urope’s carriers claim the Middle East’s most rapidly expanding State-owned airlines—Qatar Airways, Emirates, and Etihad—are benefitting from unfair competitive advantages, which are enabling them to seize market share.
     Richard Forson, (right) ‘interim’ President and CEO of Luxembourg freighter operator Cargolux, told FlyingTypers that Gulf carriers were now the biggest threat to freighter operators and combined airlines.
     “The main Middle East carriers all recorded significant growth in the first quarter,” he said. “The increasing influence of Middle East carriers is something the cargo industry will have to handle, as they have on the passenger side.”
     Forson argues that some traditional combination carries will be forced to cut capacity and may choose not to renew freighter fleets in the face of the “irrational behavior of airlines offering discounts” to build market share.
     “It’s not an equal playing field and that’s where the irrationality comes from,” he explained.
     Gulf airlines counter that in both passenger and cargo markets they are the beneficiaries of a global economic shift to the East, which has left them at the center of global trade. They believe open skies policies at home hubs and more efficient operations are giving them the ability to win market share, not cheaper fuel, landing fees, and State support.
     However, in one recent policy briefing, Lufthansa characterized the expansion of the Gulf carriers as “aggressive, government-supported growth” and called on the European Commission to push for new instruments to ensure fair trade and competition, alongside deterrents against companies and States “that provide illegal subsidies and engage in unfair trade practices.”
     A spokesman for Lufthansa Cargo said the cargo growth figures recorded by Middle East carriers had turned them into major competitors for Lufthansa and other European cargo operators.
     “We see this as a challenge and want to compete by offering the best products, top quality services, and a strong network,” he said. “However, it is important to notice that we do not have a level playing field in a lot      of areas, which sometimes makes fair competition simply impossible.”
Forson points out that European carriers have to abide by EU regulations on airport closures, emissions, and rigid rules on State Aid, which makes it difficult for them to put money into the business. By contrast, counterparts in the Middle East can operate far more freely and also benefit from attractive landing fee rates, tax regimes, and fuel costs.
     “This isn’t something that will change overnight, but we have to deal with it, so that’s why we are developing flexibility,” he said. “In Europe if there is any state ownership of the business, then this is a lot of scrutiny if money goes into the business. In other parts of the world governments can put money directly into carriers and there is no comment. One always assumes businesses are being run for profit, but there could be other strategic objectives as well.
     “We will never be able to match the cost levels of the Middle East, but have to be as cost effective as we can. We can’t afford any excesses.
     “The regulatory environment is another area. Outside Europe regulations relating to labor, for example, are not as tight. This increases the cost of doing business and makes it harder to compete with non-European carriers.”
     A spokesman for the Air France-KLM Group said that Gulf carriers and other competitors were running highly professional operations, but some also had unfair advantages. “It is an environment where national insurance contributions and salary costs are different, infrastructures are often paid through income taxes, and State policies often support aeronautical development,” he said.
     The Group believes its “Transform 2015” strategic development plan, which also incorporates cargo operations, will aid its ability to compete. “Development and flexibility of the fleet, process industrialization, and the implementation of a new commercial policy should enable us to face competition where ever it comes from,” said the spokesman.
     Competition is particularly fierce on Asia-Europe lanes, and this is also applying pressure to Asian carriers. Singapore airlines recently announced a range of cost-cutting measures and a change in strategy to focus more on regional lanes in the face of competition from Gulf airlines.
     “The dramatic fall in the Asia to Europe market and increased competition from integrators, Middle East carriers, Chinese carriers, as well as the traditional European and Asian carriers has significantly driven down yields ex Asia to Europe,” said a spokesman for Cathay Pacific Cargo. “These reduced yields combined with high fuel prices have forced CX to reduce our Asia to Europe freighter frequencies from a high of 32 freighters per week in 2008 to a current 11 freighters per week. Going forward CX will continue to match supply and demand.”
     The spokesman said Cathay was instead boosting belly capacity by replacing 747-400 passenger flights with 777-300ER. “Starting in June Cathay Pacific has 5 flights per day from Hong Kong direct into London in addition to our double daily CDG and daily services to AMS, FRA, MXP, and FCO,” he said. “Our freighter frequencies complement these passenger bellies.
     “These freighters also now operate with fuel efficient and modern 747-400 ERFs. CX has also opened our brand new Cargo Terminal, which will enable us to take service levels in Hong Kong to the next level.”
SkyKing

ogistics demand from the emerging markets project sector is going from strength to strength, providing some relief for under-pressure air charter and freighter operators.
Back in 2007-2008, major infrastructure, energy, and offshore projects were rapidly moving forward around the world, on the back of strong global economic growth.
The size of many of these undertakings meant that demand for many specialist transport solutions remained relatively perky, even once the seriousness of the downturn that became the Global Financial Crisis became apparent.
     Quite simply, in many cases it was more expensive to delay or cancel projects than to complete them.
     But after the initial time lag, reality did indeed bite.
     The pipeline of new projects dried up, and this hit the demand for projects’ logistics services across the modes.
     Only in the last year or two has the industry started to show clear evidence of recovery, particularly in emerging markets in Asia, the Middle East, and Africa.
     FlyingTypers interviewed a number of leading forwarding executives to see how they utilize air freight solutions as part of major project logistics contracts.
     “Working in the project cargo sector always involves sending some shipments by air, particularly for time-sensitive parts that cannot be delayed as they play a pivotal role in a turnkey project,” explained Per Thörnblom, GAC Group Project Logistics Manager.
     Most forwarders’ first option if air freight is required is to use bellyhold capacity and, in the current market, capacity is rarely an issue. “Airlines are hungry for cargo at a time when the highly competitive market is forcing passenger ticket prices down,” said Thörnblom. “This is especially valid on the main routes to and from China, the United States, and Europe etc.”
     However, where bellyhold space is not available, scheduled freighters are usually the next best alternative. Failing that, capacity is chartered in.
     “In the majority of cases, shippers will require charters or freighter services to meet deadline requirements that would have large penalties for not fulfilling milestone/deadline commitments, or lost revenue from production, which would outweigh the cost of charters/freighters,” said Grant Wattman, President and CEO of Agility’s Project Logistics team.
     “Agility most recently had just such an occasion this past December. Our client had a project for a Petropiac Plant under construction where critical components were required. These components prevented the plant from being operational, and the Agility team utilized full charter and general freighter services to satisfy client requirements.”
     Switzerland-based Panalpina only charters aircraft when shipments are too big to be carried on normal line haul flights and/or when the client needs the cargo at destination in one lot and not scattered over several flights. This typically applies to telecoms equipment, automotive parts, or temperature-controlled pharmaceuticals.
     Charters might also be arranged when the shipment is outsized and/or overweight and cannot be loaded into a standard freighter, which has been the case in recent shipments of cable reels going to Kazakhstan via Panalpina, with each reel weighing 25 tons and 4 meters high, and oil-well equipment in pieces weighing 58 tons, 10 meters long, and 3 meters wide, that were going to the UAE.
     “Or we charter or part charter with flight diversion if the final destination is not served by a regular freighter schedule—for example, telecoms equipment to destinations in Africa, and automotive as well as oil and gas parts from North America to South America etc.,” said Robert Boetzer, Panalpina’s Head of Corporate Charter and Emergency Services, based in Luxembourg.
     “And we charter an aircraft if the consignee needs the cargo ‘now’ and not tomorrow or in a few days. For example, if there is potential risk of a line shut down in a plant, or an oil rig has stopped operating.”
     Where standard freighters in the B747F, MD11F, DC10F, and A330F range are not large enough for specific pieces or cannot be handled by airports, forwarders then turn to IL76s and AN 125s.
     “The deciding factors on using a freighter for outsized cargo are strictly dictated by the dimensions and weight of the freight to be transported,” explained Roland Zach, VP of Starbroker Americas and Head of Global Charter at DHL Global Forwarding. “Whenever we receive a charter request from one of our customers, the first step we take is to check what type of aircraft will be required to move the shipment from origin to destination.
     “We have moved many different commodities on the Russian aircrafts—Ilyushin-76 (IL76) and Antonov-124 (AN124)—among them excavators, aircraft fuselages and wings, oil and energy equipment etc.
     “The availability of these type of aircrafts varies; at times you are able to book an AN124 or IL76 at very short notice, but then there are other times where it may take you between two to four weeks to get your hands on an aircraft, especially the AN124s.
     “These types of aircrafts are also heavily used by militaries around the world and, depending on what moves they have booked and planned, availability can change drastically.
     “The pricing of these aircraft is subject to the route you are contracting to fly and the total payload to be moved, but a big portion of the pricing also depends on the positioning and the de-positioning of the aircraft.”
Indeed, negotiating charter rates for all types of freighters is an art rather than a science according to most forwarders, although capacity is not usually an issue unless there is a massive relief operation going on, such as Haiti’s disastrous earthquake in 2010, when wide-bodied capacity ran short in the rush to airlift relief.
     “As in every business environment, supply and demand and negotiation skills determine the rate,” said Boetzer. “Rates do vary by route and weight of the cargo and type of aircraft used. The bigger the aircraft and the longer the distance, the higher the rate, of course.
     “Also, the higher the weight the less range you have with one fuel tank. Consequently, more technical stops for refueling are needed. All of this has an influence on the operational costs that are calculated into the charter rate.”
SkyKing

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RE: French Air & Space Museum

Hello Geoffrey,

     Took your (good) advice and went in search of the old arrivals/departure hall. Wonderful to see it again (I flew in & out of LBG in the sixties). Many thanks for the tip. Compares favorably with the LGA Marine Air Terminal, but not quite so impressive or historic.      Inquired in the museum shop to see if there was a book on the history of LBG, but drew a blank. Now goin' fishin' on the internet for one…..

Best Regards,
Martin / Paris
Martin Bleasdale
www.freighterdata.aero

Dear Geoffrey,

     There have been articles and commentary published about a paperless cargo world. The tone of all of these is that these are new pursuits in the industry.
     That is VERY far from the truth.
     Years ago I represented FedEx on the IATA team working toward this goal.
     And, Northwest performed a 100% perfect test of several worldwide shipments.
     We (the team) first secured agreements from customs in several countries to allow for the tests.
     Some major air freight forwarders also agreed.
     It seemed we (IATA/the industry) were ready to move ahead toward implementation.
     Sadly and inexplicably, FX withdrew its participation. IATA seemed to lose direction.
     The paperless world could have been achieved long ago.
     Technology already existed.
     Now, in a recent issue of Flying Typers . . . the graphic “Enhanced tracking has arrived”. WOW!!!!
     In the late 1970’s, we (Flying Tigers) implemented what became the best and most comprehensive automated cargo system in the industry.
     From day one you could display a domestic or international bill on a screen and see EXACTLY where it was.
     The basic display showed (shows) the exact location of the shipment.
     If it’s flying, the flight number and departure time are shown, and the EXACT position where the shipment is loaded on the aircraft is shown (BULK of specific ULD ID).
     Once the entry is made to the bill EVERY bit of information concerning the shipment is immediately available, including the ability to see who made the entries, and where the entries were made … and when.
     And, this system was able to interface with customs worldwide.
     As a matter of fact, we made house air bill entry a requirement for our field employees and this data was entered into the system, thus making customs processing more sophisticated…and provided our customer service people the ability to tell customers at the house bill level where their shipments were.
     This is WAYYYY back.
     NO other airline did this.
     No freight forwarder did it.
     We did it.
     At IATA Systems and Procedures meetings (where I represented Tigers), British Airways in particular was always annoyed because we had done it.
     Their position was, that house bill data should be entered by shippers.
     I didn’t disagree but the industry was not going to do that for many, many years. Meanwhile, when one of our flights was inbound, our Ops people could print in advance cargo manifests at the house bill level and turn the paperwork into customs before the flight arrived.
     And, when a country’s customs was finally automated, we fed them the data directly.
     I could go on, but by now you’re perhaps bored.
     I just become annoyed when I see/read/hear things that suggest something that is NOT new, presented as though it were.

Good wishes,
Lou Borok

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