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A R C H I V E S

E D I T O R I A L

"A YEAR OF JELLING"
by Geoffrey Arend

     By now it is no secret that 2002 was not a very good year.
     Worldwide airline losses were cut 30% during 2002 but when you add that up, the numbers still total about a seven billion USD minus as compared to ten billion in red ink for 2001.
     US Airways and United Airlines went bankrupt in 2002 while National, Midway and Vanguard went out of business altogether.
     The restaurant chain Hooters might have saved Vanguard, but that deal fell through.
     Hooters found another airline company willing to sell, and apparently will take off soon.
     The Hooters episode does reinforce a wonderful and slightly delirious thing about this industry.
     Now and forever, there is always somebody who wants to start an airline.
     No one should ever doubt that like the genie out of a bottle, once air service is established somebody will step up and continue no matter whose name was once on the side of the airplane.
     The desire of the wealthy to find some mad money and get into the business of flying has not changed all that much since two brothers from Ohio made a killing in the bicycle business and later took off at Kitty Hawk, North Carolina on man’s first ‘heavier than air’ flight a century ago in 1903.
     But what lies ahead for aviation and more to the point, the world air cargo business?
     We approach 2003 after two years of crises and uncertainty, failure and suffering, the result of terrorism and recession.
     Never before in the history of aviation have two such deadly elements conspired against our industry.
     We begin 2003 with the oppressive possibility of war and further terrorism hanging over everyone.
     For a moment we can imagine possibilities, if things just calm down.
     We think 2003 will need to be a jelling experience for our industry, a period of calm and predictable movement toward what is now referred to as a “new normal’ in the airline business.
     Nowhere in the world is it more important that the airline business get a grip and get back somewhere in the neighborhood of where it belongs than the United States of America.
     There is an old expression here in New York that comes to mind about Americans.
     “Comes a great challenge and the citizen army of the United States reaches down into the mass of the people and pours them into a general hopper that turns them into builders.”
     While nothing can replace the return in greater numbers of passengers to the skies, air cargo must use this time to unite in an effort to chart a new course putting forward the agenda of a vital and growing industry to the world at large.
     It has never been more apparent that something must be done to foster a strong air cargo industry voice in all matters, including security, government’s increasing role and financial interest in the airlines business and other challenges ahead.
     We are only two years out of the 1990’s a time when business got bigger as air cargo companies got fewer and sterner and more steely like big machines.
     But now with business in free-fall, just after reporting the worst Christmas retail season in 40 years we discover that the 1990’s did not unbend every twig or destroy every individual.
     There is still plenty good about being an independent, small or big part of air cargo.
     Right now as the new year begins, there is time for longing, thinking, resting and living, before 2003 gets going and it’s time to fight our way back to business gain.
     This year we need to hear from the leaders of this industry in voices, loud and clear.
     Air cargo organizations and their influential leadership must come forward with opinions, plans and some new ideas.
     The free ride is over.
     The Air Forwarders Association and Cargo Network Services, TIACA and others in our view have so far displayed an appalling case of collective laryngitis.
     As 2003 dawns and air cargo and the airline business are in a time of maximum peril, it’s like everybody has lost their voice at the same time.
     Rather than combining activities at some posh golf resort or spending an inordinate amount of time asking us to sponsor a coffee break at a conferences, we need our industry leaders to tell us they are at work, building cooperation and understanding amongst the various factions of air cargo so that a unified front can be formed to lobby for air cargo, insuring that among other things, air cargo is not hamstrung by government regulations.
     The high-profile industry “experts” have been no better. These writers of yearly cargo reports and earners of fat consulting fees have without exception retreated into a collective cave somewhere during what adds up to air cargo’s darkest hour.
     Where are these consultants with their always-ready five year and ten year prognostications and speeches at trade shows and pay for view functions?
     Plenty of small to medium companies in air cargo are thinking, the hell with a five-year growth curve.
     What will it take to survive the next year is what they want to hear about.
     In all of the horror stories of the past two years there are not enough people willing to stick their heads up in anything more than an observational mode to take on the critical issues facing the industry.
     It is absolutely outrageous that U.S. government edict of not allowing parcel post aboard passenger flights.
     The ban on Parcel Post must be lifted or at least be modified once and for all.
     U.S. carriers are losing at least a half billion dollars annually because of government restrictions as to what may be carried in the bellies of passenger flights.
     So far the only solutions that have bubbled up and been made public specific to future cargo security is employing bomb sniffing dogs or forcing airlines to go from bread and butter pallets to reinforced containers to carry belly cargo.
     Both solutions raise serious questions and doubt to say the least.
     Around the world, cargo people to a person must wonder at what is going on in America.
     But the fascination is also tinged with concern that eventually U.S. Government and specifically the Transportation Security Agency (TSA) will rear its head with ugly knee-jerk mandates for international flags.
     There is something we can do to help the air cargo industry at the grass roots level.
     Clubs and organizations here in America and worldwide should gather themselves into a mighty voice, each of themselves and let government know that it is beyond time for air cargo to be given the benefit of its expertise in the form of a voice, as the new “secure” airline business is established.
     Elsewhere while everybody with an airplane and a dream is trying to figure out how to get hooked up with Mainland China, perhaps the most compelling recent events in Asia aside from the surprising and horrible terror bombing in Bali and the anemic sinking fortunes of Singapore is the “new normal” albeit “unofficial” relations between Taiwan and China.
     Make no mistake, unless Mainland China does something overt, military or just plain stupid, the drawing together of China and Taiwan gathers even greater momentum in 2003, as business continues to seemingly know no borders.
     Those Lunar New Year flights between Shanghai and Taipei are just the beginning.
     In late December, Beijing and Taiwan sat across from each other at a table at the Warwick Hotel in Geneva with seven other members of the World Trade Organization (WTO).
     The discussion was about steel but the buzz was about China and Taiwan. For the first time in memory, both had somebody on the other side at the same table that spoke the same language.
     Anybody who thinks the Chinese don’t know how to be great capitalists and will not eventually work out their differences is not paying attention.
     Recent China Airlines (CAL) order with Boeing that needed U.S. President Bush intervention to get done, is an indication in the most strident terms that Taiwan increasingly sees its future business interests not with America, but with Mainland China.
     But give Hong Kong some attention and some credit for a stellar effort as well, if you are in marketing anywhere, including a gateway or an airline.
     There can be little doubt that the future of China lies beyond the former Crown Colony.
     Right now as Shanghai prepares to sink billions into a huge combined airport/seaport free trade zone, and tens of thousands of Taiwanese business men are gleeful about flying home in a couple of weeks minus the change plane delay/ bottleneck, Hong Kong has managed to host what must be a record number of trade shows, brought forward a new open skies agreement with the USA and forged a cooperation and development deal with the other major gateways in China.
     SAR cannot look kindly upon any arrangement that would open Beijing/Taipei direct flights.
     But publicly the airport authority unveiled charts and statistics that pointed to less than gloom and doom for the gateway if and when those flights become permanent.
     Hong Kong will eventually find a new purpose and level in the 21st Century much as New York did when international airlines expanded services to other gateways all over America after deregulation in 1978.
     In the meantime Hong Kong’s Chek Lap Kok is top dog airport in China.
     The airport authority in Hong Kong as mentioned, has done a masterful marketing effort of a quality and duration that someday should be studied by anyone who wants to do that job right.
     Getting TIACA to show up last year for their bi-annual confab was one thing. TIACA has become notorious for following the money rather than showing in the airport or city that matters.
     As example, TIACA passed on LAX for Washington, D.C. in 2000. Last year it took the money and gave SAR the nod over Shanghai.
     But when 9/11 ripped the guts out of sponsors for the TIACA Hong Kong fest, the airport authority came up big, getting both sponsors and saving ‘face’ for the TIACA 2000 show.