IATA AGM A Sideshow?

“The music goes round and round and it comes out here.”
     The 68th IATA AGM in Beijing held this week has generated saturation-level coverage of director general and CEO Tony Tyler’s “State of the Industry” speech. While hitting on all the expected points, the tenor and conclusion seem to be that of a wailer-in-chief citing endless statistics about an industry plagued by decades of razor-thin margins.
     So where’s the beef? How about telling us something we don’t already know?
     Yes, Mr. Tyler also repeated the arguments for the importance of commercial aviation, and he gets extra brownie points for putting cargo on the table with equal status alongside the passenger business.
     We want to reference that unique second sentence of the U.S. Declaration of Independence, “we hold these truths to be self-evident…” because in the year 2012, the DG states:
     “The high price of oil is among the main reasons for our anemic global profitability. Oil prices have softened slightly. But we still expect an average of $110/barrel. That will leave us with a fuel bill of $207 billion—almost equal to the GDP of the Philippines or the Czech Republic. It will account for a third of our costs. And political risks could easily push the price higher.”
     At about the time I got my aircraft dispatcher license in 1984, I learned that airline operating costs were divided into one-third fuel, one-third crews and the rest included everything else, from hull insurance to general and administrative.
      While technically correct, these are platitudes, and surely airline executives at the AGM could be reasonably expected to know such facts on their own. What is the point of trekking all the way to Beijing to listen to this? Why not use the collective business acumen of those participating in a mass brainstorming session to come up with a few new ideas that are needed to help bring the industry on a better, more sustainable path?
     Instead, the speech centered much on governments – “I propose an agenda with governments focused on unleashing our potential to drive economic growth and build a financially sound industry based on:
           • A tax regime that does not kill growth
           • Regulation that facilitates growth
           • And infrastructure that can efficiently accommodate growth
     “Airlines need infrastructure to grow. Just like taxes and regulation, some governments understand and reap the benefits. Others don’t and the economy suffers the consequences.”
     So 34 years after deregulation, governments, the oil industry, and airports hold the key to the future of the airline business, and not the airlines themselves? Governments are driving the global economy? This flailing around at sundry external factors (while indeed real) misses the point entirely, and with it another great opportunity to come up with much-needed change from within, in my view.
     Yet on cargo, Mr. Tyler said:
     “Partnerships are equally important. Cutting shipping times by 24 hours with e-freight will grow the cargo business for everybody. But despite seven years of work, e-freight penetration was just 11 percent at the beginning of the year. The Global Air Cargo Advisory Group provides an opportunity to assist airlines, shippers, and forwarders to focus on 100 percent e-freight by 2015. The e-air waybill is a key focus. Its implementation, which is targeted at 100 percent by 2014, will bring benefits to all parties while facilitating the move to e-freight.”
     No word about governments—it’s all about the participants in shipping air cargo.
     You want innovation?
     Just look at what Panalpina has been able to do with imagination and a couple of B747s, its Huntsville, USA, Dixie Jet service working via an enlightened gateway to turn a growing stable of air-minded customers into cargo new business.
     Here’s one that didn’t involve IATA, either.
     If all or any of this sounds like a ride to nowhere or a trip in an endless circle, like any one of a thousand carousels now dotting the landscape this summer, you will get no argument here.
     The problem is that while everybody wants to have a better understanding as to how to grab the brass ring in an increasingly complicated global economy, and the effect the global economy has on the transportation business, IATA offers nothing new.
     Sadly, in 2012 IATA is not much more than a cheering section; a sideshow to the real brilliance and hope of the great airline industry that it is supposed to represent and serve.
     We take little pleasure in saying that, but there it is.
Ted/Geoffrey

Catching Up With Chep

     The last time we visited, it was still Unitpool. We caught Dr. Ludwig Bertsch (right) in March 2012, before he rushed off to catch a flight to the Middle East. When we asked him about current priorities, the answers come out without hesitation – the integration of its far flung business, especially the Driessen Services component in Seattle, which specializes in ULD repair and maintenance, and rolling out the former JMI Aerospace ACTIS IT system to manage the 50 repair stations CHEP features worldwide, 23 of which are owned.
     We continued the discussion with David Harman, (right) whose present title is Director – Sales, Marketing & Account Management and who has been managing Unitpool in Zurich since 2007. There are additional projects ongoing, such as the total rewrite of the Tracker IT system by Ultra to replace the former Videcom version. Testing has been scheduled for January 2013. ACTIS will be used for accounting functions, including Form 1, while the previous Tracker repair module is being replaced by ACTIS. Two new repair stations have been added to the network, Copenhagen, following the acquisition of the SAS account and the last Nordisk Service Center and Atlanta. Talking about Atlanta, CHEP Aerospace Solutions will participate and exhibit at this year’s International Air Cargo Forum in October.
     CHEP supplies all its owned and contracted repair stations with handheld scanning equipment to record either a ULD bar-coded identification or to enter the ULD serial number. The units can also be used to order parts and as certification for the repair release forms. When it comes to technology, tracking ULDs has long been a very desirable feature; however, until recently no single automatic identification method used has fully lived up to the promise and the expectations. David confirmed that CHEP is aware and looking at a number of options with the advent of GPRS solutions, which have started making inroads in a number of airline applications. ULD systems have long used industry standards messages and while GPRS alternatives can fulfill the all-important requirement for location identification, David firmly believes a message such as UCM will continue to be used in order to provide flight movement information.
     A frequent challenge has been the fact that ULD pooling and management companies have contractual agreements with carriers; carriers have handling agreements with ground handlers who physically load, unload, store, and inventory ULDs on behalf of the airline, yet the pooling companies depend on the ground handlers for how carefully the ULDs are handled and to timely and accurately report ULD activity to both airlines and pooling companies, with whom there is no direct contract. There is a very direct financial impact that affects airlines and pooling companies as a result of damage to the units during ground handling. David indicates that there is growing awareness about handling challenges on all sides and education needs to continue.
     And what about the business prospects? According to Mr. Harman, only 12 percent of the global ULD inventory is managed by polling companies, currently CHEP and Jettainer, therefore there is significant potential to expand market share and attract more airlines to pooling, and CHEP is committed to taking up the challenge. There are customer airlines, such as the newly resigned UA/CO account, through the Driessen acquisition, which contract only for ULD maintenance and repair services, but no pooling or management. Air Cargo Germany is becoming a new client for CHEP and David clearly sees the need for CHEP to sign up a major passenger network carrier to finally break the ice into the majors. Reference customers have worked well so far when talking to new prospects, indicating that customers are satisfied with the services they receive, as also evidenced by recent discussions at the IATA WCS in Kuala Lumpur. Asked about the WCS, David said there was some improvement in the overall format, with less choice in the various tracks and the layout, yet he sees a benefit in being an IATA registered supplier, which gets CHEP access to the delegates’ lists earlier, helping with scheduling meetings.
     David went on to say that CHEP was on track for growth, pulling together the headquarter in Zurich, its operations center in Bangkok, adding the Seattle-based former Driessen repair operation and the former JMI Aerospace services, and the IT solution and customer base in New Zealand and Pacific Asia. The corporate parent, the Australian Brambles, has been instrumental in contributing know-how and experience to CHEP Aerospace, be it in the form of lean 6 Sigma or providing the resource to head up the 75-employee Bangkok center. A new website is planned to come online in July.
     With Jettainer the only competitor, Davis believes the two companies have different business models and he thinks CHEP offers more neutrality. Jettainer brands the ULDs it manages for a customer carrier, whether it is Lufthansa Cargo or Swiss, for example, whereas CHEP uses its entire inventory as a common pool.
     During his address at the 2011 ULDUG meeting in Miami, Michael Steen said ULD was an important and underestimated topic and he would make sure they have a platform at the 2012 TIACA event in Atlanta—but it remains to be seen.
Ted Braun

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Re: Boesch An Air Cargo Hero

Dear Mr. Arend,

     I read with interest your recent profile on my friend, Mr. Bill Boesch.
     As your article rightly points out, Bill was part of a small group of distinguished Americans who envisioned a safe, efficient ground transportation system, first in Afghanistan and later in Iraq.
     With the help of visionaries like Mr. Blaise Durante, Bill Boesch did the hard, dirty, dangerous work necessary to establish effective relationships with tribal leaders and then devised a working transportation system that reliably supplied distant outposts.
     The most compelling point, in my view, is that Bill quietly did all this while saving taxpayer dollars and the lives of US service members.
     Thank you for highlighting his remarkable accomplishments!

Sincerely
Ray Johns
General, USAF

Dear Readers,

     FlyingTypers’ Exclusive “Reveal” series was created to give special attention to people that bring honor and pride to our industry, but are often overlooked in the commercial awards activity sponsored by publications and other industry groups.
     This wonderful letter from Four Star United States Air Force Gen. Raymond E. Johns Jr., who serves as Commander, Air Mobility Command, Scott Air Force Base, Ill., confirms our choice of Bill and his heroic selfless effort for the past several years.
     Air Mobility Command's mission is to provide rapid, global mobility and sustainment for America's armed forces.
     The command also plays a crucial role in providing humanitarian support at home and around the world.
FlyingTypers salutes the men and women of AMC—active duty, Air National Guard, Air Force Reserve and every civilian—as they provide airlift, aerial refueling, special air mission and aeromedical evacuation.
     We again salute one of our own, Bill Boesch, for an extraordinary job well done!
Geoffrey

     I am saddened by the news of Frank's passing. The memory that popped up in my mind is that of Frank and Jim Larsen at those infamous ski outings we used to hold at Seaboard in various European resorts. A busload or so of employees, customers, and hangers-on would descend on an unsuspecting, tranquil Alpine village, which was never the same after it was all over. The specific year that comes to mind is probably 1979—not sure about that—in Braunwald, Switzerland, pretty much right in the center of the country.
     There was always a semi-formal ski competition that no one, except the Swiss, took seriously, and needless to say, Jules Schnyder and crew won it year after year. Then came the celebrations and camaraderie; it got rather raucous, and I'll spare you the details, but suffice it to say that we were politely asked to not return.
     The last event held was in 1982, after the October 1980 merger with Flying Tigers (I think) in the Italian gem of Courmayeur, and I think both Frank and Jim were present. It was the end of an era and now one of those young men has left us.
Ted

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