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The weekly newspaper for air cargo professionals Volume: 19
Issue: 12
28 March 2016
Lufthansa chief warns of further yields fall in 2016
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ufthansa Cargo did not reach its potential and yields are likely to get worse in 2016, chairman and chief executive officer, Peter Gerber (pictured) explained at a press conference on 18 March. In a briefing to the media in Berlin, Gerber admitted the German airline had a difficult year in 2015 with continuing overcapacity, but says Lufthansa fared better than the opposition. Earnings before interest and tax (EBIT) fell to three million euros,
but on an adjusted basis, EBIT was 74 million euros ($83.4 million), still down 40 per cent on 2014. Freight and mail carried in 2015 was down 2.4 per cent to 1.6 million tonnes and the load factor fell by 3.4 percentage points to 66.3 per cent. Gerber said: “We did not reach our potential, we weren’t able to reach the result seen in 2014, we were clearly not as successful as we had been in 2014.” He explained the strike action by the Vereinigung Cockpit pilots’
union and the Unabhangige Flugbegleiterorganisation cabin crew union affected operations. The strikes cost the carrier at least 30 million euros, not including damage to reputation as customers questioned Lufthansa’s reliability. Gerber predicted weak yields and overcapacity will continue to be a problem into 2016: “Yields are dropping, ours are still above market yield. Yields are falling, if you look into the beginning of 2016 - it is getting worse.” Lufthansa Cargo will stick to its 2020 cost reduction programme, and the Boeing 777 Freighters are proving fuel efficient and cost effective, though low oil prices mean the Boeing MD-11 Freighters are still useful. The airline is hoping to save at least 40 million euros a year from 2018 through reducing human resources costs and service provider costs through its C40 project. Lufthansa Cargo has postponed a decision on the cargo centre, LCCneo, but will continue to modernise its Frankfurt Airport hub with modernisation of conveyer technology, construction of a spe-
cial storage area, extension of the cool centre and introduction of smart gates, while its IT infrastructure has also been upgraded, to further digitise the business. The airline is expanding its product range with the launch of myAirCargo, which is designed so private travellers can send personal items via airfreight. Gerber said: “Lufthansa Cargo has often been a pioneer in the past when it comes to developing and launching new products and services. We want to live up to this again with myAirCargo.” The carrier is to give three managers new jobs in April and June, with Achim Martinka, Bernhard Kindelbacher and Dr Jan-Wilhelm Breithaupt changing positions. From 1 April, Dr Breithaupt will succeed Thilo Schafer as director of global handling management. Martinka, the airline’s vice president area management for the Americas will succeed Carsten Wirths in charge of sales and handling in Europe and Africa. Kindelbacher will be moving to Atlanta (US) to take over as head of area management in the Americas from 1 June.
Amazon set to acquire 9.99% of ATSG as part of airfreight deal Amazon.com is set to acquire a 9.99 per cent stake in Air Transport Services Group (ATSG), which is valued according to market prices at around $103 million. In a filing to the US Securities and Exchange Commission on Friday 18 March, the online retail giant disclosed warrants for nearly a tenth of ATSG, which handles its new airfreight operation out of Wilmington, Ohio. Earlier this month, ATSG agreed to run an air cargo service for Amazon to transport its goods across the US. This includes the leasing of 20 Boeing 767 Freighter aircraft by ATSG to Amazon. ATSG had given Amazon the right to buy up to 19.99 per cent of its outstanding common
shares over the next five years as part of the agreement signed. The aircraft lessor and air cargo supplier said Amazon had insisted on 9 March of an option to pick up a stake as part of the agreement. The warrant had to be exercised before 8 July or at ATSG’s next shareholder meeting.
The rules of the agreement also gives Amazon one seat on ATSG’s board once the company obtains at least 10 per cent of the shares. The Boeing fleet will connect Amazon’s fulfillment centres, as the retailer is aiming to speed up delivery of goods while cutting its transportation costs. Amazon’s ownership of a significant chunk of ATSG stock also gives the air cargo company a cash injection, while the retailer gets a valuable position to learn the airfreight business. Amazon is building a transportation network to complement the logistics service it gets from FedEx, UPS and other providers, as it feels this is not enough to meet its growing demands.
wcs: industry action needed now
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new contract and more offices for ecs
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acquisitions in asia top priority
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korea performing well for AA
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Black day in history of Brussels Airport AIR CARGO WEEK was shocked and saddened by the terrorist attacks at Brussels Airport and in the city on 22 March. The newspaper gives its warm condolences to those affected and our thoughts are with victims and their families, airport staff and residents of Brussels. At around 9am on 22 March, two explosions took place in the airport’s departure hall near check-in counters, leaving 11 dead and injuring many. Another explosion then took place at a Metro station near the European Union in the city, leaving 20 dead and injuring many. Brussels Airport’s chief executive officer, Arnaud Feist says: “On behalf of the entire airport community, I would like to extend our warmest condolences to the family and friends of the victims of these cowardly and heinous acts. “I would like to extend a heartfelt thank you to the emergency and rescue services, passengers and staff for their compassion, solidarity and help. This is without doubt the blackest day in the history of Brussels Airport.” Flights and operations were cancelled on 22 March, but the airport was looking to start cargo flights on 23 or 24 March.
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NEWSWEEK
Silk Way and MAB Kargo form partnership
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AB Kargo formerly MASkargo and Azerbaijan cargo carrier Silk Way West Airlines have signed a memorandum of cooperation that will see both airlines leveraging on each other’s aircraft fleet and network in different regions of the world. The strategic partnership between the two air cargo players entails a block space agreement (BSA) on a twice weekly route to and from Kuala Lumpur and Amsterdam via Baku Heydar Aliyev International Airport in Azerbaijan. The weekly flights are scheduled to be operated every Thursday and Sunday. The inaugural Silk Way West flight, bearing flight number 7L434 touched down on Malaysian soil at 16.30h on 17 March and had an approximate total of 105 tonnes of cargo from Amsterdam.
MAB Kargo says it had received bookings for 95 tonnes of cargo for the returning flight from Kuala Lumpur to Amsterdam Airport Schiphol. Speaking at the signing ceremony, MAB Kargo, chief executive officer (CEO), Ahmad Luqman Mohd Azmi says: “We have a solid network and will continue to serve key Asian and Australian market with our fleet of Airbus A330-200 Freighters.
“The partnership with Silk Way West will provide us the synergistic benefits by expanding our wings to new destinations such as Baku and Tehran and serve familiar markets such as Frankfurt, Malpensa, Vienna, Istanbul And New York.” Silk Way West Airlines CEO, Kamran Gasimov adds: “Leveraging on existing interline and block-space agreements, the partnership will allow both airlines to have access to each others capacity across their respective global network. “The first Azerbaijan freighter arriving in Kuala Lumpur International Airport today has started a new page in our airlines history. We will continue our network expansion in to South East region and meet the changing needs of the market.”
Pegasus orders 5 Boeing 737-800
PEGASUS AIRLINES has finalised an order for five Boeing 737-800 Next Generations, worth around $505 million. The airline, along with its subsidiaries, Air Manas and Izair, operates 69 aircraft, including 58 737-800s. Pegasus, which started charter flights in 1990 and scheduled services in 2005, flies to 33 destinations in Turkey and 70 in the rest of the world. It is based at Istanbul’s Sabiha Gokcen International Airport. Pegasus Airlines chief executive officer, Mehmet Nene says: “The performance of the 737-800 has proven reliability, fantastic operating economics and popularity with our customers. I am pleased that we will be continuing with this long-standing relationship that stretches back 20 years, adding more Boeing airplanes to our fleet.”
ACCC upholds price fixing fines
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THE Australian Competition and Consumer Commission (ACCC) has upheld surcharge price fixing fines against Garuda Indonesia and Air New Zealand. The ACCC had taken action against 15 airlines, of which, 13 paid fines totalling $98.5 million, while Garuda and Air New Zealand appealed. Proceedings against Garuda and Air New Zealand were dismissed on 31 October 2014, as it did not occur in a ‘market in Australia’, but the ACCC appealed to the Full Court of the Federal Court. The Full Court found if cargo was carried to a destination within Australia, it took place with a ‘market in Australia’, so breached price fixing laws. ACCC chairman, Rod Sims says: “This decision is significant because it confirms the ACCC’s view that the conduct by the airlines in fixing air cargo surcharges to be paid by Australian importers and ultimately passed on to Australian consumers, were caught by Australian competition laws.” The airlines not appealing and paying fines of between $5 million and $20 million were Air France KLM, British Airways, Cargolux, Cathay Pacific, Emirates, Japan Airlines, Korean Air Lines, Malaysia Airlines, Martinair, Qantas, Singapore Airlines and Thai Airways.
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NEWSWEEK Boeing freighter for Raya Airways
RAYA AIRWAYS has taken delivery of a Boeing 767-200 Freighter, its fourth Boeing aircraft, adding to its fleet of one 757-200 Freighter and two 727-200 Freighters. The aircraft, registration 9M-RXA, is the first Malaysian registered 767-200F, and is part of Raya’s fleet expansion, which will include an additional 757 and 767 by the end of 2016.
The 767-200F has a maximum payload of 42 tonnes and a non-stop range of eight hours. It will be able to transport freight including temperature sensitive cargo, livestock, perishables, pharmaceuticals, humanitarian and relief aid, as well as odd sized cargo, and oil and cargo equipment. Raya Airways commercial director, Lee Shashitheren says: “The delivery highlights the growing demand for capacity to serve Intra-Asian region in particular, with a commitment to operate a modern and efficient fleet. This is an important step in keeping the revenue potential on the positive while controlling our cost levels.” The airline is planning on expanding its network with flights to Japan, India, Korea, Thailand, Vietnam, Bangladesh, Cambodia, China and Indonesia, as well as increased frequencies to Hong Kong and Singapore.
LATAM perishables boost CEVA
BERRIES from Peru are set to boost export volumes for CEVA Logistics in Latin America (LATAM) over the next few years. CEVA’s country manager for Chile and Peru, Vicente Pesantez tells Air Cargo Week in Peru it is evaluating the growth of berries, which will bring an increase in volumes and “may well change the mix of cargo now lead by asparagus”. Pesantez says there are operating challenges in LATAM for CEVA: “Now airlines are optimising their freighter capacity in the LATAM region, it is creating many flight cancellations and schedules are not as accurate as it used to be. “For this reason we need to be more proactive and need to have the cool chain working better than ever. Our freight has to be in the best condition to support “in and outs” from the cool chambers, sometimes twice a day. The only way we can do that and see that the quality of our products remain safe, is to ensure our cool chain is working perfectly.” In 2015, CEVA’s results in the perishable sector were positive across LATAM, which is one of its key geographical areas. Pesantez says CEVA in Peru is a major
player in the air export of fruit and vegetables where for many years now, it has developed the capabilities, know-how and a skilled team specializing in perishables. He adds: “Additionally to this, during 2015, CEVA Logistics Mexico entered this important market providing logistics solutions for the transportation of flowers and fruit and vegetables into the USA and some European markets and we have high expectations of growth in this market for the next couple of years.” CEVA estimates perishables represent around 70 per cent of air export volumes it handles in LATAM, but in some markets such as Peru - this goes up to 95 per cent. Perishable volumes include asparagus, mangoes, avocados, limes, fresh cut flowers, green peas and berries. The main destination is the USA with almost 85 per cent of volumes, Europe at around 12 per cent, and the rest mainly to Asia. Pesantez says perishables are important to CEVA: “We identify the perishable sector as a key sector of growth in the LATAM region and want to continue expanding our presence in other countries where we find opportunities to add value, provide good levels of service and grow our market share in a profitable way.” He urges improvements in the cool chain sector and thinks it is time for the carriers to be more creative and proactive by investing in new services to improve quality and cost of logistics: “We can still see important freight sitting in old dollies beside the ramps, sometimes in a heavy weather environment, when I’m sure technology can supply better solutions for these activities protecting the quality of the cargo.”
Expansion for UPS at Ontario International
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PS is to double capacity at Ontario International Airport with a new sorting facility and expanding an existing building to process e-commerce and retail packages. The new building will process urgent, UPS Next Day Air packages and will feature automated sorting capabilities and the expanded facility will be retrofitted with automated sorting systems and will double its processing
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capacity. The expanded facility will process twice the amount of packages per hour and increase the building’s footprint by 15 per cent to 900,000 square feet. UPS is expanding the facility to cope with demand in e-commerce and retail businesses. The expansion will provide 500 new jobs over five years including delivery drivers and package handlers, UPS will start hiring in 2018. UPS president for West Region, George Willis says: “These investments in UPS’s air and ground network illustrate UPS’s commitment to customers in the inland empire and abroad, and are part of an ongoing, network-wide investment the company continues to make in hub expansion and automation.” Both facilities will have automated sorting systems to move packages through the sort process capturing package data and routing volume to proper load positions.
IATA WCS REVIEW
Industry action needed now
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he air cargo industry is not efficient enough, and people need to stop simply talking about what needs to be done to improve things and take action. At the closing plenary of the International Air Transport Association’s (IATA) World Cargo Symposium in Berlin at the Intercontinental Hotel from 15-17 March - it was agreed there is too much complexity in the industry, and air cargo needs to take the initiative before regulators tell it what to do. The closing discussion panel, ‘Cargo operations – How can we do things better?’, consisted of WFS director of cargo operations, David Ambridge, DHL Express director network airside Europe, Christian Bergfelder, Saudia Cargo vice president operations, Chris Notter, and Hong Kong Air Cargo Terminals manager service delivery, Simon Yap. Ambridge feels the industry needs one standard and efficient way of working to make running a cargo terminal simple and safe. He explains: “It can never be efficient to do things 50 different ways, we must try and standardise, simple means safe. 57 different cargo manuals is very tough, we can find best practice and bring
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Drones have air cargo future
to one.” Notter adds: “Reasons for the problems are complexity, we do too much for too many people, a bit of this and a bit of that. “We’re doing things, we don’t trust ourselves, if we don’t play as a team we won’t win.” Ambridge also believes most cargo terminals are too big and cost too much money to construct, as they need to allow for items to sit for two or three days, which wastes time and resources. “An integrator can get cargo off a plane, processed and on a van, we are a long way behind.” He wondered why if FedEx were able to have pre-clearance in the 1980s, why people think it is fine for customs clearance to take several hours. Ambridge also told visitors that the industry needs to take the initiative and not wait for regulators to tell it what to do. He adds: “From many conferences we need to have a take out before the next one, it’s no good if in five years we are still talking about safety, collaboration and innovation. We have got to move ahead, even one deliverable is better than none. Let’s not wait for regulators to tell us what to do.”
UNMANNED aircraft or drones will emerge in the airfreight industry in the years ahead, but there still remains many hurdles to overcome. Delegates at the International Air Transport Association’s (IATA) World Cargo Symposium in Berlin in the track ‘Drones for tomorrow’s air cargo’ heard what the future holds for drones, which are causing much controversy due to crowding the skies and posing a threat to commercial aircraft. The International Transport Forum’s economist, Alain Lumbrose says: “We are going to see them emerge as a viable solution (in airfreight), but some drones will fall by the wayside. “Drones have a strong potential to penetrate the air cargo market. Small shipments in the short-term can be a pathway to larger drones for bigger shipments in the long-term.” A drone freighter may not happen though, in his opinion: “Developing a large unmanned freighter would be very costly and military cooperation may be needed.”
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Lumbrose explains drones could be used one day to deliver goods to humanitarian disasters, for military resupply, to service the oil and gas industries and in the last mile for small urgent packages. However, he gives a warning: “There is going to be a killer drone and a human fatality sometime. It is not a matter of if, but when. But, we must ensure an accident does not shut down the industry.” The US Federal Aviation Administration says in 2015 there were 300,000 drones registered and 700,000 licenses in the US. IATA’s senior vice president of member and external relations, Paul Steel calls for more dialogue on drones: “There is an urgent need for the drone community to engage as to how we are going to manage the airspace. If a drone flies into a passenger aircraft there is a problem, as it could kill 100-200 people.” Drones are seen in different lights and Astral Aviation’s chief executive officer, Sanjeev Gadhia says they could prove beneficial in Africa: “The requirements in Africa are different to the US or Europe. We need drones for e-commerce or medicinal products, and don’t need sophisticated drones.” He adds: “We are working on looking several tests in South Africa on testing drones. We believe for the first three to five years they will carry up to 500 kilos, but 200-250 kilos would be very useful for Africa.” Gadhia also urges IATA to take a leadership role in the drone sector by working with manufacturers of the technology and governments - to come up with a framework which is easy to adapt across the globe.
IATA WCS REVIEW E-commerce demand rising in China
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hina’s ever expanding middle class are demanding foreign goods, presenting huge e-commerce opportunities in Asia Pacific, Hong Kong Air Cargo Industry Services (Hacis) managing director, Vivien Lau says. Speaking at the International Air Transport Association’s World Cargo Symposium air mail and e-commerce track, Lau told delegates China’s middle class are increasingly willing and able to spend more on foreign goods, which are considered higher quality than Chinese equivalents. The Chinese government is also encouraging growth through tax incentives and e-commerce pilot zones. Lau says: “Chinese online shoppers are the third largest importer of US goods, 61 per cent are willing to pay more for products made in the US. The growing middle class is desperate for authentic and good quality goods.” She says China’s middle class is the same size of the entire US population, and with Asia Pacific posting double digit year-on-year e-commerce growth, China’s market will soon be worth more than the US, UK, German, Japanese and numerous others combined. Chinese consumers are purchasing baby and maternity
products, consumer electronics, cosmetics and food and nutrition online from abroad. The Chinese government has introduced tax incentives and e-commerce pilot zones in 12 cities. The initiative offers large tax savings on e-commerce orders, and though this rate has been revised upwards, it is still cheaper than in stores. There are 12 pilot cities with a B2B to consumer model, shipping in bulk to warehouses near to market. Lau says the regional distribution centres means bulk imports to maintain optimal stock levels, greater predictability for overall logistics, as well as making returns easier and more efficient. She says Hacis, and parent company, Hong Kong Air Cargo Terminals, have reconfigured operations for e-commerce. A pilot zone has been set up in Nansha, which includes cargo acceptance at piece level, with data synchronised with one single platform while moving across the border. Lau says: “Our RFS has a special licence acceptance, e-commerce shipments into China travel under transhipment mode, with exemption benefits, making it efficient to send them via Hong Kong.” Lau adds e-commerce is a great opportunity for airfreight if it can offer speed and efficiency.
Lithium battery debate rolls on
THE next lithium battery fire incident on an air cargo carrier is around the corner as the issue continues to be a concern among industry professionals. Delegates at the International Air Transport Association’s (IATA) World Cargo Symposium in Berlin were told of the challenges and needs to counter the threat in the track entitled ‘ULD: in the frontline of flight safety’. AmSafe Bridport business manager for cargo, Joe Ashton, whose firm makes fire containment covers (FCCs) says statistics point to an incident being on the cards: “It will simply not to go away and the threat is established and increasing. The next serious air cargo fire incident is overdue as few airlines have implemented any protection.” He says FCCs can contain a lithium-ion battery fire and calls for standards to come into effect in the industry for FCCs and for fire resistant containers. Ashton says a clear path must be outlined for protection against potential blazes from lithium-ion batteries. Ashton says AmSafe’s FCC tests have found the FCCs it produces contain lithium fires for five to six hours. He says FCCs prevent the fire from spreading to other ULDs,
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and also give the pilot the chance to land the aircraft safely. IATA’s assistant director for cargo safety and standards, Dave Brennan explains that FCCs provide that extra level of protection against possible fires and says making sure the transportation of lithium battery shipments is safe is proving a challenge. Speaking more widely on the issue he called for action at state levels, and explains: “If you look at the risks of lithium batteries, it is not an air transport problem. We are the people at great risk. “A lot of the work has to happen on streams at government levels as it is a consumer protection issue. They need to stop getting aviation to fix the problem.” The International Civil Aviation Organization has banned the carriage of lithium-ion batteries on passenger flights from 1 April this year, but freighters can still carry shipments. The Federal Aviation Administration urges airlines to conduct a safety risk assessment to manage the risks associated with transporting lithium batteries as cargo.
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GLOBAL GSAs
New contract and more offices for ECS
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he ECS Group continues to win new airline contracts, open more offices and is now heavily focusing on South East Asia. The general sales agent’s (GSA) chief operating officer, Adrien Thominet (pictured) tells Air Cargo Week (ACW) the marketplace is generally good for ECS, despite some markets being flat, but he is not complaining. He explains: “In terms of network we are enlarging with new countries, contracts and offices. In 2016, it will be the same sort of dynamic as last year. We completed some developments in South America in December last year in Brazil where we opened new offices. “In the early part of the year we are very focused on Asia and especially South East Asia and Indo-China,
with a complete new network as well with nine new countries covered in Asia (such as Indonesia).” Thominet says the GSA business model is completely different in Asia compared to what it is like in Europe and the USA, and the way ECS works is totally different. “There are a lot of opportunities (in Asia) with low-cost carriers, but they want a total cargo management contract. They want the GSA to take over the entire activity such as the handling, the responsibility of the claims, everything, and it is totally different. “But we like this concept, of having a regional office to manage it entirely as it involves more commitment,” Thominet says. As for new contracts he tells ACW: “This week we signed a new
contract in Mumbai, India with Thai Airways (pictured). We are quite strong in India as we have 14 offices there, but this is a new step in development for us, but it is very good for us.” He adds ECS will imminently reveal two more big airline GSA contracts, which will be revealed in the near future. Thominet says while airlines are expecting to grow revenues, they cannot necessarily increase their capacity, which is something only the Middle East carriers such as Qatar Airways and Emirates are doing, which provides challenges for ECS. “The rest of the airlines are not increasing their capacity, but have a need to increase revenue so you have to work on the cost savings for them such as for the trucking, the handling and also optimising the services. “This involves us being more innovative, proactive and we must provide them new services and new segments such as in e-commerce and pharma. We as a GSA are providing new services because some have middle-sized structures and cannot do it themselves.”
New parameter
Digitisation and e-tools he explains is a “big new parameter” for ECS this year, as many carriers do not have the tools or experience and expect the GSA to have them such as the electronic air waybill, e-booking and e-technologies, which are all crucial for its partners so they can expand their business. Thominet says: “It is one of the problems of the industry. We have a need to help partners who are not as rich as the likes of Qatar Airways, Emirates or WFS, and need to help them compete to have the technologies. “This is where it is interesting for as we will not bring anything to a Qatar for example, as they have their new technology and own tools. Where it is exciting for us is the smaller sized carriers who we can help to grow.” At the International Air Transport Association’s World Cargo Symposium in Berlin, he explains ECS had some meetings with Aero-
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mexico, a smaller sized carrier in comparison to say the big Middle Eastern airlines, but needs new tools, products and technology and e-commerce development and pharma opportunities. He explains this is where ECS can bring in the value and is where its focus lies, on making relationships stronger with carriers of this size and those with similar resources. Thominet also feels airlines expect as more commitments from the GSA in many levels in service and also on the financial side. “They expect we are sharing the financial risk they want us to take some financial commitment to guarantee the revenue for them. It is a risk for us, but it has also proved that we are a reliable partner and one, which is ready to take risk and invest such as in new routes which we are launching with them,” he says. Thominet says ECS has entered a new segment working with Royal Maroc (pictured) and has been implementing some flights for them in Africa, which it is financially supporting, thereby enlarging the carrier’s network through their financial commitment. He explains: “It is a win-win situation, but it is also new approach as we are no longer just a reseller of capacity. But what we are trying to do, our strategy – is to focus on keeping the local management and branding, but not rebranding. We try to make these local heroes in one group or one brand.” As for the Global GSA Group taking over the operations of Maastricht Aachen Airport in the Netherlands, Thominet says he is still trying to figure it out and what the best strategy is, but it is not a move ECS plans on making. He observes: “I think it is complicated - as one you are involved in one industry and if you play in other fields like this, it has complexities, as you need to keep your neutrality as a GSA, as we are dealing with mainly airlines. I think if you are involved in another industry you lose some neutrality and it is a complexity. “On the other side it is interesting that the GSA can provide additional services and solutions.”
GLOBAL GSAs Acquisitions in Asia top priority for Air Logistics Group
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ir Logistics Group sees further consolidation in the general sales agents (GSA) market in Europe and is looking to invest in Asia this year. Chief operating officer, Stephen Dawkins (pictured) tells Air Cargo Week: “We foresee consolidation in Europe and continued investment in IT to better service our airline clients. We are planning further acquisitions in Asia and anticipate double digit growth in this part of the world again in 2016.” Dawkins explains that in 2015 it saw further pressure on yields, as the Chinese economy slowed and there was continued overcapacity, but for Air Logistics it was another positive year of sustained growth. “After a thorough and comprehensive tender process, Air Logistics Group secured a large worldwide airline contract with a focus on African destinations. This was one of the main highlights of 2015,” he explains. The GSA performed well in all regions, but Dawkins says in Europe it saw single digit growth and business was especially
buoyant in Asia where it posted double digit growth. Dawkins notes the Chinese market continues to be challenging on yields and overcapacity, but he says it has little impact on Air Logistics as it only has minor operations in China. The company now has a network of 81 offices across 48 countries and he feels the combination of expert local knowledge and the strength of a financially well-backed corporation will lead to more business and carrier contracts this year. As for the challenges ahead, Dawkins says they are similar to the last decade: “The normal challenges that we have been able to overcome for the last 10 years – overcapacity brings pressure on yields and as such we continue to strive to control our costs while ensuring we maintain the highest levels of customer service for the airline clients we represent.”
Further consolidation is a natural progression in the industry in the view of Dawkins and he is sure there will be further consolidation of GSA companies across the globe “because that is what our airlines demand”. Dawkins adds: “Airlines demand a wider reach, financial security and the delivery of the highest level of customer service. Our airline clients know where the business is, we need to ensure we deliver the highest level of customer service to secure the business on behalf of our airline clients.” His outlook for the air cargo industry is upbeat and he sees an exciting two years ahead if fuel remains low, as he feels it may allow new airline entries into the marketplace. Dawkins concludes: “There will also be further investment in online bookings and the e-AWB; however our industry cannot lose sight of talking to its client base and listening to their demands and expectations.”
HAE growing footprint in South America SOUTH America has been the fastest growing region over the last 12 months for HAE. HAE president for the Americas, Ian Hutchinson explains the general sales agent (GSA) has expanded geographically with the help of in-house products HX and Skyspace and secured some new contracts. He adds: “Our own products are always complementary to the GSA business and helps our airline principal penetrate new markets.” In 2016 so far, he says it has held on to the success of 2015 and is aiming to continue geographical and product expansion, which will drive revenues and he is optimistic about the next rest of the year. Hutchinson says: “Given the global challenges we foresee a challenging but nevertheless positive 2016. SWE have new investment in IT and this will help us offer new and creative solutions to the market. “Our expansion plans offer excitement to our local teams and new opportunities to our partners, we are also keen to get our network of offices working together more than they have done before.” HAE in his opinion offers clients in-depth
local market knowledge, cost efficiencies and through close working relationships, new opportunities are created. And HAE he says provides new innovative ways to interface with customers. HAE he says also has expansion plans for markets in South America and is planning on moving into new ones across the continent, but in a “considered manner” based on the needs of partners and products. Hutchinson explains: “The linkages between South American countries is strong so our current network will lead to new opportunities, in different countries. “One example is new contract with Viva Columbia (pictured). Our total cargo management program, will require further expansion to meet the needs of this exciting contract.” There are challenges for HAE in South America, Hutchinson observes: “Challenges mostly surround exchange rate risk and the volatile nature of some the perishable and oil linked markets. The world is getting smaller and South America is more and more interesting for new entrances and new alliances – therein lies the opportunity.”
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KOREA More cargo routes for Korean, and an aid mission to Fiji
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orean Air is set to start a direct bellyhold route from Seoul in South Korea to Tehran in Iran after the lifting of international sanctions against the Persian country. Media reports in South Korea say the Korean Ministry of Land, Infrastructure and Transport is to give a flight license to Korean to move passengers and airfreight four times a week between Incheon International Airport andTehran International Airport. Korean Air is reportedly also considering introducing cargo flights to Iran first, although nothing has been confirmed yet. The carrier is thought to have won the license over Asiana Airlines, and is expected to start operation on the route within the year with four flights a week. South Korea and Iran did reach an aviation agreement in 1998 to allow South Korean carriers to run four flights of passenger and cargo
aircraft, but no South Korea passenger aircraft has landed on Iranian soil so far. Iran Air had operated a Tehran to Incheon route via Beijing Capital International Airport until 2007, but this was suspended due to the international sanctions imposed on Iran over its nuclear programme. Korean Air’s cargo aircraft had flown the Seoul-Tehran route in the 1970s on an irregular basis. Once the route starts it will link South Korea and Iran which have populations of 50 million and 80 million, respectively. The Korean government sees business and trade opportunities between the two countries. The decision to open the direct flight route between Seoul and Tehran came after a new wave of interest in ties with Iran. The carrier has also been awarded seven additional frequencies to India, adding to the three weekly flights it operates from Seoul to Mumbai International Airport.
Korean Air was involved in operating humanitarian flights and provided relief goods earlier this month to those affected by Cyclone Winston in Fiji, which reportedly affected 5.5 per cent of the population. Goods delivered to the Pacific island country included 9,000 litres of mineral water and hardtack biscuits. The carrier said it had planned to transport donations collected from the Fiji Embassy to South Korea. The goods were delivered on Korean Air’s flight KE137 which departed Incheon International Airport on 19.25h on 10 March. Korean says it has a strong commitment to helping with relief efforts in times of need. In the
aftermath of the Sichuan earthquake in 2008, it dispatched a special cargo flight to transport blankets and mineral water to the quake zone. The carrier also made donations of relief goods such as 90,000 litres of mineral water and 2,000 blankets to the victims of the earthquake in the northeast province of Japan in March 2011 and 60,000 litres of mineral water, 60,000 noodle cups, 24,000 of dried rice and 2,000 blankets to the Philippines to aid those affected by Typhoon Haiyan. In 2015, Korean Air delivered 24,000 bottles of mineral water, 2,000 blankets, dried rice and other food materials to those affected by the earthquake in Kathmandu, Nepal.
Korea performing well for American Airlines
AMERICAN AIRLINES CARGO expects cargo tonnage levels to grow by two to three per cent to Korea with the export of smartphone and automobile parts and supplies remaining the top commodities. The carrier’s managing director for cargo sales in Asia Pacific, Keijiro Ishii says this year has got off to a great start and it has seen a significant boost in business and 2016 is looking good to date. He explains: “Airfreight exports for the US, Latin America and Brazil may not be as strong as we would prefer, due to the continuous economic recession in the region; however, we have seen a strong demand from airfreight exports out of Mexico, where Samsung, GM and Hyundai Motors have facilities. Going forward, we expect an even greater increase in demand, particularly for Mexico City and
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ACW 28 march 2016
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Monterrey.” Last year, he says the union strike on the US West coast brought about a temporary rush of airfreight near the end of 2014 and into 2015, before tapering off a bit midyear. “Plus, as a result of promoting sales in the Latin America region, tonnage out of Central America increased by almost 45 per cent from the previous year,” Ishii adds. Computers and computer parts, such as LCD monitors, as well as fabrics, were top commodities out of the region in previous years, but he says now some of the most commonly exported items include smartphones and auto parts from major electronic and motor companies. AA Cargo has recently started a new service between Incheon and its Dallas/Fort Worth hub, using a Boeing 777 holding up to 22 cargo positions. Ishii sees challenges ahead in Korea: “Some major conglomerates, such as Samsung, LG and Hyundai, have moved production overseas to locations such as China, Vietnam and Cambodia, which decreases the demand out of Korea, which creates a challenge for local airfreight.”
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