Vol. 8 No. 4 WE COVER THE WORLD Wednesday January 14, 2009

Will Martinair Disappear Into KLM

     After KLM’s complete takeover (100%) of Dutch carrier Martinair, that became official December 31, look out for an air freight giant emerging in Western Europe.
     “Together with Air France Cargo we’ve got a fleet of twenty-five long haul freighters plus seventeen combination aircraft,” stated KLM Cargo’s speaker Eelco van Asch.
     Eleven of these freight planes belong to Martinair “which makes us the thirteenth largest capacity provider worldwide,” emphasizes the Amsterdam-based carrier’s spokesperson Suzanna van der Velde.
     Meanwhile integration talks between both management groups also began in earnest last week on January 5.
     Aviation experts believe that future network strategy and fleet policy together with market initiatives and capacity realignments are the prioritized topics on their agenda.
     Both airlines however, denied revealing any details of their plans, nor did they deliver a timeframe for their discussions. “Our mutual aim is to create higher value for our customers,” was the only comment made by KLM’s Eelco van Asch when asked by ACNFT.
     Observers believe that the oft -mentioned merger of the airlines seems to be quite an ambitious undertaking since both carriers pursue differing business models.
     While KLM is a classic line-haul carrier, Martinair established in 1958 by Dutch manager Martin Schroeder offers the market a substantial number of charter flights.
     So what really happened here?
     For a number of decades it worked, with KLM holding half of the shares of Martinair and Nedlloyd holding the rest, as both carriers did their thing.
     All of that changed after Nedlloyd’s take-over by Danish logistics giant A.P. Moeller-Maersk.
     Ever since the Nedlloyd exit, Martinair has been impacted as shareholders pursue different strategies with no common platform for investing much needed money in their mutual daughter Martinair.
     While all of this sorts out, Martinair management has commenced restructuring the carrier.
     As a consequence many jobs have been axed together with European passenger flights.
     There is speculation that the entire passenger division could be shut down due to heavy losses.
     In 2007 the Martinair deficit amounted to almost 70 million euros after 7 million the year before.
     While no financial figures are available yet for 2008, indications are that less than favorable results will be reported.
     Since KLM’s main interest is Martinair’s cargo business which according to Suzanna van der Velde is making money, it does not seem a stretch to imagine that Martinair could exit the passenger business altogether.
Heiner Siegmund

New India Airports Need Better Connections

     Two of India’s greenfield airports—in Bangalore and Hyderabad now say that they are aiming to be a bold example of the SEZ-Aerotropolis, a popular model to generate non-aeronautical revenues by including public art, retail businesses, health care and other aspects of a city.
     But local leaders are realizing that this approach can’t work without proper connectivity to city centers.
     The Indian government has also backed the model of SEZ-Aerotropolis and has provided the two airports huge parcels of land for real estate development.
     Besides non-aeronautical revenues, Airports Authority of India (AAI) and other Indian airport operators know that they need to improve airport connectivity, as it is central to the development of an airport as a destination.
     But both private airports, which have gone up in Hyderabad and Bangalore, have been built about 40 km from the city centers, with limited and constrained connectivity and have neither an existing intermodal connectivity nor do they have any plans to achieve it in the future.
     What has been discovered is that while Hyderabad (Rajiv Ghandi International Airport) as example fares much better in reducing congestion as compared to the old Begumpet Airport that was located near the city center, the new gateway offers almost nothing of the location driven services, not to mention access that continue to make in-town airports attractive despite their often overloaded status.
     This connectivity short-sightedness on the part of airport developers will undoubtedly hamper the growth and development of these airports as potential shopping destinations and recreation centers.
     Such supplementary incomes provide the airport operator with a cushion to offset costs and funds for future growth and modernization and in due course make it self-sustaining.
     Meanwhile, the upsurge in the demand for air transport is forcing moves to improve and develop long-neglected airport infrastructure in the country.
     Elsewhere during the past few years, the aviation industry has witnessed a shift in consumer pattern, with Asia-Pacific outpacing the two traditional leaders, North America and Europe.
     Europe still continues to be the single largest region in terms of passenger revenues, though the Asia-Pacific region is expected to take a premier position by the end of 2009.
Gordon Feller

     Got a sweet tooth for my sweetheart as Emirates introduced daily flights to Cote D'Ivoire in December, the place where cocoa grows into fields of chocolate.
     Add Abidjan that EK launched two years ago to daily service as EK flight 787, a A340-300 departs Dubai each day at 0740hrs, arriving in Abidjan, Felix Houphouet Boigny Airport, at 1455hrs after a quick stop in Accra, Ghana.
     Abidjan is one of 15 destinations that Emirates serves in Africa . . .

Tough Talk As China Knuckles Down

     At the National Civil Aviation Working Conference hold in Beijing on January 6, the Chinese regulator, Civil Aviation Administration of China (CAAC), reviewed performance of its civil aviation industry in 2008.
     Compared with the two digit growth in past years, only 0.2 percent in mail and cargo transportation was reaped in the year 2008, according to a preliminary statistic by CAAC.
     Passenger transportation resulted in 3.3 percent growth year on year.
     However, conditions are much more pessimistic according to months.
     Mr. Yang Guoqing, Deputy Director of CAAC, revealed at the conference:
     “In November 2008, the industry experienced a drop of 14.8 percent in mail and cargo transportation and 13 percent in passenger.
     “Net losses of the whole industry in the first eleven months were near RMB4 billion, as a result of over RMB7 billion suffered by airlines.”
     In the year 2009, in which everything seems only worse, CAAC will take measures to help the market resume to balance.
     “In principle, no application for new airlines establishment would be accepted before 2010.
     And any plans for introducing more aircraft will be strictly examined by CAAC.
     “Domestic airlines are strongly encouraged to cancel or delay existing orders for new aircraft that are scheduled to deliver in 2009.
     “Leasing contracts with overseas entities are not expected to renew if they expire in 2009.
     Other measures on supply control include grounding of aircraft, selling and converting to freighters.
     As to the market in 2009, CAAC says an 8 percent growth in mail and cargo transportation and 10 percent in passenger business is projected.
     “While industry experts have expected a more difficult time for domestic airlines in 2009, reaching the growth goal set by CAAC requires great effort of all players, and the first step is to avoid the worse case scenario,” warned Mr. Yang.
     “If not properly tackled, the whole industry will suffer from excess inventory, unbalanced competition, aggravating losses and security threat.”
David