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Qantas Freight’s Q-GO Fresh ensures your fresh seafood, meat,

plants and flowers arrive at their destination, with freshness

and quality preserved.

Qantas Freight is Australia’s leading air cargo carrier, and with

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4

Swiss drone testing begins

iata: uk muSt build a new runway

Schiphol ShakeS up india

pharmaceutical influence

moderniSation iS key

The weekly newspaper for air cargo professionals

6

7

10

SWISS WORLDCARGO, US drone firm Matternet and Switzerlands’ postal service Swiss Post began drone flight testing last week.

The tests with the drone (see picture) will occur this month, but the partners do not expect routine drone use to be-come a reality for another five years, citing regulatory hurdles and battery life. The drones are expected to be used for emergency deliveries in disas-ter relief, delivering to remote locations and for special express consignments. The testing will use Matternet’s first product, Matternet One.

It is capable of transporting one kilogramme over more than 10 kilo-metres with a single battery charge. The companies are investigating drone technology and its cost effectiveness.

Air Cargo Week (ACW), the only weekly airfreight newspaper in the world, is to provide more news stories on a daily basis with its updated website, aircargoweek.com.

Launched last week, aircar-goweek.com will provide more stories daily, while our newspaper subscribers will still get the news and analysis they enjoy with the weekly print product.

Editor of ACW and aircargoweek.com, Rob Coppinger, says: “Our lat-est website has been designed with the reader in mind, and from our recent readership survey, on what

they are looking for from an online product as well as what they value in their weekly newspaper.” Cate-gories on the website range from airline and airport news to cargo

handlers and forwarders. The new look website also includes ACW features and the features programme for the forthcoming year. The website also has links

to social media and followers of ACW on Twitter, @aircargoweek, will receive tweet alerts for the latest news and feature articles. Company and personality inter-view videos is another feature of the website that users will in due course enjoy.

Aircargoweek.com has a link to the World Air Cargo Awards website, organised by AZura International. Readers can see this year’s winners of the Munich event and the site will later this year contain details about the ACW World Air Cargo Awards to be held in Shanghai on 15 June 2016.

wfS buys Fraport Cargo ServicesW

orldwide Flight Services (WFS) is to acquire a 51 per cent shareholding in Fraport Cargo

Services (FCS) and tells Air Cargo Week (ACW) it wants to be a, “major player,” at Europe’s largest cargo hub Frankfurt Airport.

The company explains that the deal is part of a strategic partner-ship with German airport operator Fraport and is central to its strat-egy to expand in Europe’s major cargo markets.

The acquisition will see Fraport retain a 49 per cent share in FCS and continue to take a substan-tial role in the management of the company.

WFS president and chief exec-utive officer, Olivier Bijaoui, tells ACW: “It is a natural develop-ment for us alongside our already strong positions at Paris [Charles de Gaulle Airport] and London Heathrow [Airport]. Germany is obviously a prime focus in our growth plans.”

Bijaoui could not tell ACW the

terms of the deal, saying they have not yet been disclosed. WFS and Fraport plan on closing the trans-action by September. He explains to ACW that WFS sees further growth across Europe.

“We are always looking for growth opportunities. We are con-tinuing to grow organically and investing across Europe, such as in Milan Malpensa Airport where we will open a new cargo terminal in 2016,” Bijaoui notes. Expansion is set to continue in Europe, he

explains, as there are still places on the radar where WFS wants to establish a, “stronger presence”. Bijaoui tells ACW that Amsterdam Airport Schiphol is one of the loca-tions it wants to grow organically.

“We will continue to focus on providing the highest quality of ser-vice and value for our customers as this drives growth for us, and will continue to look at opportunities in markets where we see the potential to do more,” Bijaoui says. In June, WFS was awarded ground han-

dling licenses to operate at Spain’s Madrid, Seville, Santiago, Oviedo and Vitoria airports. In 2014, WFS handled more than four million tonnes of cargo at 145 airports across the globe. Fraport executive board chairman, Stefan Schulte, explains: “As in the past, the cargo business continues to be vitally important for our business model. To continue developing our cargo handling business successfully, it has been our wish to find a strong and competent partner that offers a strong international network.”

Schulte says the strategic part-nership with WFS gives Fraport the opportunity to gain a broader base for further development of FCS in the future.

FCS is the largest provider of cargo handling services at Frank-furt Airport. Last year, tonnage at Frankfurt rose 1.8 per cent to 2.1 million tonnes.

FCS employs more than 600 cargo handling staff at freight cen-tres at Frankfurt’s CargoCity South and provides cargo services to many airlines.

more daily stories with new aircargoweek.com

Volume: 18 Issue: 27 13 July 2015

NEWSWEEK

A irbus aircraft conversion company Elbe Flugzeugw-erke (EFW) is confident it can get its supplementary type certificate for converting Airbus A320 family air-craft despite the airliner’s forward centre of gravity (CG) issue.

Launched at the Paris Air Show this year, the converted Airbus A320 and Airbus A321 will have 11 and 14 positions, respec-tively. The A320 will have a 21 tonne capacity for a range of 2,100 nautical miles (3,889 kilometres) and the A321, up to 27 tonnes for 1,900 nautical miles. The planned 2018 entry into service is expected to see an A321 fly.

An Airbus supported EFW A320 passenger to freighter (P2F) programme was to be launched a few years ago, but market and technical challenges stopped it. In September last year, Pac Avia International launched its own unsupported A320, A321 P2F programme. The technical challenge for EFW was resolving the issue of where to put the cargo door without aggravating the A320’s forward centre of gravity issue. Aircraft stability involves balancing a number of factors including the centre of gravity and centre of pressure.

EFW’s head of aircraft conversion sales, Andreas Mayer, spoke to ACW and says: “We had the problem of a design decision to

put a cargo door in the back, the A320 has a forward centre of gravity issue and putting structural reinforcement in the rear we would have cured that problem, but we created new problems by putting in a door at the rear because the structure was very weak at that area and we had to reinforce to a much greater extent and we were required to do a full fatigue test. Then we realised the aircraft is going into an unstable state, flutter, and it created...new technical challenges.” About 2,500 of the 3,000 A320 family air-craft made can be converted for a market estimated to be up to 800 over 20 years, including Boeing 757 replacements, as well as Boeing 737.

This time, Singapore based-ST Aerospace is doing the design with Airbus and EFW support. ST Aerospace is also taking a con-trolling stake in EFW. Mayer explains: “We now have the door in the front. Our cargo door location is at two different locations for the A320 and A321, so we do not have the door in the same posi-tion. On the A321 it is further back due to the forward CG issue. We are trying to put the door as far back as possible without reducing loading clearance for the engine nacelle.”

He adds EFW is not creating a freighter matching all require-ments. Its heaviest position weight is 2.5 tonnes in the centre area. “We have four heavy positions as we call it now with up to 2.5 tonnes”. The customers are expected to be integrators, such as FedEx in the US or SF Express and China Postal in China. Mayer adds that China could have a conversion centre, but for now, they are in Dresden (Germany), Singapore and Alabama (US).

2 ACW 13 JULY 2015

Airbus A320 CG issue won’t stop P2F again

A freighter that can hover, use short runways, have reduced maintenance and could be quiet enough for airports with night curfews is the outcome of a German led study into a concept called Fanwing.

FanWing could be used by package delivery companies, those targeting pilotless operation, or on-demand cargo op-erators, according to the German Aerospace Center (DLR). FanWing has an open rotor that spans the wing’s length (see picture – credit Adrian Mann / FanWing). It is this large distributed thrust system that is expected to make it quiet enough for night ban airports. The DLR led study is called SOAR, an acronym constructed from diStributed Open-rotor AiRcraft.

At the DLR’s Institut für Lufttransportsysteme, Jonathan Gibbs is studying the commercial aspects of FanWing. Gibbs tells Air Cargo Week about the project’s next steps: “What we have decided to do is pick two aircraft that we are going to design for specific markets, not for cargo, but they could be used for cargo.” Gibbs and his fellow researchers are also going to talk to freighter operators, “and see if there is a demonstrated need and try to infer how competitive Fanwing will be.”

Starting in 2014, the 782,989 euro ($864,592) two-year European Union supported project is studying a FanWing freighter concept that can carry eight tonnes. Its direct oper-ating costs are being compared to fixed wing short take-off and landing aircraft and helicopters. Gibbs explains that FanWing’s fuel burn is better than a helicopter’s, while its take-off distance is greater, but for an conventional aircraft the opposite is true.

Hovering, STOVL freighter study

NEWSWEEK

3ACW 13 JULY 2015

A irline financial performance is, “improving strongly,“ especially for carriers in the US and Asia Pacific, according to a report by the International Air Transport

Association (IATA).The association published its May-June Air-

lines Financial Monitor on Tuesday 7 July. In the monitor it samples the first quarter (Q1) results of 81 unnamed airlines.

IATA explains: “The industry financial per-formance improved significantly on the year ago period at the operating and net profit level. The increase was driven by North American air-lines, where consolidation and cost cutting has resulted in a significant boost to profitability and lower fuel costs.”

Airlines in Asia Pacific have also improved on a year ago, IATA adds. Chinese carriers recorded, “solid,” Q1 profit results and IATA says this is due to strong demand and improved operational efficiency. In Q1, the carriers sam-

pled had a combined net post-tax profit of $5.3 billion, compared with a $1.2 billion net post-tax loss in the first quarter of in 2014.

But, there was a significant difference in per-formance across regions. In North America, the 35 sampled had a net post-tax profit of $3.4 billion and the 21 in Asia Pacific a net post-tax profit of $954 million. But, in Europe, the 13 sampled saw a net post-tax loss of $161 million

and the seven in Latin America, a $107 million loss. The five from other regions posted a net post-tax profit of $1.1 billion. In the report, IATA also says crude oil prices weakened in June, due to expectations of supply increases in the US and Iran. Last month, there was a decline of five per cent in the crude oil price, compared to May. Levels are down 45 per cent on the 2014 highs.

IATA says airfreight volumes fell by 0.5 per cent in May, compared to April, confirming a flattening in the growth trend that started in late 2014. “This development is consistent with a trend change in world trade, particularly in emerging Asia, where trade showed a notable decline in Q1 and remains weak in [the second quarter],” IATA explains.

The association also explains that the freight load factor fell further in May to 44.3 per-centage points. “There was a sizeable fall in volumes, which pushed load factors down fur-ther,” it notes.

Asia Pacific, US airlines finances improved in May

Volumes across European airports fell year on year (YOY) by 0.4 per cent in May due to the economic problems in the European Union (EU), according to the Airports Council International (ACI) Europe.

The figures for the month were published by the airport trade body as part of its May traffic report for the continent. That reports says many of the busiest cargo hubs, by vol-umes, saw YOY declines in the month.

ACI Europe says: “Freight traffic across the European airport network was down 0.4 per cent, reflecting the rela-tive weakness of economic growth in the EU, the continued impact of sanctions on Russia as well as more structural factors.” The EU economy has also been affected by the ongoing economic problems in Greece, and the weakness of the euro, which has also had an impact on volumes.

May’s performance continues the unstable year for cargo volumes across Europe. In April, there was YOY growth of 0.8 per cent, but in March, volumes fell YOY by 1.8 per cent. In February, there was YOY growth of 2.9 per cent, but in January there was 0.5 per cent fall.

ACI Europe says the year to date cargo volumes on the continent have remained flat compared to 2014, with no growth or decline. But, the figure is up 5.7 per cent on 2013. In May, Europe’s busiest cargo hub by volumes Frankfurt Airport, saw a 3.4 per cent fall to 170,348 tonnes. Paris Charles de Gaulle Airport saw a 7.6 per cent drop to 149,000 tonnes. Cargo volumes at Amsterdam Air-port Schiphol were down 1.5 per cent in May.

European volumes fall in May

WorldNewsKERRY LOGISTICS’ managing director, Gary Wilcock, died on Sunday 21 June after a short battle with cancer. He was 54 years old. He had worked in the air-freight industry for more than 30 years. Wilcock grew the Kerry Logistics net-work from a single business unit based in the UK to a firm which operates in 11 European countries.

LUXAIRCARGO has been certified, “Lean & Green,” under a Luxembourg government scheme launched in 2014. One action that led to this certificate was the decision to buy all of the di-vision’s electricity from renewable energy sources. The scheme is run by Luxembourg’s ministry of sustainable development and infrastructures and Cluster for Logistics, a body that pro-motes the development of the country’s logistics industry.

2015 slips back to 2014AIR cargo markets in the second quarter of this year ap-pear to be back down to levels at the end of 2014 after a, “very volatile,” first quarter, the International Air Transport Association (IATA) reports.

IATA’s analysis is in its latest quarterly market report the Cargo Chartbook, which it published on Thursday 2 July. The association is optimistic there will be growth during the rest of this year, which will be driven by upturns in the economic cycle and world trade, that is expected to grow by 3.7 per cent in 2015.

However, IATA is remaining cautious: “Weakness in emerging markets and scope for potential spill over from the slowing of the Chinese economy introduce downside risks for the outlook in 2015.”

IATA also forecasts there will be growth in advanced economies this year and says air freighted commodities leave room for cautious optimism later on in 2015.

The association explains that freight tonne kilometres (FTK) have stopped growing, partly due to the build-up in inventories. “A build-up in inventories has halted the under-lying growth in air cargo demand so far this year and will likely continue to adversely impact airfreight demand over the short term (two to three months),” IATA notes.

NEWSWEEK

4 ACW 13 JULY 2015

China Southern signs Sodexi dealAIR FRANCE-KLM MARTINAIR (AF-KL-MP) cargo express operator Sodexi has renewed its contract with China Southern Cargo.

This follows on from the launch in May of the firm’s 22 million euro ($24.6 million) HubExpress located at Paris Charles de Gaulle Airport (CDG).

China Southern Cargo launched a four times a week freighter route from Guang-zhou (China) to CDG on Sunday 21 June.

Sodexi managing director, Jérôme Balbi, says: “We have handled transit mail bags for the airline for some time and now through the new express hub, in addition to our existing destinations of Madrid, Warsaw, Buenos Aires and Rio [Brazil], we are adding a number of new destinations.

“These are Milan [Italy], Riyadh, Copenha-gen, Prague, Athens, Mexico city, Budapest, Lisbon, Johannesburg [South Africa], Vien-na [Austria], Lima and Kiev.”

Balbi says mailbags arrive from Guang-zhou on a China Southern flight, and are transferred immediately into the HubEx-press, where they are sorted for the correct

Air France flight. “The distance to the air-craft position is now much shorter and we are able to load within several hours. The market for high speed transfers demands a quicker and more efficient solution and that is why we have placed this facility just a few metres from the aircraft,” Balbi explains.

Balbi adds that the sorter can handle up to 6,000 32 kilogramme packages per hour, which is on a par with what integrators are providing. “Handling this kind of traffic is exactly the reason for our building the new Express hub,” he explains.

The HubExpress has eight entry points feeding a 300 metres parcel sorter that separates packages between 41 contain-er stands, 10 bulk stands and 19 standby stands.

The opening of the express handling fa-cility at CDG represents, “the future pattern for the company’s share of the fast grow-ing e-commerce market”, AF-KL-MP said in May. Capacity can be increased and high yield sectors such as express and pharma will be targeted.

T he UK government’s Airports Com-mission’s recommendation that a third runway be built at Heathrow Airport has gained support from the International Air Transport Asso-

ciation (IATA).The association’s director general and chief

executive officer, Tony Tyler (see picture), gave IATA’s view at the Runways UK conference in London on Tuesday 6 July. Tyler says a third

runway at Heathrow is the, “right decision,” and adds: “IATA supports expansion at Heath-row. Let me be absolutely clear about that. But, let me be equally clear that we have some seri-ous reservations about the conditions that are attached to this conclusion.”

He feels that there is a need to move forward quickly with the recommendation and says UK prime minister, David Cameron, should indicate publicly that he backs the report’s conclusions. Tyler also believes that the UK government’s Department for Transport should proceed with the next steps.

Tyler wants stakeholders to find solutions to the issues of cost and environmental impact. “The aviation industry is committed to environ-mental sustainability. And we can only deliver the...benefits of a third runway if using it makes business sense to airlines.” Another concern is UK political will for an additional Heathrow runway. He feels the country’s policy record on supporting aviation, “is not encouraging”.

IATA: UK must build a new runway Falling freight in 2015 for Finnair

FINNAIR saw its cargo volumes fall year on year (YOY) by 16 per cent for the first half of 2015, which it puts down to the structural change in its operations.

The Finnish carrier handled 61,904 tonnes in the first six months of the year, as its volumes continue to decline each month compared to 2014.

“The cargo overall figures reflect a struc-tural change from the comparison period, as Finnair withdrew from the use of leased [Nordic Global Airlines] freighter aircraft ca-pacity in Asian traffic,” Finnair says.

In June alone, the airline saw a 15 per cent YOY drop to 10,940 tonnes, which the airline says consisted almost entirely of bel-lyhold cargo on scheduled flights.

June’s total was above May, when Finnair handled 10,301 tonnes, and April’s 10,233. It was below the yearly high in March of 11,299 tonnes, but up on February’s 9,785 and January’s 9,346.

In each month of 2015, the carrier has

seen falls in cargo volumes, with every month except February registering double digit declines, compared to 2014.

For the first half of the year, Asia was the only region seeing a YOY tonnage rise, which was 0.4 per cent to 39,106 tonnes. Cargo volumes to Europe fell YOY by 12.4 per cent to 10,308, to the North Atlantic region by 4.4 per cent to 3,784 and domestic volumes saw a drop of 7.7 per cent to 828 tonnes.

After the first half of 2015, Finnair’s cargo capacity measured in available tonne kilo-metres fell YOY by 4.2 per cent to 676.1 million. In June, it was 115.3 million, a YOY fall of 10.3 per cent.

The airline’s revenue tonne kilometres for the first six months of 2015 saw a YOY de-cline of 17 per cent to 370 million. In June alone, there was a 14.7 per cent fall to 67 million. From January to June, the load fac-tor fell by 8.4 percentage points to 54.7 per cent. Every month of 2015 has seen the cargo load factor fall YOY.

NEWSWEEK

5ACW 13 JULY 2015

I AG Cargo’s re-launched cargo route to Kuala Lumpur International Airport from Heathrow Airport has, “exceeded,” the carrier’s expectations since it was started a

month ago, it says.The airline’s regional commercial manager

for Asia Pacific, John Cheetham, was speaking to Air Cargo Week (ACW) at an IAG Cargo media briefing on Friday 3 July at the Mandarin Orien-tal hotel in Kuala Lumpur.

IAG Cargo had operated the British Airways service to the Malaysian capital, but stopped the service in 2001 due to the economic climate.Cheetham explains to ACW: “We feel Kuala Lum-pur is a very strong destination for air cargo. Asia is the engine of growth for the world. Aside from the powerhouses of China and India, South East Asia is strong and presents opportunities.”

Cheetham says IAG Cargo has seen a, “high route load factor,” in the first month since it was started on 27 May, but he could not reveal

the exact figure to ACW. He says it has been performing similar to routes operated to Hong Kong and Singapore.

He explains that the Malaysian economy is growing fast and is very different to 2001 when IAG stopped the service. Now, in its view, the South East Asian economy in general is buoy-ant. The daily service to Kuala Lumpur means cargo does not now have to be trucked from nearby Singapore. Cheetham says the service

was reintroduced as IAG Cargo can now oper-ate a Boeing 777-200 extended range aircraft, which he adds has a payload of 15 tonnes, but can sometimes hold up to 19 tonnes. The high efficiency of the 777-200 has helped make the route more cost effective for IAG Cargo, he notes. Cheetham explains that other routes into Asia could also follow and other links to the region are on their radar: “Asia has been very positive for us. The airline is always looking into new routes.”

He explains that the daily service to Kuala Lumpur also has the optimum take-off and landing timings to move cargo. The Kuala Lum-pur flight leaves London at 20:15h, arriving at 16.05h. It then departs at 23:05h and arrives at 05.25h, where goods be transshipped or trucked on. The carrier stopped using freighters in 2014, moving towards a bellyhold strategy and Cheetham says the move has made a, “big difference to the bottom line”.

MALAYSIA’s market was an attractive one to enter for IAG Cargo as it has a good balance of imports and exports, explains the carrier’s regional commercial manager for Asia Pacific, John Cheetham

Speaking to Air Cargo Week (ACW) in Kuala Lumpur, he says the country has good growth potential and a thriving economy and it has a good location in South East Asia.

Cheetham says of the cargo moved out of Kuala Lumpur in the first month, 30 per cent was perishables such as fruit, 50 per cent high-tech goods like electronics and machinery, 10 per cent rubber goods, five per cent just-in-time textile gar-ments and the remainder general cargo. As for imports they have mainly been aerospace products, machine parts, micro-chips, mainly high-value cargo.

“What we are seeing in Kuala Lumpur is the balance in the commodities in the area such as oil and gas, perishables, rubber and a range of commodities, which allows the airfreight market to ride a lot of peaks and troughs,” Cheetham explains.

He says Malaysia’s gross domestic product (GDP) is growing at around five to six per cent and GDP was $23,900 per capita in 2014. In 2016, exports are forecast to grow 6.8 per cent and imports 6.9 per cent, so Cheetham sees a bright future and a good balance for cargo volumes in both directions.

Speaking at the media briefing, Malaysia’s trade ministry the Malaysia External Trade Development Corporation (MATRADE) said in 2014 the country’s trade was $443 billion, $234 billion in exports and $208 billon in imports.

MATRADE director, Mohammad Silmi Abd Rahman, tells ACW the IAG Cargo service is a boost to the country. “It is another platform for companies in Malaysia to export, particu-larly to Europe and North America,” Rahman says.

Rahman explains Malaysia is now transporting more high-value cargo via air, but the route will most importantly help create much needed capacity to transport perishables. “It is a relief that it has been started as it will help perishables and is very good for fresh goods such as fish, flowers and fruit.”

Imports he says will mainly be pharma, microchips, and aerospace products such as to the Airbus centre in Kuala Lumpur and Rahman adds that electronic products will also be moved both ways.

He adds a major aircraft engine manufacturer is close to announcing plans to supply high value parts for the Airbus 330 and 350 from Malaysia, in a contract worth $264 million.

Balancing imports and exports

Re-starting Kuala Lumpur opens new doors WoRldNewsAVIC INTERNATIONAL LOGISTICS and SDV have signed a memorandum of un-derstanding to strengthen cooperation by sharing their respective expertise, know how, networks and resources in the mar-ket to improve the competitiveness of both firms. The cooperation extends to a common bonded warehouse, support of AVIC in customs clearance in certain gateways in China and the use of AVIC Lo-gistics’ domestic trucking network

AEROFLOT has announced that it has changed its official name and legal status in line with recent amendments to Rus-sian legislation. The company’s full legal name in English is now Public Joint Stock Company Aeroflot – Russian Airlines. The short form of the name in English is Aer-oflot PJSC. These changes have been made to comply with recent Russian law.

ACW 13 JULY 20156

The Indian economy continues to show positive growth and has created a niche for itself in generic

pharmaceutical exports, says industry sources.

Dovetail this with a growing middle class population that is driving increased demand for imports and you have a recipe for India’s expanding influence on the global airfreight market. IAG Cargo’s (IAG) regional commercial manager for Asia Pacific and India, John Cheetham (see picture), tells Air Cargo Week (ACW) that on-going improvements in Indian infrastructure are supporting the region’s ambitions for growth. “Bangalore and Hyderabad airports are relatively new facilities which have benefited from invest-ment which in turn has helped drive cargo volumes,” he says. “Cargo handling in Delhi has also improved in recent years with ground handling agents investing in facilities. Undoubtedly further investment in infrastructure will continue to support airfreight exports.”

IAG Cargo already has a strong footprint across India offering daily flights to five cities, including a double daily service to and from its cities of Mumbai and Delhi. In the pharmaceuticals market, Indian manufacturers have been among the first to synthesise generic alternatives to older drugs as their patents ended and have established themselves as players in the global pharma industry. “As

a result we have seen strong flows from India to destinations around the world and, between 2013 and 2014. Our temperature sensitive constant climate volumes in India increased by over 50 per cent,” says Cheetham. The year to date has been a positive one for IAG, he adds. “The first quarter of 2015 saw huge demand to the US during the west coast port strike but even after this ended we continue to see good demand. Excellent connections through our Heathrow and Madrid hubs have allowed us to target a broader range of destinations, ensuring we have capacity where our custom-ers are growing.”

Latin America has quickly emerged as one of the major destinations for Indian pharmaceuticals products over the past few years, Cheetham explains. These high growth markets are susceptible to the low price points of generics and so IAG has boosted its constant climate network in the region. This network was created to support the trade in temperature sensitive pharmaceuticals and in North America it remains a key destination for pharmaceutical flows from India.”

Cheetham suggests that while export volumes continue to be slightly stronger than imports for India, the overall balance is much improved compared to previous years. For IAG, pharmaceuti-cal products, garments and chemical products are the main commodities being shipped, along with some automotive business. He expects Indian manufacturing to remain competitive for the foreseeable future which, in turn, means demand should continue to grow from strong consumer economies like the US. “We also expect to see good growth to Latin America as those economies develop further. Through our Madrid hub and significant reach into Latin America we are in a very strong position to support this trade as it develops.”

Pharmaceutical influenceINDIA

New Delhi to Shanghai Saudia routeNEW direct freighter services to and from New Delhi were introduced by Saudi Arabi-an Airlines Cargo (Saudia Cargo) in June, including a flight linking the Indian city with Shanghai in China.

They are all part of the airline’s continued expansion strategy. The Shanghai direct ser-vice offers scheduled main deck capacity using Boeing 747-400 Freighters, operating twice weekly between the two cities.

Saudia’s regional director for the Far East, Vikram Vohra, says: “The direct service be-tween Shanghai and New Delhi has been specifically designed to fulfill the needs and requirements of customers in both cities.”

Saudia Cargo says the new services fur-ther consolidates its position as a leading freighter operator from China to the Middle East and that if demand between China and India continues to increase then flight fre-quencies would go up. The Jeddah (Saudi Arabia)-based business, which operates a fleet of freighters and sells bellyhold ca-pacity, provides Chinese shippers with 900 tonnes of capacity a week between Shang-hai and Guangzhou (China). Complementing freighter services from Mumbai in India, it offers customers in northern India a twice weekly 747-400F service departing Delhi to Riyadh and Jeddah.

THE Indian government’s Airports Authority of India (AAI), which last year handed con-trol of the country’s airports at its cities of Delhi, Mumbai, Bengaluru, Hyderabad and Kochi to private operators, is developing strategies to build stronger revenue streams from airfreight.

The AAI chairman, R. K. Srivastava, says, the authority is shifting its focus to domestic cargo operations with the objective of creat-ing a basic infrastructure at airports which have potential for airfreight growth.

Srivastava has with met air cargo stake-holders in the country to understand the problems they are facing. He tells Air Cargo Week that airfreight remains integral to the growth of the nation, with more than one billion citizens.

“There are many issues relating to dif-ferent sectors and we have identified and

discussed them in an effort to resolve them. Our role is to provide infrastructure and fa-cilitate business,” he says.

“With India poised to take a big leap in manufacturing, infrastructure development and e-commerce, the AAI is now ready to take a lead in developing domestic air cargo in the country.”

In 2014, India’s domestic cargo was reported to have grown by 10 per cent com-pared to the previous year and international airfreight which has grown by about five per cent.

Srivastava says AAI is in the process of developing 24 domestic airports with a com-mon user domestic cargo terminal. Three airports, in the Indian cities of Jaipur, Luc-know and Coimbatore, have already started cargo operations. The other 21 are expect-ed to follow over the next two years.

India’s big cargo plans unfold

7ACW 13 JULY 2015

INDIA

Growing appetite for airfreight

Agrowing appetite for Indian produce abroad by for-eign nations coupled with a steady demand from Indians living abroad bodes well for the country’s perishable market in the years to come. Add the ingredient of improved quality and these are key fac-

tors in place to underpin growth in perishables.India’s agricultural production continues to show robust

demand both locally and internationally and one airfreight player expects the perishables market to end the year on a high note. India ground handling company Cargo Service Centre (CSC) has seen this increase take place. CSC’s chairman, Tushar Jani, tells Air Cargo Week (ACW) that the perishables market has been showing, “reasonable growth,” and is likely to continue doing well in the months ahead.

“In the past, restrictions and bans on selected fruit and vege-tables have dampened volumes being exported from India, but these situations are mostly temporary. For example, the ban on mango imports into the United States was recently lifted and so we are already seeing an upturn in mango volumes this season.” The CSC is pursuing an aggressive national expansion strategy to

extend its air cargo footprint across India. “We are already pres-ent at the leading airports of Mumbai, Delhi and Chennai,” says Jani. “The country’s aviation authorities are increasingly inviting reputed organisations to operate and manage airports through contractual bidding.”

The centre’s overall objective is to be present at every major domestic airport within India and create a pan-Indian domestic air cargo network connecting the various airports together. “This connectivity, coupled with our aim of single window clearance for cargo, will create a truly seamless cargo network for air cargo across India and boost the domestic growth of air cargo volumes,“ Jani says. He adds that recent restrictions on the exports of cer-tain fruits and vegetables from India have made exporters more quality conscious when it comes to perishables. “As a result, we are witnessing quality exports from India to leading international destinations including the US, UK, Europe and Middle East mar-kets,” he explains. “We believe increased acceptance and demand for perishables on account of better quality exports will keep perishable exports elevated as more and more exporters adopt a quality focused, professional approach to their produce.” Jani

also expects India’s e-commerce sector to boost domestic air cargo movements in the coming months on the back of the entry of international e-commerce operators.

After it begun operating the domestic cargo terminal at Man-galore International Airport at the end of June, CSC says it wants to develop a domestic airport network for cargo movement across the country and will participate in all future domestic air-port tenders.

INDIA is an increasingly significant global market for air-freight and Amsterdam Airport Schiphol is seeking to expand airfreight business links with the country by focus-sing on the pharma business.

The airport’s cargo arm, Schiphol Cargo, its director of business development, Bart Pouwels, tells Air Cargo Week (ACW): “India has huge potential, particularly in pharma. Its large population and steadily increasing middle class pros-perity, based on rising international trade, will also generate growth of inbound traffic in the longer term, as has been the case with China,” he says.

“We have held a number of trade missions in India and phar-ma logistics forums at trade shows, where we have brought members of our logistics community together with pharma manufacturers to promote better mutual understanding and create business relationships,” Pouwels explains. “Recently we signed a memorandum of understanding (MoU) with our peers at [New Delhi Indira Ghandi International Airport] designed to promote a trade lane between us, based on the sharing of information and best practice.”

Delhi and Schiphol have in common their own dedicated cargo departments and share similar objectives. “An obvi-ous starting point is the airports at each end of the route and we hope Delhi can learn from our achievements in com-munity collaboration here at Schiphol,” he adds.

Despite its strategic location as a major European hub and with long standing connections with all major markets, it is only over the past four to five years that development of trade with India has been actively pursued by Schiphol.

“Pharma is our main focus as it’s an ideal airfreight prod-uct and a growth sector that can bring new traffic into the air,” Pouwels comments. “But, existing business is also important, the main imports from India are fashion goods, raw materials and machinery parts whilst key export com-modities are raw materials, machinery parts and capital equipment.”

Schiphol’s business plan is to stimulate trade and expand business with India through cooperation rather than straight financial investments. “Our investment is in devoting re-source to this important market, travelling to India, meeting with the manufacturers and generally doing whatever it takes to facilitate trade,” says Pouwels.

Schiphol shakes up India

POUWELSWe hope Delhi can learn from our achievements in community collaboration

ACW 13 JULY 20158

WESTERN EUROPE

Lufthansa Cargo battles overcapacity in key lanes

Volumes on the rise in Belgium

BELGIUM continues to be one of Western Europe’s highest growth areas for airfreight volumes.

The country’s main cargo hubs have both achieved strong growth rates so this year.

In the first five months of 2015, Brussels Airport (see picture) has seen cargo volumes rise YOY by 8.4 per cent to 201,756 tonnes. The airport explains: “Growth is recorded in all cargo segments at Brussels Airport, but mainly in the full-freighter segment. The past few years, this segment was hit hard both worldwide and at Brussels Airport.

“Due to the arrival of several new cargo carriers including Qatar Airways, Ethiopian Cargo and the Chinese Yangtze River Express, Brussels Airport is showing strong recovery in this segment.”

Freighter service KF Aerospace, previously known as Kelowna, started operating at Brussels Airport in May.

Liege Airport has also seen similar growth rates, which has been backed by its strategy of focusing on freighters. In the first five months of this year, Liege’s cargo volumes have reached 264,138 tonnes, a YOY rise of 12.2 per cent.

SOME of Western Europe’s busiest airfreight gateways have been seeing rocky times in 2015, as cargo volumes have struggled.

Frankfurt Airport saw cargo fall by 3.3 per cent year-on-year (YOY) to 176,889 tonnes in May, which the airport’s operator, Fraport, blamed on holidays during the month. The airport has seen volatile figures throughout 2015. Be-tween January and May, cargo volumes fell YOY by two per cent to 850,082 tonnes.

Heathrow Airport also saw cargo volumes fall YOY in May for the first time in 2015, with a 0.7 per cent dip to 125,067 tonnes. But, between January and May, cargo volumes in-creased by three per cent to 618,883 tonnes. Heathrow Airport chief executive officer, John Holland-Kaye, explains the figures show the need for increasing capacity and says exports to emerging markets are driving growth.

In the first five months of the year, Paris Charles de Gaulle Airport saw volumes reach 740,843 tonnes, a YOY decline of 5.3 per cent. The airport has been affected by air traffic control strikes in France.

Amsterdam Airport Schiphol has also seen a fall during the first five months of 2015. Volumes were 652,349 tonnes, a YOY drop of 2.2 per cent.

Western Europe’s busiest hubs struggle

Overcapacity is the main challenge for carriers oper-ating in Western Europe, according to Lufthansa Cargo’s vice president of area management in Europe and Africa, Carsten Wirths.

He explains to Air Cargo Week (ACW) this is espe-cially true on services to Asia, where competition on routes is being driven by Bosphorus and Gulf carriers, which is leading to, “significant pressure”.

Wirths says there are other challenges: “We are still facing some political and economic unrest in Europe, which effects overall airfreight development. Furthermore, we are striving to accelerate the digitalisation progress and improve our planning stability.”

Despite the tough business climate, Wirths says Lufthansa has had an, “extraordinary,” good start in the first half of 2015. “We recognise again an increasing pressure in the market. All in all we can be very satisfied with the development of the first half of the year; however we expect a challenging second half,” Wirths says.

In Western Europe, Lufthansa is seeing an industry trend for better efficiency by creating a more effective transport chain

from shipper via forwarder and airline to the consignee. “Some are based on airport community initiatives, others on bilateral or tripartite approaches,” Wirths explains to ACW.

The pharma market continues to increase with demand in Asia

as well as the US: “At the same time process requirements for transportation of pharmaceutical goods are increasing for exam-ple due to government health organisations requiring a higher standard for these products,” Wirths explains.

He explains the key trading lanes for Lufthansa are in Asia, especially China, which is the carrier’s leading lane in terms of combined import and export tonnage. The transatlantic trade lanes are also performing well, where Wirths says higher yields can be achieved. Demand for goods is fluctuating, Wirths says: “Perishables show a strong demand towards the US due to a cheap euro and pharma is steadily increasing. Automotive goods are partially project driven.”

He says opportunities exist in e-commerce and pharma and Lufthansa is hoping its partnership approach will pay-off. In August, it starts the All Nippon Airways (ANA) joint venture to Japan from Germany, the UK, and France. Wirths says: “All other European countries will follow step-by-step. More and faster connections, more capacity, flexibility and time savings are benefits for European customers.” He feels Western Europe will remain competitive due to large capacity into all the major trade lanes.

9ACW 13 JULY 2015

WESTERN EUROPE

Positive first half for IAG despite impact of weak euro

International Airlines Group (IAG) Cargo has seen a solid first half of the year, according to the carrier’s regional com-mercial manager for Europe, Chris Nielen.

He explains to Air Cargo Week (ACW) that for the first four months of 2015 results were positive, especially into the US,

but over the last few months IAG Cargo has been affected by the weakening euro against the strong dollar. “We have seen in May and June the market is softening and in May it was especially slow,” Nielen says.

There has been positive signs and there was a slight uptake towards the end of June, Nielen notes, especially across France, Germany and the Netherlands. Traffic to the US is back to normal after the surge due to the West coast sea port slowdown: “The overall market is quieter, which our customers and cargo han-dling agents are telling us.”

Nielen says dealing with overcapacity is the principle operating challenge. He tells ACW it is a problem for IAG, and proving a barrier to even better results: “Our biggest challenge is overcapacity in the market, especially with all the additional

bellyhold and freighter capacity coming in. The biggest challenge for the industry is how to deal with this extra capacity.”

New bellyhold routes launched by IAG Cargo into Latin America (LatAm), such as Cali and Medellin in Colombia, and to Havana

have boosted volumes. The carrier’s biggest trade lanes are North America, LatAm and Asia.

IAG Cargo has now started moving cargo on low-cost airline Vueling, which it bought in 2013. “Selling the Vueling cargo capac-ity is very important for us and we are opening more stations all the time. This gives us one of the biggest European networks,” Nielen says. Vueling will add another bellyhold route to Munich on 15 July.

Nielen says IAG Cargo saw cargo volumes on narrowbody routes increase by 12-15 per cent in the second quarter of 2015. In his view there will be good growth in the airfreight industry in the future: “We are optimistic the global economy will grow and especially in Europe. The Dutch economy is looking good and Germany is strong. We think Europe will perform well in the rest of 2015.”

Nielen adds that IAG Cargo is focusing on its constant climate products and specialist services in Europe. It feels the strongest growth will be in transporting this cargo, especially pharma.

Air France-KLM Martinair toils in 2015ONE of Western Europe’s principle cargo carriers, Air France-KLM Martinair (AF-KL-MP) continues to struggle.

This year, the airline has had to cope with the impact of air traffic control strikes in France and a cost cutting programme that has been implemented and affected performance.

AF-KL-MP saw cargo volumes fall by 10.4 per cent to 3.7 billion revenue tonne kilome-tres (RTK) between January and May, though the declines in May were smaller than in April. In May, RTK was 741 million, up from April when it was 703 million, but down on March at 822 million. May was up on Janu-

ary and February when RTK was 713 million and 726 million, respectively. In May, RTK fell by 12 per cent, year on year (YOY), which follows a 14.9 per cent fall in April. Each month of 2015 has seen YOY falls in RTK, starting at eight per cent in January, 8.2 per cent in February and 8.7 per cent in March. Available tonne kilometres (ATK) fell by 3.5 per cent from January to May to 6.1 billion.

In the first quarter (Q1) of 2015, AF-KL-MP saw its cargo revenue fall by 7.5 per cent to 625 million euros ($697.5 million). The cargo division saw losses rise from 34 mil-lion euros in Q1 of 2014 to 63 million in Q1 2015.

LUXAIRCARGO has continued its investment in specialist products by opening a new dan-gerous goods (DGR) area at Luxembourg Airport in June.

The facility is spread over 1,000 square me-tres of sprinkled storage area and shelters. It has capacity to handle 75,000 tonnes a year, which is above the current average of 50,000 tonnes. LuxairCARGO says security and safety requirements were the prime motivations of the investment.

LuxairCargo explains: “2015 is an import-ant year of preparation for the future for live animals, DGR and works have started for an extension of the big and heavy centre, anoth-er special product for the main deck carriers.”

This development continues infrastructure upgrades. In May last year, it extended its live animal facility allowing it to handle 50 hors-es through 50 stalls constructed. The Luxair

Group announced in May revenue was up five per cent in 2014 on 2013, reaching 495.2 million euros ($544.6 million). This includ-ed a net profit of 9.7 million euros, a surge of 411 per cent . The airline said at the time the improved performance was mainly due to investments made in its fleet and cargo infrastructure.

LuxairCARGO opens dangerous goods facility

ACW 13 JULY 2015 10

AUSTRALASIA

O cean freight may be faster than a decade ago, but when it comes to getting goods quickly and efficiently to and from the geographically remote Australasian

region, airfreight is often the only viable option.“We are a long way away from most of the

world,” says CEVA Logistics’ director of air and ocean services in Australia and New Zealand, Grant Lowe. “Whilst technology is improving and shipping goods by ocean freight is getting faster, the distance to and from Australia and New Zealand can be a tipping point for many customers wanting short lead times for deliver-ies. In these instances, airfreight often becomes the only option.”

With changing economic, political and tech-nological dynamics, he tells Air Cargo Week, that companies are continuing to re-evaluate their supply chain needs. Lowe adds that CEVA is helping customers by providing, “secure, resilient and well managed,” supply chains to, “ensure competitiveness”.

CEVA offers a package of premium, value added services and specialist products to the Australian and New Zealand market.

“Our direct, into store, solution sees us partnering with airlines to deliver a cost effective method of distributing products, sourced and packaged from overseas vendors or suppliers, directly to store; and in some cases directly to the end consumer.” Lowe explains this can include consolidating small shipments to reduce transportation, warehouse and over-head costs as well as the lead time distribution process.

“We see a trend for using this service from consumer and retail, automotive and energy and

mining and technology customers who are look-ing to engage with a global partner with strong local expertise and a network to ensure that any issues or problems, including trade regulations and compliance, are solved quickly,” he explains.

Lowe adds that evolving scalable, flexible and innovative solutions to improve the efficiency of customer supply chains is a key driver of busi-ness in Australia and New Zealand.

“CEVA is always looking to optimise its customer supply chains by leveraging our trans-portation and logistics network capabilities,” says Lowe.

One example he gives is the company’s deci-sion to boost investment in property in Australia and New Zealand by constructing multi-user sites. These are designed to bring various busi-ness units, such as contract logistics, air and ocean, transport and car carrying services, together on the one site.

“This move represents a real point of dif-ference within the industry and our property investment activity includes building a new super multi-user warehouse site in Melbourne, which will become CEVA’s largest in Australia.”

Leveraging your assetsModernisation is key

AIRLINES in Australia and New Zealand are working through fleet modernisation and operational transformation programmes to ensure they are in the best place possible to compete in an airfreight market that will become ever more demanding.

B&H Worldwide’s regional director for Australia and New Zealand, Steve Moralee (see picture), says that through partner-ships with B&H, carriers are well positioned to make important change decisions to maximise future business opportunities. “Knowing they have the support of a flex-ible and responsive partner that is not constrained by the rigidity of a traditional third party logistics contracts, or the cost and time drain normally associated with software providers, is important,” he states.

B&H is based in the UK. It is involved in the aviation parts logistics industry. It has a proprietary IT system called OnTrack. This provides real time information for the

live tracking of parts around the globe. It can also provide maintenance event man-agement, in-shop repair progression and operational and financial statistical anal-ysis. “Our operational engagement and relationship management protocols ensure our customers have a detailed perspec-tive on their global logistics activity and are always preparing for the next wave of activity, including risk managing any un-favourable trends that may be emerging,” says Moralee.

Having established a share of its target aviation market in Australia and New Zea-land, B&H has begun providing service to carriers operating in Asia and says it is look-ing for growth in line with the strong industry development predicted for the years ahead.

Asian production of aviation parts got a boost at the Paris Air Show last month when Airbus and India’s Mahindra Group an-nounced a multi-year contract for metallic parts supply by Mahindra Aerospace.

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