Vol. 10  No. 5                                                   WE COVER THE WORLD                                 Wednesday January 19, 2011

 


   The path ahead certainly includes some reference to the road recently travelled.
   For air cargo, an exact projection of what will happen in the year ahead after having spent the past trio of years aboard a global economic rollercoaster might be considered risky business.
   But in the end, life and how we conduct our business are still part inspiration and part perspiration, although our survey seems to be finding much more affirmative voices on the doorstep of 2011.

Etihad Lifts Off Large

commenced commercial operations in November 2003 and went on to become the fastest growing airline in the history of commercial aviation. Abu Dhabi, the capital of the United Arab Emirates, is the airline’s hub.
     Etihad’s fleet of 54 aircraft operates close to 1000 flights per week, serving an international network of 64 destinations in 42 countries.
     For Etihad Crystal Cargo and its top executive Roy Kinnear, the arrival of two Airbus A330-200F freighters this year, adding to two A300s and two MD11 freighters, was a huge milestone.
     “The additional freighter capacity has allowed us to expand frequency on key markets and to launch six new freighter routes (including Hong Kong and Beijing) bringing the total destinations served to 24. We are confident these aircraft, owned and operated by Etihad Crystal Cargo, will further push our business forward,” Mr. Kinnear said.

Roy Kinnear
Senior Vice President
Etihad Crystal Cargo 
FT:   What are the near term and long term plans for Etihad Cargo?
RK:  We are currently operating six freighters: four leased and two owned and operated. Our strategy of using the freighters for feeding and de-feeding the airline’s belly hold capacity continues, however the rate of growth of dedicated cargo capacity over the short term is strong.
     Etihad Crystal Cargo will take delivery of a Boeing 777 Freighter in June 2011, offering further opportunities to expand frequency and broaden our footprint in growth markets.
     Etihad’s plans for aircraft deliveries between now and 2020 will provide another step in our growth, enhancing both schedule frequency and destinations. We are also set to launch our first service to Incheon, South Korea. We are continually reviewing expansion plans with a focus on various destinations in Africa.
FT:   What do you expect in terms of future air cargo growth—and what will drive that growth?
RK:  We expect to see a capacity increase of approximately 15 percent, year on year.
     In the long term, the greatest areas of opportunity determine our growth plans. As markets mature and evolve from producer to consumer/growth markets, for example Vietnam, Indonesia, Egypt, Turkey and South Africa, we will focus on those important markets.
FT:   What is your absolute top priority right now?
RK:  My top priority is extending the wave of record tonnages for Etihad Crystal Cargo and, knowing the cyclical nature of the business, making strong tactical changes during these positive times. The success of new routes such as Hong Kong, Beijing, Lagos, Addis Ababa, Erbil and our newest destination Seoul is essential to the growth plans for Etihad Crystal Cargo and the airline’s plans for achieving profitability in 2011. For Etihad’s cargo business, the top priority is playing our part in meeting Abu Dhabi’s 2030 Vision. This will include opening a new cargo facility in Abu Dhabi, scheduled for completion in 2014, and ensuring our existing cargo facility operates at full capacity.
FT:   How much is Etihad’s business driven by the airline/forwarder partnership. What percentage?
RK:  Our business is almost entirely interdependent with the forwarding community. There are a number of specialist industries, such as produce and pharmaceuticals, where the end customer takes a more prescriptive role with carrier choice, but in general, we work with our forwarding partners on finding joint solutions. Having attained a significant scale, we now manage programs with several key global multinationals. We also have a thriving charter and special projects desk as part of our Freighter Operations team, which uses our own flying and also leverages supplier relationships to find part- and wholly-dedicated flying capability for customers.
FT:   How will the airline/forwarder arrangement succeed in the future, faced with the challenge of the integrator?
RK:  There is clearly room for both models. As logistics departments in manufacturing companies continue to enhance their capabilities, fully outsourced approaches will become less common and we expect there will be a greater desire to engage with carriers. Forwarders will continue to provide the full range of services and in general, airlines won’t be largely involved in this market sector. Schedule will remain one of the most important criteria for air cargo, so it is important to understand that schedule is not just about door-to-door timing.      Customers still look for direct routing, and hub approaches taken by integrators don’t always offer the quickest or most direct approach.
FT:   Is the integrator emerging as possible service partner adding their service into yours in some fashion?
RK:  We currently carry business for integrators and the simple bilateral interlining approach can work well.      The challenge is aligning the need for service and uplift standards relative to the airport-to-airport pricing and cost models.
FT:   What new services, construction, products, etc. have been instituted?
RK:  Since the airline launched seven years ago, the key focus has been on expanding our network, so enabling the hub in Abu Dhabi to meet growth has been a key step in our progress. We have evaluated a number of key strategic opportunities to benefit the business, such as the new cargo facility in Abu Dhabi, scheduled for completion in 2014.

FT:   What irritates you most in air cargo. Why? What would you like to see changed?
RK:  As an industry, we need to attract new talent to keep the momentum. Cargo is a great business, a bellwether of global trade, an economic engine and a challenging, solutions-driven environment. Raising the profile of the industry as a potential career is an opportunity for all of us.
FT:   Where is the air cargo business right now? How should the air cargo industry conduct itself considering current economic, security and political conditions?
RK:  Current cargo market conditions are positive, particularly given recent global events and movements.      The pace and growth of volumes and yields are good. The infrastructure challenges of the business such as security and electronic document acceptance remain a huge obstacle requiring multilateral approaches. Cargo continues to be a key component of airline business models and as a result, the pressure to deliver means there are very few resources to spare in cargo departments to dedicate to the common good. Those who can, and do, champion such causes are certainly worthy of the recognition they receive. At a time when there should be multilateral communication and advocacy, it is harder for the industry to engage as a whole. It will be interesting to see if the recent GACAG initiative, launched at the recent TIACA conference, will come to fruition as this will be important for the industry’s future. A level playing field regarding security and related regulatory infrastructure is essential, not just across markets, but even within markets themselves. Suffice to say there is an increasing focus on global security and as regulations are tightened, we are fully complying with governments worldwide.
FT:   What is your company doing in light of those conditions?
RK:  Competition remains strong; therefore we remain focused on delivering excellent service today while investing in growth for the future. We are seeking to achieve the best business outcomes by entering supply contracts that give us flexibility to grow rapidly if necessary, but also allow for rapid adjustment if the business cycle works against us. Diversifying from larger but more volatile trade lanes such as Asia to Europe and finding a larger number of niche business opportunities and routes has served us well.
Geoffrey/Flossie

 


The Weirdest Plane Ever Built?

Click on image to view

 

Neel Shah
Senior Vice President
Chief Cargo Officer
Delta Air Lines

     Ask Neel Shah, what is the top agenda at Delta Cargo for 2011, and the answer is immediate and certain:

There are many things to be excited about as we head into 2011.
     We are launching several new routes that should prove to be quite lucrative from the cargo standpoint, including DTW/PEK, ATL/PVG, LAX/HND, DTW/HND and increased frequency on DTW/GRU.
     This should give us a good push in the right direction as we pursue $1 billion in cargo revenue.
     We are also rolling out system-wide warehouse and planeside scanning, which will be a game changer for us because we will have complete visibility into our shipment status at all times. We have worked hard at this initiative and hope to have it rolled out to all the US gateways by March 31 to expectation.
     2010 was a good year for air cargo and Delta Cargo enjoyed the general recovery in the global economy.
     We saw strength across the board, but the regions with the biggest growth were the Pacific and Latin.
     Delta Cargo was also busy finishing off the integration work related to our acquisition of Northwest and I am very proud to say that the vast majority of our employees voted to have a direct relationship with management rather than be represented by a union.
     Overall, it was a great end to a very good year.
     One of the things that really stood out in 2010 was Delta’s return to the domestic mail business.
     We started with zero domestic mail in March and carried close to 4.5 million pounds in December and continued to post very strong performance numbers. We are looking forward to growing this business significantly in 2011 through close partnership with the USPS.
     The most important appointment for the cargo division in 2010 was Gregory Mays to the position of Managing Director of Global Cargo Operations.
     Greg has brought a great deal of process discipline to the division and he has a number of significant projects that will roll out over the next few months that will have a positive impact on our customers.
     One of the biggest challenges for 2011 is the strength of the global economy and our ability to weather the uncertainty that still exists out there.
     Oil prices are rising, which is obviously a concern because it has a disproportionate impact on the airline business and could force modal shift if it continues on its current trajectory.
     Delta Cargo will be pretty active on the trade show front over the coming year both as a standalone entity and also with our Skyteam Cargo partners.
     We plan to attend Air Cargo 2011, Air Cargo Europe, CNS, IATA World Symposium and a host of other shows around the world.
Geoffrey/Flossie

 

Cargoitalia MXP-ATL
February 3

     Milan, Italy-based Cargoitalia will begin scheduled service to Atlanta on February 3.
     Twice weekly flights to Milan raised comment from Atlanta Mayor Kasim Reed (right) who said: “Our freight forwarders have been asking for more airlift capacity to Europe.
     “Cargoitalia is a world-class, all-cargo airline that meets this need, and I am confident it will serve our customers well in the years to come.”
     “Atlanta is one of the most important air cargo gateways in the U.S.A., and we consider it a must-have city in our growing network,” said Roberto Gilardoni, (left) Cargoitalia commercial director. “The facilities [in Atlanta] are impressive, and we greatly appreciate the help and support they have shown to their newest guest airline.
     We have great optimism about our potential in this market.”
Ted

 

     Reto Hunziker, the likeable young manager of Lufthansa Charter, now has completed his first year leading the organization, having taken the MD reins from company founder Christian Fink early in 2010.
     We caught up with Reto, who moved from start-up Jade Cargo in Shenzhen back to Frankfurt with some ease, wondering if things are really humming along and what is next for Lufthansa Charter?
     Reto used to describe his team at Jade as "my famly." From that approach, Reto Hunziker seems to be all for the expansion of family, which looks to be growing all over the place.
FT:   How do you rate your performance as MD Lufthansa Charter? What have you learned?
RH:   Everything is going the way it should. We initiated an internal team, building and changing process to clarify the responsibilities and interfaces. This had, has and will have a big influence on the people and the company culture.
     This will make dealing with us even more efficient and fast for our customers, so we are definitely on the right path to be fit for the future.
     I have learned to deal with a different culture and environment again, privately as well as in the business.      Here in Germany you can address problems and differences much more directly. Talking to people straightforward and right away will sort out any issues before they turn into a problem.
FT:    Recent word is surfacing of changes in personnel at Lufthansa Cargo Charter. Can you describe whom the new people are and what you hope they might accomplish?
RH:   We appointed a new GM for the Americas, Andrew Morch, who was working for Swissair, KLM, ABC and Air Canada before. He has a good knowledge about the U.S. market and customer base.
     The new GM appointment for DXB is Lloyd D'souza who comes with years of experience in charter brokering, in HKG we have appointed Murray Gregg who has been with with Air New Zealand for decades and is a real veteran in the industry.
     The change process will also bring some personnel chances in the FRA office. We did shift some responsiblities within the teams and had a few personel changes.
FT:   Can you describe the current condition of your business, and what you think lies ahead for 2011?
RH:   We had a good year 2010 with a considerable increase in revenue compared to 2009.
     2011 will in my view be quite a challenging year. The classical peak season 2010 from mid October (after the Golden week) until early December did not turn out as strong as we hoped and did not stretch into the New Year as it did the year before. Most of the freighter capacities that where grounded in 2009 are back in the market and a further increase is to be expected.
FT:   How is the charter market right now and what are you doing to leverage Lufthansa Group to maximize returns with Jade, Austrian, Swiss and Lufthansa?
RH:   The market is ok, the request level is slightly above last year. We always check the availability of the group capacity first. We then go to the market in case there is no group capacity available.


  Reto Hunziger and Heide Enfield, Head of Marketing & PR.
  "Wings of Help is a great charity that is constantly at crises points everywhere in the world with special emphasis in helping children. Lufthansa Charter is proud to support Wings of Help."

FT:    Has the financial crisis affected your business, and if so, how have you modified the way you do business during the crisis? What actions have you taken toward additional product enhancement and what new products and services are or will be offered?
RH:   We were affected by the financial crisis in the same way the whole industry was affected. Being an extremley lean organization we were well prepared! We implemented and kept a strict cost optimization program and hence we where able to get through the crisis very well.
     The traditional ad-hoc charter business will stay the main focus for the future. However, we started to look into new segments, like small charter operation, as well as into year round charter chains. Additionally we are discussing new products and industry approaches together with Lufthansa Cargo and the Lufthansa Cargo Group.
FT:    What is the most common misunderstanding about Lufthansa Cargo Charter?
RH:   Everybody thinks that we focus on selling group capacity only. That is not the case at all; group capacity reflects only a minor share within our business model.
     We are also often seen as MD11 F, Boeing 744F and 777F provider, flying mainly in and out of Germany. However, we do much more and can offer each size of aircraft from XXS to XXL and that worldwide, be it between China and India or the US and Brazil or any other country in the world.
FT:   Has anything in the air cargo businesses' recent past surprised you? If there were one thing you could change about the industry to make it better, what would it be?
RH:   I was surprised that 2010 was developing the way it did. The short recovery mode from the crisis to what was, e.g. for our parent company the best year in history, was a big surprise.
     I would like to make our business more predictable and reliable and less dependent on seasonality.
FT:   How has increased security demand impacted your business? In your opinion, what contributed to the success of 100% security in the USA? Do you believe that the same success will occur in Europe and elsewhere in the world?
RH:   We are in line with the industry. We did not feel a negative development due to increased security. Security will be the key in the future.
FT:   Are air cargo industry shows worth the cost, time and labor? What do they deliver and what can be done to make them better? What air cargo conferences do you plan to attend during 2011?
How productive have air cargo conferences 2010 been - i.e., Brazil and CNS that you attended?
RH:   To improve the quality of conferences there must be more focus on current, important topics. For example the issue that Dr. Otto brought up during his speech at CNS about CNS becoming more international and bringing the conference outside the U.S., and the follow up discussions that are now continuing in FT.
     This year we of course plan to attend the transport logistic exhibition in MUC which is, in my opinion, still the most important one. This will be a combined Lufthansa group stand with LH Cargo, LH Cargo Charter, Swiss WorldCargo, Brussels Cargo, time-matters and Jade. Besides we will be present at Air Cargo Africa, a first time event, together with our colleagues from Brussels Airlines Cargo. Brussels is very well established in the African market and we hope to get a piece of the cake. At Intermodal in Sao Paulo we will be with our colleagues from Lufthansa Cargo Brasil again and for sure we will be at the CNS. Other conferences and exhibitions will be visited by our local colleagues.
     The Brazil show was an excellent experience. It showed how big the potential is in the South American market. Everybody is focused on China and India, however in my opinion the South American market is emerging as an important market.. SA-EU, SA-Asia, SA-US as well as the traffic within SA will grow and will play an important role in the future.
FT:   How important to your business are air cargo industry awards?
RH:   I belive we could do with far less awards. With every publication giving out awards nowadays we have a bunch of Best whatever in the end. Wouldn't it be more serious to have one central award with different categories, based on performance only.
FT:   Earlier last year, Lufthansa Cargo Charter (as did many other cargo companies) was involved in lifting relief supplies to Haiti. What other moves has Lufthansa Charter made to help organizations that are recognized for their contributions to people in need? How much emphasis can you place in utilizing Lufthansa Charter to help others?
RH:   2010 we also flew relief charters to Pakistan after the flood. Besides we are a supporting member of the "Luftfahrt ohne Grenzen"( Wings of Help ) institution. In this regard, we also sponsored their Sikorsky S38 World Children's flight.
     Relief is an important topic for us which we do take very serious. We try to help whenever we can. Needless to say, we provide relief flights at base cost.
FT:    When not working, what else interests you? Hobbies?
RH:   I like running and biking; in general I like spending my time outside enjoying nature.
FT:   At some point in life, everyone thinks about the job they delivered: How do you rate yourself? Why? Of what are you most proud?
RH:   I think together with my new team I have done quite a good job so far. However it is far too early to relax - there is still a lot to do. I'm proud that most of my people understand the new philosophy and the new approach.
Geoffrey/Flossie

 

RE: Century Of Aviation In India

Dear Geoffrey,

     Your paper on the century of aviation in India was all sweet to me, as a postman and as a Frenchman!
     Airlines sometimes forget that mail was the mother of all commercial aviation, although it is also true that many of them are represented by dedicated, knowledgeable and nice persons.
      A colleague from the UPU reminded me that a meeting room at the Universal Postal Union offices in Bern, Switzerland is named after Henri Péquet, where I have chaired some meetings of the UPU Transport Group or the IATA - UPU Contact Committee.
      Thanks for the ever so interesting news and comments you bring to us!

Regards,
Christophe
Christophe EGGERS
La Poste S.A., Direction des Relations Extérieures
Responsable Facilitation Supply Chain
Supply Chain Facilitation Manager

Geoffrey:

     I guess you are aware of the very bad floods, which are happening throughout Queensland. Two-thirds of the State roads are under water, which is roughly the area of Great Britain & New Zealand and parts of some Countries in Europe. Brisbane CBD has been evacuated and the Brisbane River, which runs through the City, has burst its banks and flooding of the Brisbane CBD is happening right at this moment, with the worst expected tomorrow the 13th as floods waters being released from Dams upstream merge with the river and tidal system.
    The situation is critical and we expect our power to be cut off at any time and have no idea when we may be back on line.
    Our warehouse/office is situated very close to the Brisbane River and in the flood zone, therefore, we are in the process of sandbagging all possible water access areas to our building and moving freight stored in our warehouse to higher ground.
    To all GLN members and other services partners, we apologize for any lack of communication in these coming days; however, we will respond to any emails as soon as we are up and running again.

Kind Regards,
Joseph Raitt
Raitt International Freight Pty Ltd.
Unit 10/300 Cullen Ave East
Eagle Farm QLD 4009
AUSTRALIA
joe@raitt.com.au

Late News:    The Brisbane City Council says bad weather combined with a king tide this weekend could cause flooding in areas that were not affected by last week's Brisbane River peak.
     Last week Brisbane Airport reported people arriving at the Brisbane International Airport terminal thinking it was an official evacuation center.
    The Australian Business Traveller reported “the airport took them in and gave them shelter in gate lounges, but asked Brisbane residents to go elsewhere if they needed evacuation, as the airport was not a designated evacuation center.
    “Despite the dire situation in Queensland, Brisbane Airport is still operating and not flooded.
    “However, availability of transport to and from the airport is limited due to flooded roadways.”

 

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