology,” in favour of web-based solutions. “We need disruptive innovation and to look at a common platforms accessed by the web,” says DeBenedette. “If we continue relying on 1990s solutions, e-freight adoption is going to take forever.”

Common people, common platform

DeBenedette urged the air cargo community to work towards adopting a common platform accessed by the web and collaborate to explore new technologies and business models for inter-operability. Global independent freight network The WACO System also sees increased digitisation and e-commerce as key for the future. WACO executive director, Richard Charles, tells ACW that members were exploiting opportunities in emerging markets. “Volumes are holding up for our members, but margins continue to come under pressure. So far in 2015, we have added Kenya and four other countries to our network. Further expansion is targeting Kazakhstan, Angola, and potentially Iran, dependent on the lifting of economic sanctions.” Charles says that another new development he is seeing is acquisitions or shares being invested in specialised logistics, IT and e-commerce firms. He adds; “Well run independent logistics companies are on the shopping list of larger companies, especially those with unique geographical or customer portfolios.” Despite the challenges of declining margins and cash flow pressure as competition in the markets intensifies, Charles believes there are opportunities for independent freight forwarders to prosper. A new independent freight forwarder network is the Cooperative Logistics Network (COOP) which attracted 141 delegates from 47 countries to its inaugural meeting in Thailand in May. COOP founder and managing director, Antonio Torres, saw demand for a capped non-exclusive network to offer agents, “quality partners,” and financial security, like an exclusive network. “Many freight forwarders like the autonomy that a non-exclusive network brings, but so often they don’t enjoy the same financial security and quality partners as they would in an exclusive one.” For forwarders that are small teams the challenges are clear, find an IT solution to meet the demands for the electronic systems customers want to use and find partners, exclusive and non-exclusive, to achieve that global reach.


We need disruptive innovation and to look at common platforms accessed by the web


ACW 15 JUNE 2015



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