From "Peak Season" to "Strike Season?"
You've certainly heard of the "peak season" and its impact on the air industry; however, judging from the look of things this past month, it now appears we have experienced a "strike" season.
First there was Greece, where the public services and transport employees called for a general strike which brought everything to a screeching halt in protest of the government's austerity measures. After several days and much negotiating, the Greek economy was saved by much-needed capital provided by the EU.
Airline-wise, there was the Lufthansa pilot's strike, which had little effect on the cargo side of their business.
Next there was British Airways' head-to-head dispute with its cabin crew, which threatens to ground half of its passenger services out of London Heathrow. Fortunately, the impact on cargo has been minimal so far.
The unions representing cabin crews of Air France-KLM threatened to strike to protest the company's reform plan for its medium-haul operations.
The unions also object to management's attempt to renegotiate a collective agreement that runs from 2008 to 2013.
Cathay Pacific flight attendants are considering a strike over Easter as a last resort to stop a change in roster policy that now allows some workers to rack up overtime while others work as few as 10 hours a month.
Reuters has reported that SAS struck a deal with pilots and cabin crew to freeze salaries and reduce pensions and allowances under a cost-cutting plan to return the Scandinavian airline to profit. SAS, collectively half-owned by Sweden, Norway and Denmark, said the new agreement would bring over US$70 million in savings.
Last year was one of the worst ever for the aviation industry, but SAS has long been struggling with high costs. Unions have up to now resisted changes needed to compete with no-frills flyers such as Ryanair. The airline said cost cuts from all unions for 2009 and 2010 not totaled $292 million. Overall savings under the Core SAS restructuring plan were $1.08 billion.
Until recently, Japan Airlines' pilots had been spared any reduction in its workforce, unlike their ground staff, flight attendants, maintenance workers and other employees. Now, debt-ridden JAL Corporation will expand its voluntary retirement program to include pilots. JAL is offering early retirement to more than 1,500 captains, along with nearly 800 first officers aged 35 or older. According to the Nikkei business daily report, the move is part of Management's efforts to reduce its workforce by 5% or 2,700 people.
2010 Loss Forecast Cut in Half
Predicted losses for the aviation industry in 2010 have dropped to U.S$2.8 billion compared to the $5.6 billion loss forecast in December last year. Loss estimates for 2009 have also dropped, to $9.4 billion from the previously forecast $11 billion.
IATA claims that the improvement is largely driven by a much stronger recovery in demand seen by year-end gains that continued into the first months of 2010. Relatively flat capacity translated into some yield improvement and stronger revenues. Improvements are being driven by economic recovery in the emerging markets of Asia-Pacific and Latin America.
IATA is also now predicting that cargo demand, which fell by 11 percent in 2009, is expected to grow by 12 percent in 2010, five percent more than the previously forecast seven percent. That would wipe out the effects of the crisis and still give the industry a one percent growth.
Seeing as most commentators are expecting a pre-crisis recovery not before 2013, suggesting it as early as this year is optimistic.
Source: Air Cargo News - March 11, 2010
Air Export Demand Exceeds Supply
A notice from one of our airline partners recently served as a reminder that in recent months we have seen a constant increase in exports. Recently the demand has surpassed the supply. It has been recommended that customers weigh the option of moving time sensitive cargo on an express priority service to ensure cargo is airlifted.
Regardless of chosen carriers, passenger baggage, perishables and mail take priority, followed by general cargo; therefore, there is never a 100% guarantee cargo will ride as booked, particularly on a passenger flight. We all work as proactively as possible in the best interest of our customers during these times of tight space availability.
Space issues also exist all across Asia and now Europe; keeping this in mind, we all need to be alert to the ever-changing landscape when it comes to booking airfreight cargo.
Generally after Chinese New Year there can be a dip in traffic China/USA, but that does not appear to be occurring this year. The economies are gaining momentum, inventory levels are still low all over the world and very few, if any, parked aircrafts are being reintroduced to the market.
NEW REGULATIONS
New German Aviation Security Regulations go into effect April 29, 2010
Beginning on April 29, 2010, exporters will be faced with considerable changes as the implementing provisions concerning Regulation (EC) No 300/2008 were passed on October 21, 2009. This new regulation replaces Regulation (EC) No 2320/2002. Regulation (EC) No 300/2008 shall apply in full from April 29, 2010.
So far, the regulated agent was able to approve a consignor as a known consignor so long as the consignor signed the "Security Declaration of the Known Consignor." In the future, known consignors will have to be approved by the Federal Office of Civil Aeronautics (in German, Luftfahrtbundesamt, LBA) through an official audit.
There are numerous security requirements to be met for approval: the shipping company must guarantee that the airfreight is packed tamper-proof and kept in a controlled area so it is protected from unauthorized tampering and interference. The staff handling the air cargo must be trained accordingly. The shipper has to implement an access control process so that the premises or the site are protected against unauthorized access.
The LBA is required to audit and approve all known consignors by April 29, 2013, and to register them as known consignors in the "EC database of regulated agents and known consignors."
For the period between April 29, 2010 and April 29, 2013, the following interim solution applies: the LBA gets a list of all known consignors from the regulated agents. Thus, the known consignors are listed for up to three years with the federal authority - which indicates that air cargo from those known consignors may continue to be regarded as "secured" and be exempt from ample security controls.
The existing Security Declarations signed by consignors will remain valid for the time being. So far, it has not yet been established whether they hold good for the whole three-year transition period or whether they will have to be renewed every year.
Future editions of the AIT eNewsletter will keep our readers informed as soon as the ministries and the Federal Office of Civil Aeronautics have laid down, in writing, the exact order of procedure.
UP, UP, AND AWAY - AIRLINE UPDATES
The credit crisis hasn't hindered Emirates Group Airlines aircraft orders. Emirates Group is one of the fastest growing airlines with $406 million net profit in 2008. It presently has 145 wide body aircraft, including seven freighters and eight A-380 super jumbo-jets. It has another 145 aircraft worth $50,000 billion on order from Boeing and Airbus.
Emirates will add Amsterdam service beginning on May 1. Currently, the carrier ships 1,000 tons of flowers to the Aalsmeer flower auctions south of Schiphol, Amsterdam each month from Nairobi, Kenya and Addis Ababa, Ethiopia.
Emirates freighters will help export the flowers as well as import them via their international hub in Dubai. Exports from the Netherlands cover more than 60% of the world's fresh-cut plants, flowers and bulbs. Amsterdam will be the airline's second new route this year after Tokyo, which launched March 28. Prague service is scheduled for July 1, Madrid for August and Dakar in September.
Source: Air Cargo World 3/19/10, American Shipper 4/10
The pilots strike didn't slow Lufthansa Cargo's operations in the air or its larger expansion strategy in international freight markets. Lufthansa, which wants to cut $1.35 billion in costs by 2011, said it was merging its cargo operations with those of Austrian Air, effective July 1.This move will allow optimization of cargo flow through their Frankfurt, Munich and Vienna hubs. Austrian Cargo will effectively become a subsidiary of Lufthansa Cargo.
Source: JOC 3/1/10
UPS Airlines recently announced plans to furlough 300 pilots or 11% of its 2,800 member force, to bring costs more in line with demand. The package and freight delivery company is still working with the Independent Pilots Association to identify cost-cutting measures that could forestall or mitigate the action before it takes effect in May when the first 170 pilots are scheduled for furlough.
UPS Airlines President Bob Lekites said that even though the economy has begun to turn around, UPS anticipates a very gradual recovery and a continued need for belt-tightening. In January the company said it would eliminate 1,800 management and administrative positions to streamline its domestic U.S. small package business, which is just one of the steps UPS has taken during the past two years to eliminate $1.4 billion in costs during turbulent economic times.
Source: American Shipper 3/10
Although cargo load factors and volumes are back to pre-crisis levels at Swiss International Airlines, revenue and yields aren't faring as well. The carrier is not even halfway to recovering from the fall in rates during the downturn. The strength of the economic recovery in Europe, where companies are still shedding jobs and governments are bringing an end to their stimulus packages, is still a concern. Having no freighters to fill is presently an advantage to Swiss Air because it has managed to return to 80-85% load factors for belly cargo on its long-haul routes. In June, SR is due to start a six times a week A-340-300 service to San Francisco - its second US west coast destination and its seventh in North America.
Source: Air Cargo News 3/12/10
Eva Air Cargo has reintroduced freighter service between Taipei and Vienna. The carrier operates a 747 freighter every Thursday and Sunday. Compared to the current three passenger flights per week with a total of 24 to 36 ton freight capacity, these additional flights will provide additional air cargo capacity of 18 to 30 tons twice a week. According to K W Nieh, spokesman for Eva, the main reason to relaunch the freighter flights was the rising demand in cargo business beginning with the fourth quarter 2009 and the recovering worldwide economic situation. He commented further that demand from the CEE (Central and Eastern Europe) is particularly promising.
Source: Air Cargo News 3/24/10
Cargoitalia has increased its schedule by 50% in March. USA flights will rise to three per week operating Milan (Malpensa) - New York/Chicago on Wednesdays, Milan/Chicago on Saturdays and Milan/New York on Sunday. This increase is in a direct response to demand.
Cargoitalia is now the only carrier providing direct maindeck capacity from New York to Milan, according to Commercial Director Roberto Gilardoni.
Flights to Hong Kong will also increase to three times weekly. Tuesday services will route via a new destination, Sharjah and Thursday and Saturday services will continue to transit Dubai. All inbound flights will maintain their technical stop in Almaty.
Source: E-Cargonews Asia 3/24/10
Air India has around 15 Boeing 777s and has placed orders for 27 Boeing 787s. Boeing has delayed the delivery date. As a result, Air India is blaming Boeing for financial woes and has claimed $710 million in compensation. Thus far, Boeing has agreed to pay $145 million.
Boeing is also in the headlines as a result of Air Berlin's cancellation of a $1.7 billion of firm orders for Boeing's 787 Dreamliner aircraft amid uncertainty over whether Air Berlin will increase long-haul flights - this according to Reuters. The order was placed in 2007 when Air Berlin had planned to buy charter airline Condor but backed out of the planned takeover a year later, citing soaring oil prices and worsening economic conditions. Air Berlin has cut its order to 15 planes from 25 and reduced possible future options on aircrafts from 10 to 5.
Source: Cargonews Asia 3/18/10
Air Cargo World Announces 2010 Air Cargo Excellence Survey Winners
Air Cargo World, the global news authority on air logistics and freight transport, has unveiled the findings of its sixth annual Air Cargo Excellence (ACE) Survey, which measures carriers and airports on specific criteria and ranks them to identify above or below average performance.
The survey is determined by freight forwarders who rate airlines on Customer Service, Performance, Value and Information Technology; airports are rated by airlines on Performance, Value, Facilities and Regulatory Operations.
The top five airlines were honored with awards, ranging from Diamond to Bronze, at the March 9, Vancouver awards ceremony. Southwest Airlines garnered the highest overall airline score, led all airlines in the Performance and Value categories, and received the evening's highest honor, the Diamond Award. FedEx Express, which came in second in overall score, was the recipient of the Platinum Award; and Emirates Sky Cargo came in third and received the Gold Award. The Silver Award went to Virgin Atlantic and Bronze to Nippon Cargo Airlines.
Airports rated highest by airlines and forwarders included Memphis in North America, Amsterdam in Europe, and Seoul Incheon in Asia & Middle East, in the one-million-or-more tons category. In the half-a-million to million ton category, Dallas/Ft. Worth, Luxembourg and Tokyo Haneda took the lead in each of their regions. For the half-a-million and less category, Athens (Europe) advanced to the top spot from 11th in 2009, and Rockford (North America) moved into first place, up from seven last year. Nagoya rated highest overall in Asia & Middle East.
Significant improvements made by airlines from 2009 to 2010, include Southwest Airlines' jump to first place from 12th, FedEx Express to second from ninth, Nippon Cargo Airlines to the fifth position from 30th and Japan Airlines to sixth from 22nd place.
"The Air Cargo Excellence Awards ceremony gave us a great opportunity to honor the airlines and airports that strive to meet excellence and to exceed their past performances. The success of this inaugural event proves the importance and credibility of the Air Cargo Excellent survey, which has become an important benchmark of airline and airport performance," said Steve Prince, publisher of Air Cargo World.
Southwest Named Airline of the Year and Carrier of the Year
The Express Delivery (XLA) and Logistics Association has named Southwest its Airline of the Year for the sixth consecutive year and the Airforwarders Association also selected the airline as Carrier of the Year.
AFA members voted Southwest the best for on-time performance, customer service, problem resolution, claims handling, technology support, service options and overall value.
The XLA awards are based on an annual survey of association members who use the services of commercial passenger airlines for their express deliveries around the world. Southwest took top honors in 2002, 2003, and 2005 through 2009, and finished second in the rankings in 2001 and 2004.
Greener Planes Mean Bluer Skies for Continental Airlines
On March 8, 2010, Aircraft 516, which was the 737-800 Continental used for its biofuel demonstration flight last year, received a special paint treatment with the Eco-Skies logo and green winglets. Results from the biofuel demonstration flight and from similar demonstration flights will help biofuels become certified for commercial aviation use.
Scientists estimate that overall life cycle greenhouse gas emissions related to biofuels, like the blend made partially from algae and jatropha oils that Continental used, will be reduced by 60%-80% as compared to traditional jet fuel. The fuel Continental used on their demonstration flight was also about 1% more efficient than traditional jet fuel.
AIRPORT UPDATES
Due to reconstruction of the main runway at JFK Airport by the Port Authority of New York, one third of the airport's traffic and half its departures are being diverted to three smaller runways. Waiting for take off and landing is now longer, which has had a rippling effect to other cities. During this construction period, which is expected to last for the next three months, several airlines have cut back on their schedules, which equates to fewer available flights on which to book cargo. The completed construction is expected to reduce delays by an estimated 10,500 hours per year. The renovation is expected to have a 40 year lifespan by paving with concrete instead of shorter-lasting asphalt.
Source: American Shipper 4/2010
Dubai Airport has announced double-digit growth in cargo traffic in February. According to Paul Griffiths, CEO, Dubai Airports were the fastest growing major international airport in 2009 and figures so far this year are very encouraging. For the first two months of 2010, cargo traffic has reached 343,160 tons compared to 265,870 tons for the same period in 2009.
Source: E-Cargonews Asia 3/22/10
In their annual report on airport performance, the ACCC (Australia Competition and Consumer Commission) have once again named Sydney Airport behind first-ranked Brisbane, Adelaide, Perth and Melbourne. Graeme Samuel, chairman ACCC, said the indications are that Sydney has increased profits by permitting service quality to fall below that which airlines reasonably expect. This is the fourth consecutive year Sydney has been awarded this dubious claim.
Source: E-Cargonews Asia 3/12/10
Airports of Thailand, the state-owned operator of the country's main airports, has approved an expansion of the Suvarnabhumi Airport - Bangkok.
The airport was opened in September 2006 with a capacity to handle 45 million passengers and three million tons of cargo a year. The venture, which will take place between 2010 and 2016, hopes to expand capacity to 80 million passengers, of which 60 million will be international and 20 million domestic. Freight is estimated to grow by an average of 4.6% a year in 2010-2014.
Source: Aircargo Asia-Pacific 2-3/10
PREPARING FOR TAKEOFF: A THOUGHT TO PONDER
When once you have tasted flight, you will always walk the earth with your eyes turned skyward: for there you have been and there you will always be.
- Henry Van Dyke (1852-1933)
If you have any questions or comments regarding the Air eNewsletter,
please contact Kathleen Lally from the AIT International Air Department. |
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