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International Trends & Analysis

Airport Management • Midwest Gateways • Charters

APRIL 2008

INTERNATIONAL EDITION

Growingin the GulfGrowing

in the Gulf

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April 2008 1AirCargoWorld

INTERNATIONAL EDITION

COLUMNS

10 North AmericaWith the DHL tentative

agreement in hand, theTeamsters could be aiming for abigger prize, FedEx • Big Towne

12 EuropeBritish Airways Terminal 5

opens as the carrier prepares fora new U.S.-led invasion • SASDown

16 PacificThe open skies agreement

between the U.S. and Australiaoffers more freight capacity tothe region, but there are fewtakers

DEPARTMENTS

2 Edit Note4 News Updates

36 People38 Bottom Line40 Events

MiddleEast

The region does provideopportunities for the airfreight industry, but can theGulf carriers maintain theirrapid growth

MidwestGateways

All-cargo airports arebecoming major playersthroughout the mid-andSouthwestern states

OutsizeCargo

Coyne Airways and AirCharter Service are keyplayers in different roles inoutsize cargo

24 Airport Management

Attracting the freightindustry to alternativeairports is more challengingand complex than airportleaders might believe.

A p r i l 2 0 0 8 C O N T E N T S V o l u m e 1 1 , N u m b e r 3

Air Cargo World (ISSN 1933-1614) is published monthly by Commonwealth Business Media. Editorial and production offices are at 1270 National Press Building, Washington,DC, 20045. Telephone: (202) 355-1172. Air Cargo World is a registered trademark of Commonwealth Business Media. ©2008. Periodicals postage paid at Newark, NJ and atadditional mailing offices. Subscription rates: 1 year, $58; 2 year $92; outside USA surface mail/1 year $78; 2 year $132; outside US air mail/1 year $118; 2 year $212. Single

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April 20082 AirCargoWorld

Other StoryIn this issue, there are two informative articles about air freight

opportunities at alternative airports. One deals with the chal-lenges of attracting freighters to those airports while the other

explores alternatives in the American Midwest.But don’t overlook opportunities for air freight at those large airports. Yes, I re-

fer to those high-density facilities, which get a lot of bad press because too manypassenger airliners are being managed by an ancient air traffic control system.

Consider Chicago O’Hare International, a congested but valuable piece ofreal estate to air transportation. As part of its modernization plan, O’Hare issetting aside more than 50 acres in the northeast section of the airport for car-go development.

The Illinois Department of Aviation recently issued a Request for Qualifica-tions from third-party developers, who are expected to chip inaround $50 million over the life of the contract, according tosources. Five respondents were invited to submit a proposal.The winner, says an airport spokesman, will be chosen on vari-ous factors, including the “respondent’s proposed rent to thecity,” as well as the “green design elements of the proposal.”

Elsewhere, there is activity indicating major airports are fo-cused on cargo. Consider Centurion Air Cargo’s $123 million,632,000-square-foot project at Miami International Airport.When built, the facility will be the biggest cargo terminal at MIA.The land is leased from Aeroterm, which has also signed a lease

with MIA for 48 acres in the northeast sector of the airport for development.George Bush Houston Intercontinental Airport is enhancing its freight abili-

ties to better handle the increased flights of combination and freighter airlines.A new 61,484-square foot perishables facility is only part of its long-term plans.

Hartsfield-Jackson Atlanta International is planning to build additional335,000 square feet of warehouse space by 2015 as part of its cargo master plan.

There are similar stories around the world. At London Heathrow, officialsare still considering the cargo-related aspects of British Airways recentlyopened Terminal 5, but it is relatively certain that freight will grow at one ofthe world’s busiest airports. The growth at CargoCity within Frankfurt Airportcontinues as the freight traffic rises. A fourth runway will open in 2009 and athird terminal in 2015. Cophenhagen Airport is planning to build a new cargoterminal with road and rail access.

Even the airlines are investing in cargo facilities at these large airports. CathayPacific Airways will invest some $770 million in a new cargo terminal at HongKong International. The airline will design, build and manage the 1.8 million-square-foot facility for 20 years following its opening in 2011. The terminal willincrease express and general cargo handling capacity to 7.4 million tons per year.

Alternative airports aside, it’s safe to assume that the big airports will stillcater to air cargo.

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International Trends & Analysis

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UpdatesNews

ed 2008 at about $2.65 a gallon buthave increased some 31 percentsince January.

The latest surge has given a boostto those airlines that have hedgedtheir prices this year. Lufthansa, forexample, has hedged more than 83percent of 2008 fuel costs and 27 per-cent for 2009. The airline says it ex-pects 2008 fuel costs to rise to nearlydouble to $7.6 billion from 2007, al-though some relief could come fromfurther weakening of the U.S. dollar.

Better Times?

Despite doom-and-gloom scenar-

ios, business could be looking

up for the air freight industry, if re-

cent monthly figures released by the

International Air Transport Associa-

tion are any indication.

Air freight growth of 4.5 percent

was recorded in January. “This runs

contrary to downward trends in

many leading indicators including

semi-conductor shipments and man-

ufacturing business confidence lev-

els,” IATA said.

The Asia-Pacific airlines saw freight

demand increase 6.5 percent in Janu-

ary, up a half percentage point from

December’s freight traffic. European

airlines saw its’ freight traffic slump

0.4 percent in China and India.

“January traffic results show that

we could be at a turning point,” Gio-

vanni Bisignani, IATA’s director gen-

eral and CEO said.

Yet, not all the news is good for

cargo. “A month’s data is not

enough to define a trend, however,

the sharp shift in demand growth

patterns makes it clear that the U.S.

credit crunch is negatively impacting

air travel,” Bisignani said.

Air cargo has been growing at half

the rate of global trade expansion,

Fuel Rockets Up Surcharges

With jet fuel prices clearing the once-unthinkable land-mark of $3 a gallon, the surcharges airlines and for-warders charge their customers are about to clear an-other barrier. But cargo operators have to wonder

whether the rising charges may be a bar to shipper business. Cargolux raised its fuel surcharge to about 95 euro-cents a kilo effective March

31, and with oil prices soaring deeper into triple digits last month the surchargebarrier of $1 and one euro looked to be the next one to tumble.

The U.S. Energy Information Administration said daily jet fuel prices onspot markets peaked at $3.48 a gallon in New York on March 14, by far thehighest price ever recorded for jet fuel and nearly 20 cents higher than theprice just the week before. Jet fuel prices in Los Angeles and went beyond$3.30 a gallon, Rotterdam was at $3.26 and the price of $3.11 a gallon in Sin-gapore looked like a bargain by comparison.

Cargo industry officials say carriers and forwarders are passing along the in-creases but they’re seeing shippers respond by moving to less costly transportwhere possible.

“Customers are reconsidering air and going to ocean on the import side, es-pecially with their less critical shipments,” said Joseph Hoban, director of in-ternational air services at forwarder AIT Worldwide Logistics.

He said shippers, for the most part, are accepting the rising energy chargesas a cost of business.

Hoban said the fuel impact has been softened by relative stability in core airpricing. “Rates have been pretty good out of Shanghai and Hong Kong, andexiting the U.S. The airlines may be a little shy about doubling up on highfuel surcharges and rates,” he said.

Jet fuel prices have grown about $1.65 since the start of 2007. Prices start-

04NewsUpdateINT 3/20/08 2:04 PM Page 4


indicating a loss of market share to

cheaper ocean shipping,. Aviation

fuel rose some 300 percent between

2002 and the first half of 2007, com-

pared to a 200 percent rise in fuel for

ships during the period, IATA said.

Waybill Ways

The passage of the InternationalAir Transport Association’s air

waybill Cargo Services ConferenceResolution 600b will simplify theshipping process and could helppave the way to a paperless recordkeeping standard.

The main change of Resolution600b, approved by the U.S. Depart-ment of Transportation after 18 yearsof tinkering by IATA committees, isthe creation of a “uniform currencyexchange rate,” said Carlos Torneo,senior legal counsel for IATA in Mon-treal, “regardless of whether you’reunder the Warsaw or Montreal con-ventions.” The 600b, the modernizedair waybill Conditions of Contract,complies with both Warsaw andMontreal conventions.

The new resolution also limits theliability of the carrier. Serge Larue,IATA’s director cargo safety and stan-dards, said Resolution 600b specifies250 French gold francs to be the con-version equivalent of 17 SDR, whichprovides a method of converting thefrancs into other currencies.

The new resolution effectively re-places 600b2, which shippers foundunnecessarily complex and lengthy.

IATA used the long awaited pas-sage of 600b to advise shippers toshift to plain paper airway bills al-lowed under the long-standing 600a;600b has nothing to do with the useof non-colored air waybills.

But 600a allows the use of plain pa-per as opposed to color-coded copies.

Moving to the automated productionof a plain paper version, with the newConditions of Contract on the reverseside, will help shippers meet the “ad-hoc printing requirements in an e-freight environment,” IATA said.

“The real goal here is to have an e-airway bill that is universally accept-ed by business and customs,” saidJens Tubbesing, president of CargoNetwork Services, a division of IATA.

Bullish Airbus

Airbus is brimming with confi-

dence these days. Despite pre-

dictions of a sales slump in 2008, the

manufacturer forecast a demand for

24,262 new passenger and cargo air-

craft valued at $2.8 trillion over the

next 20 years.

Airbus gave its upbeat assess-

ment following the release of its lat-

est Global Market Forecast for the

years 2007 through 2026.

Among the new aircraft deliveries

will be a need for 877 new freighters.

By 2026, 3,778 freighters will be

needed, including 2,901 conversions.

Many will be widebodies including

the A330-200 freighter, said Airbus

Americas CEO Barry Eccleston.

Air freight is forecast to grow

faster than passenger traffic, with

freight tonne kilometers increasing

annually by 5.8 percent, Airbus said.

Eccleston offered the following on

the company’s Very Large Aircraft

during the briefing. “There will be a

freighter version of the A380,” Eccle-

ston said. “But we won’t restart the

freighter program until we’ve met

the challenge of putting the A380

passenger aircraft in service.” Singa-

pore Airlines is operating two A380s.

The A380 will be most valuable at

capacity-constrained airports, such

as London Heathrow, and Hong

Kong International, Airbus said. Nine-

ty-three capacity constrained air-

ports represents 64 percent of world-

wide traffic and the A380 would help

relieve that congestion. Hence the

Airbus slogan: “Bigger is Better.”

The doubling of passenger traffic

worldwide over the next 15 years,

the increasing demand in China for

domestic and international service

and accelerating deregulation there,

the growth of low cost carriers, and

the emergence of 21 new markets

were reasons Airbus gave for the in-

creased demand for aircraft.

Eccleston dismisses suggestions

of overconfidence, saying, “When

we look at the rising demand [over

the forecast period] we don’t see an

overcapacity issue.”

While India and China are the

fastest growing markets, North

America remains the most fertile

ground for new deliveries, said Lau-

rent Rouaud, vice president market

forecasts and research, with the need

for 5,210 single-aisles airliners, 1,111

twin-aisle and 163 very large aircraft.

Big Boeing

While Airbus remains undecid-ed about when to restart its

A380 freighter program, Boeing isplowing ahead with the develop-ment of its next generation wide-body, the 747-8 freighter.

Boeing released 50 percent of thedesign drawings of widebodyfreighter to factories and suppliers tobegin building parts, assemblies andtools. Meaning, the company hasreached the point of no return onthe program.

Ross R. Bogue, vice president andgeneral manager of the program saidthe 747-8 will provide nearly equiva-lent trip costs and 16 percent lower

UpdatesNews


ton-mile costs than the 747-400. Itwill also be 17 percent more fuel effi-cient than the -400. The -8 freighterwill be longer than the -400 by 18.3feet and have a maximum payloadcapability of 154 tons, with a rangeof more than 4,420 nautical miles.

“For many applications the largestfreighter wins,” said Robert Dahl,project director for the Seattle-basedAir Cargo Management Group. “Andthe 747-8F will be the largest freighterin the market until Airbus reinstates afreighter version of the A380.”

Dahl said the market acceptance ofthe aircraft is “already apparent” be-cause of the nearly 80 firm ordersfrom a diverse group of customers.

Boeing is hoping the -8 will com-plement the new 777 freighter withthe ability to transfer cargo directlybetween the airplanes. The main deckcargo doors on both aircraft are sizedto accommodate 10-foot high palletsfor easy interlining.

e-Lufthansa

Lufthansa Cargo is bringing e-

freight to Germany by signing up

for the International Air Transport

Association’s paperless initiative.

A meeting held last month in

Germany initiated a further trial

phase of the IATA worldwide pro-

gram, which is finally starting to

attract the attention of several car-

go carriers.

Lufthansa will take over project

management in Germany and over-

see implementation of the necessary

processes by all interested parties in

the logistics supply chain.

“We are delighted that Lufthansa

Cargo has taken on the role of coor-

dinator,” said Mathias Jakobi, man-

ager of the IATA office in Germany

and Austria.

“The IATA initiative will allow us

to handle all the paperwork in the

entire supply chain electronically

and make it more environment

friendly,” said Markus Witte, project

manager at Lufthansa Cargo.

The e-freight project began as

part of IATA’s “Simplifying the Busi-

ness” program in 2004 and moved

into a pilot phase in five markets in

2007. The findings from the trials

will be put into practice in other

major markets, including Germany,

following completion of the project

in 2010.

ASTAR Sues

Miami-based ASTAR Air Cargo issuing Merrill Lynch, Pierce,

Fenner & Smith for investing mil-lions of dollars in a fund that ties upthe airline’s cash.

The claim was filed with the Finan-cial Industry Regulatory Authority togain access to ASTAR’s funds thatwere frozen in an Auction Rate Secu-rities fund in the company’s MerrillLynch account.

ASTAR is seeking compensatorydamages of $9.1 million and punitivedamages of at least $27.3 million.

On the surface, it doesn’t appearthe suit was filed, in part, becausethe airline needs money. It’s rela-tionship with DHL remains intact.DHL did not immediately returncalls for comment.

Then there is recently ratified four-year contract ASTAR signed with itspilots, represented by the Air Line Pi-lots Association. The accord calls forretroactive pay and more than 20percent in pay increases over thecourse of the contract.

“Merrill Lynch decided to saddleASTAR with an illiquid investmentrather than risk more of its own capi-tal in the ARS market,” said Scott Di-mond, ASTAR’s lead litigation coun-sel. “When Merrill Lynch concludedthat ARS were a ‘hot potato’ they de-cided ASTAR would be the one to getits hands burned.”

The investment house’s responsewas sharp and swift. “This is a suitwith no merit,” said William Halldin,a spokesman for Merrill Lynch. “It ishard to understand the claims of AS-TAR, which has been investing inAuction Rate Securities for threeyears. The CFO (Steve Rossum) is asophisticated businessman, whowanted higher yields than cash couldgive the company.

“Not only did ASTAR want to in-vest in Auction Rate Securities, butthe executives went so far as to ask


UpdatesNews


http://www.aeronautical-engineers.com


http://www.dnata.com

about specific ARS and picked othersfrom a menu of choices that met AS-TAR’s criteria. ASTAR knew it wastrading liquidity for yield because itspeople discussed this and the riskposed by auction rate securities be-fore they purchased them.”

Dimond said ASTAR would neverhave invested in the ARS market ifMerrill Lynch had informed the carri-er “of the true liquidity risks of the se-curities and the apparent liquidityproblems at Merrill.”

ACE Correction

The Air Cargo Excellence survey

published in the March issue

mistakenly listed the criteria used

by our readers to rate both the air

carriers and airports. The correct

criteria for each survey should read

as follows:

Criteria for AirportsPerformance: Fulfills promises and

contractual agreements, dependable,prompt and courteous customer ser-vice, allied services; ground han-dling, trucking, etc.

Value: Competitive rates, ratescommensurate with service level yourequire. Value added programs

Facilities: Apron, warehousing,perishables center, access to high-ways and other modes

Regulatory Operations: Customs,security, FTZ

Criteria for AirlinesCustomer Service: Claims handled

with expedience, solves problems ina prompt and courteous manner,professional and knowledgeablesales force

Performance: Fulfills promisesand contractual agreements, de-pendable, accomplishes scheduledtransit times

Value: Competitive rates, rates arecommensurate with service level yourequire, value-added programs

Information Technology: Trackingand tracing of shipments, Internet,electronic commerce capabilities

Readers can view the revised ACE surveyby going to www.aircargoworld.com

UpdatesNews




http://www.qrcargo.com

Preliminary Program of EventsSunday, May 4

07:30 The CNS Partnership Golf Classic 12:00-18:00 Registration19:00 Welcome Reception

Monday, May 507:15-08:30 Breakfast08:45-09:15 Welcome and Conference Overview

Jens Tubbesing, President, CNS Corp.09:15-09:45 Is the Gap Any Smaller?

Our Accomplishments Since San DiegoMick Fountain, Chairman, CNS Advisory BoardPresident and CEO, Barthco International

09:45-10:30 Keynote AddressRoger MacFarlane, CEO and Director, UTi

10:30-11:00 Refreshment Break11:00-11:15 Introduction and Acknowledgements

Jens Tubbesing11:15-12:30 Charlie Rose Interviews

Richard Anderson, CEO, Delta Air Lines12:30-13:00 The Details: Introduction to Afternoon Tracks13:00-14:00 Lunch14:00-15:30 Tracks for Those with Special Interest

• Track 1: Technology, Phil Sims• Track 2: E-Freight USA, Steve Smith• Track 3: Training and Talent Development, Jens Tubbesing

19:00-19:30 Cocktail Reception19:30-22:00 Dinner/Buffet

Tuesday, May 607:15-08:30 Breakfast08:30-08:45 Review and Preview

Scott Dolan, United Cargo08:45-09:30 Keynote Address

Jost Hellmann, Managing PartnerHellmann Worldwide Logistics

09:30-10:15 Security Update- W. Ralph Basham, Commissioner- U.S. Customs and Border Patrol- Ed Kelly, Air Cargo Division Manager–TSA- U.S. Department of Homeland Security

10:15-10:45 Refreshment Break10:45-11:45 Open Skies – Environment – Talent Development –

Security – Risk ManagementPanel Moderated by:Deep Parekh, Partner, Equus Group LLC

11:45-12:30 Closing the “Know-Do” GapVictor Rosansky

12:30-12:45 Conference Wrap UpJack Boisen, Vice President, Continental Airlines Cargo

13:00-14:00 Lunch14:30-15:30 Ground Handling Companies meet with CNS14:00-17:00 CASS-USA (By Invitation): Howard Chaloner19:00-19:45 Cocktail Reception19:45-23:00 Gala Partnership Dinner

Close the “Know-Do” Gap: Turn Knowledge Into Action

Early Sponsors: adi Management Consult, Aer Lingus Cargo, AIRDEX International,All Nippon Airways, American Airlines Cargo, Apperson Print Resources, Atlas Air,Austrian cargo, avianinform GmbH, bmi, British Airways World Cargo, CargoWise edi,CHAMP Cargosystems, Citi, Continental Airlines Cargo, Delta Air Lines, DHL Express,DHL Global Forwarding, Emirates SkyCargo, EMO Trans, Expeditors International ofWashington, Finnair Cargo, FreightScan, Global Aero Logistics—World Airways, GlobalTransport Training Service, Huntsville International Airport, Iberia Airlines of Spain, IJSGlobal, JetStream Ground Services, Kuehne + Nagel, LAN Cargo, Lufthansa Cargo,Lynden International, Panalpina, Pittsburgh International Airport, Polar Air Cargo Worldwide,Rickenbacker International Airport, Schenker, SKO-BRENNER-AMERICAN, SwissWorldCargo, Target Logistic Services, Team Worldwide, TRAXON Europe, United Cargo,UPS Air Cargo, UPS Supply Chain Solutions, US Airways

PGA NationalResort & SpaPalm Beach Gardens,Florida

May 4-6

Register online atwww.cnsc.net

Featured Speakers

Charlie RosePBS Emmy Award Winning Journalist

Jost HellmannManaging Partner,Hellmann Worldwide Logistics

Roger MacFarlaneCEO and Director, UTi

Richard AndersonCEO, Delta Air Lines


http://www.cnsc.net

ReportsRegional


course this is a possibility, but wedon’t see FedEx management as will-ing to undertake bargaining.”

FedEx says the Teamsters don’trepresent any employee group, butthe union says it represents FedExGround drivers in Boston, Local 25and Hartford, Conn, Local 671.

Drafting a national agreement withthe thousands of FedEx Express em-ployees would be particularly chal-lenging, Welker said.

But the Teamsters may have nochoice if Congress continues to rec-ognize FedEx under the RLA.

Getting FedEx to agree to any Team-sters-led accord, much less a nationalagreement would be very difficult, andcounter-intuitive for the union. “It ismuch easier to get individual units tosign up than go system wide,” said Jer-rold A. Glass, president of F&H Solu-tions Group, a labor relations and hu-man resources business. “This hasbeen the Teamsters’ pattern and Ithink that will continue [at FedEx].”

An OpportunityObtaining a national agreement

with the Express division would givean enormous boost tothe Teamsters, which

has been losing members of late.According to Welker, there are

roughly between 30,000 and 40,000FedEx Express drivers; 10,000 line-

The Teamsters union has the agreement they want, but notthe one it craves. A tentative national agreement is thefirst between the labor union and various DHL Express em-ployee groups, but for the Teamsters it is only something

of a reminder that the real prize for the union is a foothold at theexpress and ground operations of FedEx.

For now, U.S. law recognizes FedEx under the Railway Labor Act, which al-lows for only one union per work class on the property. Under the NationalLabor Relations Act, a law most unions prefer, there can be multiple unionsrepresenting one labor group.

Neither side is speculating officially, but Teamsters General President JamesP. Hoffa has made no secret that FedEx is the big prize.

Such an agreement at the Express division “would mostlikely be a national agreement because, by law, an RLA unit isa national unit,” said David Welker, Teamsters senior campaign coordinatorfor the package division.

Going for a national agreement at FedEx Express “would not be a Teamstersstrategy, but pursued as a result of what the law dictates,” Welker said. “Of

New DealWith the DHL tentative agreement in hand,

the Teamsters could soon set its sights on a bigger integrator

by Robert W. Moorman

NORTH AMERICA

10RegionalsINT 3/20/08 12:15 PM Page 10

haul drivers and 6,000 to 7,000 air-craft mechanics. FedEx said thosenumbers were inaccurate, but de-clined to release their own.

Bringing together various employeegroups under one master agreementseems tailor made for FedEx, which islargely non-union, said industry ob-servers. The Air Line Pilots Associa-tion represents the pilots.

FedEx seemed unconcerned aboutthe possibility of a large organizingdrive for a national agreement by theTeamsters. “It is no great surprise thatwith declining revenues and member-ship numbers that the Teamsterswould target FedEx,” said companyspokesman Maury Lane. “So far, wehave seen that the Teamsters will sayand do anything to organize, despiteFedEx’s record of winning multipleawards for being one of the bestplaces to work around the globe.”

Still, the Teamsters could be target-ing FedEx at the right time. Theunion has repeatedly challenged incourt FedEx Ground’s practice of clas-sifying its drivers as independent con-tractors. The California SupremeCourt in late November refused tohear an appeal by the FedEx parcel di-vision of state trial and appeals courtrulings that the company should re-imburse driver expenses because theyare effectively company workers.

The Internal Revenue Servicefined FedEx $319 million for mis-classifying workers as contractors intax year 2002. Then, there is thestalled effort in Congress to reclassi-fy FedEx under the NLRA, which ismeeting stiff resistance from theMemphis-based carrier.

Opening ActMeanwhile, the tentative DHL na-

tional agreement consolidates 38 dif-

ferent bargaining units into a singlecontract, using a standardized com-mon language, said Ian Gold, Team-sters director of strategic research, whoworked with the negotiating commit-tee on the DHL tentative agreement.

The accord covers DHL drivers,clerical and call-center workers andemployees at the regional sort facili-ties. It doesn’t cover any employees ofABX Air or ASTAR Air Cargo, formerlyDHL Airways, sub-set carriers of DHL.

In mid-March, local leaders forwhat is called “two-person meetings”will review and modify, if necessary,the tentative agreement. At thatpoint, details of the accord will be re-vealed to the public. Ballots will thenbe mailed to the DHL members forratification expected sometime inmid-April, Gold said.

The tentative agreement at DHL isnot unique, Gold said, but it has beensome time since one was signed. TheTeamsters have a master freight agree-ment covering the larger unionizedless-than-truckload carriers, Gold said.

Big Towne

Towne Air Freight’s recent acquisi-

tion of eight-location operation of

Synergy Cargo Logistics is the clear-

est signal yet the South Bend, Ind.-

based company is determined to bet-

ter compete with Forward Air and

other large air freight truckers.

Synergy Cargo Logistics is a private-ly-held logistics company founded in1994 that has grown into a $25 mil-lion company with eight locations,mostly in the Southwest.

“The acquisition of Synergy signifi-cantly strengthens our full-servicemodel in Arizona, Nevada and Cali-fornia and opens the door intoTexas,” said Tom Downey, presidentand CEO of Towne Air Freight.

Synergy founder Kim Sheridan-Ro-hasek will become vice president ofTowne’s Western region.

… BrieflyAmerican Airlines Cargo is ex-

panding the Expeditefs productguarantee to include its truck feederservice. The trucking segments con-nect freight from secondary marketswith widebody flights at American’sgateway cities and Expeditefs pro-vides priority boarding and flightconnections. … UPS is acceleratingpackage movements between morethan 12 million ZIP code pairings byone day or more. The improvementsinclude lanes originating in eight keystates and more than 70 markets, andwill speed up more than 75,000 pack-ages nationwide per day. … Anchor-age-based Northern Air Cargo ac-quired Reliant Logistics, an aircraftcharter brokerage firm based in Ypsi-lanti, Mich. … Forwarder SEKO ex-panded its Puerto Rico office with ad-ditional staff and enhanced IT. Thefacility is close to San Juan’s LuisMunoz Marin International Airport.… Purolator USA, the subsidiary ofthe Canadian distribution servicescompany, opened a branch office inLos Angeles, serving customers inSouthern California, Arizona andNevada. … DHL signed a five-year,$80 million agreement with procure-ment services company Avendra,which will use the shipper for expe-dited delivery services to hotels andresorts. In other company news,DHL Global Forwarding wasrevalidated to participate in the U.S.Customs-Trade Partnership AgainstTerrorism program. … EmiratesAirlines boosted its service to Hous-ton Bush Intercontinental Airport todaily service to Dubai. ■


ReportsRegional


ReportsRegional


our money back guarantees.”For the immediate future, howev-

er, Gunning and his team must focuson transition costs at Terminal 5,some $40 million, with investmentgoing into new equipment, manpow-er and systems.

“Luckily for us, the first phase ofthe transition, moving short-haulservices out of Terminal 1 at the endof March, will not affect us toomuch, because we do not make sig-nificant use of this capacity,” saidTony Davies, BAWC’s manager ofhub operations. “The real test willcome at the end of April when themajority of long haul services aretransferred out of Terminal 4.”

Transfer times between the air-line’s cargo building and the newTerminal 5 facility will not be signifi-cantly impacted, particularly with theprovision of a dedicated cargo road-way. But the requirement for steepergradient underpasses at the new ter-minal means that BAWC has had torethink how it hauls pallet dollies. “Ithas meant investment in a fleet of 85new tractor tugs at a cost of $140,000apiece, plus 484 new pallet dollies,”said Davies. “In addition, we havehad to recruit 165 more drivers.”

Gold RushUnlike the Terminal 4 operation,

space constraints at the new Termi-

The glitzy new British Airways passenger terminal at Lon-don Heathrow clearly shows where the carrier’s prioritieslie. An $8.5 billion investment in Terminal 5 puts virtuallyall of the airline’s operations at its home hub and under

one roof for the first time. BA spent more than $120 million in fit-ting-out no less than six fancy first and business class lounges atthe new facility.

For BA, the future is the premium-class passenger.Steve Gunning, managing director for British Airways World Cargo, has

adopted the same principle for the airline’s cargo business – the future is pre-mium cargo traffic.

”Our range of premium products are now responsible for generating over 18percent of overall cargo revenue for the airline,” he said. “It is now our inten-tion to focus on growing that business even further.”

The airline believes it could push that percentage figure up as high as 25percent and that confidence is certainly supported by recent growth figures.

“In the last 12 months, we’ve grown our Prioritize express product by 20percent,” said Gunning. “Unlike other carriers … we have not withdrawn

Terminal VelocityBritish Airways digs in at its home hub and

prepares for a new U.S.- led invasion.

EUROPE


nal 5 means the cargo operation willbe unable to establish a single for-ward holding area for built-up pallets.

“Instead, we have reached anagreement that each of the 143 air-craft stands at the new terminal willhave a dedicated area capable ofholding between four and seven pal-lets,” said Davies.

The opening of the Terminal 5 op-eration coincides with the imminentimposition of the “open-skies” treatyon the North Atlantic. The accordcaused a flurry of activity at the Lon-don gateway with carriers horse-trad-ing valuable take-off and landingslots for millions of dollars.

Continental Airlines is believed tohave spent in excess of $200 millionto muscle in on a piece of the action.

Delta Air Lines and Northwest Air-lines secured trans-Atlantic slots by“persuading” their alliance partners,Air France and KLM Royal Dutch Air-lines, to give up short haul Europeanservices. American Airlines and Unit-ed Airlines, previously the only twoU.S. carriers allowed to operate out ofHeathrow, have also been busy beef-ing-up their service offerings.

BAWC’s ShareGunning said he is unfazed by the

U.S. carriers stampede. He maintainsBA will be able to continue to hold itsown on the trans-Atlantic.

But on a broader front he’s con-cerned about the carrier’s overallhome market share. Said Gunning,“Our share of the UK air cargo exportmarket is currently down at between12 and 13 percent.”

BAWC has not lost significant busi-ness volumes due to a lack of focus inits home market, but nor has it grown.

“One of the more telling points,”said Gunning, “is that in all our other

markets we have separate customersales and customer support teams,while in the UK we only have a salesteam. That seems to be an anomalywhich we need to fix right away.”BAWC runs its key UK accounts in-house, while franchising out lesserbusiness to British Airways RegionalCargo. This is a long-standing jointventure with Dunwoody AviationServices in which BA holds a 40 per-cent stake.

But now it appears that this opera-tion too is under transition. Global air-line handling agent, Worldwide FlightServices, struck a deal to acquire themajority 60 percent holding in BARCcurrently held by Dunwoody. The dealwill not only strengthen the positionof WFS at UK regional airports, butcould provide a springboard to developnew handling agreements with BAWCoutside of the UK, the U.S. particularly.

But the move could cause somediscomfort to other carriers on theWFS client list, particular as the BARCoperation extends beyond handlingto include sales.

Gunning refused to be drawn intothe matter, insisting that BAWCwould continue to retain a 40 percentstake in BARC.

SAS Down

SAS Cargo’s tough year in 2007

was as much the result of high

fuel costs and overcapacity on key

markets as it was consolidation

among its customers.

“This has affected the result for2007, which is not at a satisfactory lev-el,” said Kenneth Marx, president andchief executive of SAS Cargo Group.

The company posted a profit of$3.5 million for 2007 on revenue of$527 million.

Marx said the new market situa-

tion resulted in a “changed strategy”for SAS Cargo, which can already befelt. The changes included the adop-tion of a more efficient organizationthat could work closer with cus-tomers. The changes do not limitgrowth, despite concerns of over ca-pacity in certain markets.

“We have just opened Vietnamand later we will open both San Fran-cisco and Delhi,” Marx said.

The SAS board of directors has de-cided to sell of the SAS Cargo’s freighthandling unit, Spirit Air Cargo.

… BrieflyCargo traffic for European carriers

grew 4.2 percent in January, thestrongest expansion since August, ac-cording to the Association of Euro-pean Airlines. ... The Volga-DneprGroup, parent of AirBridge Cargo Air-lines, opened a cargo terminal at Kras-noyarsk, Russia, as part of its long-term plan to strengthen the bridge be-tween Europe’s largest hub, Frankfurtwith several cities in Asia. Enhancingthe Siberian hub will allow AirBridgeto double its stopover flights to Kras-noyarsk to 40 weekly frequencies. Inother developments. Also, Boeing de-livered its 1,400th 747-400 freighter toGE Commercial Aviation Ser-vices for lease to AirBridgeCargo Air-lines. … Cargo traffic at LondonHeathrow Airport grew 9.3 percentin February and was up 9.8 percent inthe first two months of 2008, accord-ing to airport operator BAA. ... SASnamed Aviareps its general salesagent for the Ukraine for flights be-tween Copenhagen and Kiev. … JetAirways contracted with RutgesCargo for road feeder service out ofBrussels, where the airline operates sixdaily connections to India. … EtihadCrystal Cargo, a division of Etihad


ReportsRegional


Airways, is introducing Short MessageService, or SMS tracking, enabling cus-tomers to follow the status of freightshipments worldwide via mobile tele-phone. … Lufthansa Cargo’s trafficgrew 8.8 percent in February on just a3.8 percent increase in capacity. ...Sigma Freight Systems and Car-goWise edi announced a strategic al-liance to develop and market Cargo-Wise edi’s flagship product in theUnited Kingdom. The alliance will re-fine and enhance CargoWise edi’sflagship product, ediEnterprise for UKrequirements. … TNT, the world’sfourth largest express carrier, posted aprofit of just over $1.45 billion in2007 on revenue of $16.1 billion, a4.5 percent increase over the $981

million profit in 2006. For the fourthquarter, TNT reported a 22 percentdecline in net earnings of $217 mil-lion, down from $277 million a yearearlier after taking a restructuringcharge. Without the charge, profitwould have risen 4.5 percent. … Pro-Logis, manager and developer of dis-tribution facilities, leased 295,000-square feet of warehouse space in Bu-dapest to Unilever, maker of food andpersonal care products. … SwissWorldCargo increased capacity be-tween Zurich and Tel Aviv thanks tothe introduction of an additionalA340 on the route. The carrier will of-fer around 42 tons of cargo capacityon the route. … Kuehne + Nagelwon a three-year contract from con-

sumer electronics manufacturer Sam-sung to manage warehousing anddistribution across Lithuania, Latviaand Estonia. … bmi started three-times-weekly flights between LondonHeathrow and Damman, Saudi Ara-bia. ... Swissport Internationalwon a license to provide ground ser-vices for seven years at Larnaca andPaphos airports on Cyprus. Opera-tions are scheduled to commenceMay 15. … UPS will acquire 100 per-cent of its authorized service contrac-tor in Romania, Trans Courier Ser-vice. The acquisition is an extensionto a relationship that dates back to1990, and UPS expects to completethe transaction in the second quarterof 2008. ■


ReportsRegional

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ReportsRegional


Industry observers say manage-ment was looking for a buyer to takethe entire cargo capacity on the U.S.sector off its hands.

Big RooQantas signaled its wants to add

three flights to its current 48 weeklyU.S. frequencies.

The airline has 43 passenger flightsa week between the two countries,plus five frequencies on Jetstar Air-ways serving Hawaii, while its main-deck presence is comprised of threeweekly 747 freighters to Sydney andone to Melbourne. Ben Andrew,manager of national freight sales, saidthere’re no plans to step up cargoflights on the sector.

Forwarders would welcome addi-tional lift, as capacity to Australia hasbeen tight. At present, capacity is ad-equate, but during the past peak sea-son, agents struggled to find space,said Peter Burn, vice president for theAmericas of wholesaler AMI.

Their headaches are compoundedby the long sector andseasonal headwinds.

“The cargo market is quite strong, butweight restrictions are an issue withcapacity,” said Scott Dolan, presidentof cargo at United Airlines.

Routing freight to Australia throughAsia is not a viable alternative, so for-warders have to make do with the ex-

Observers might be forgiven for asking why U.S. negotia-tors bothered. In February, the United States and Aus-tralia agreed on open skies between the two countries,but the new regime is hardly spawning a surge of flights.

The number of U.S. carriers signaling plans to enter the market or step upservices is exactly zero. United Airlines is the lone remaining incumbent onthe passenger side, operating 14 frequencies a week on the sector, while U.S.maindeck lift is down to FedEx and UPS.

In Australia, one carrier is planning to enter the market. Low fare providerVirgin Blue wants to mount U.S. flights through V Australia, its in-ternational arm. Virgin has approval already from the Australianauthorities for 10 weekly U.S. flights and has ordered six 777-300 extendedrange airliners. The airline didn’t announce definitive route plans, but Los An-geles and San Francisco were the top choices.

The new player probably will not come into the picture until late this year.Unlike the typical low fare airline, Virgin Blue has a freight connection, as itslargest shareholder is Toll Group, the biggest logistics and transportation providerin its home market. However, this does not guarantee a strong cargo emphasis.

Open Sighs Forwarders want more capacity to the South Pacific, but the

liberalized U.S.-Australia treaty hardly opens skies

PACIFIC

by Ian Putzger


isting capacity, said Burn. Increasinglycarriers have made noises about blockspace agreements, he said.

Airlines would be more inclined toadd lift if northbound loads andyields were anywhere near as good asthe southbound.

“Our export freight volume is verysmall and that poses a challenge toany aircraft operator working Aus-tralia’s routes. I guess if you’re build-ing a dedicated freighter business, youneed to be able to diversify the in-come sources,” said Peter McNamaraof AMI Wholesale Freight in Australia.

Making DoQantas Freight has done precisely

that. Wet-leasing 747 freighters fromAtlas Air enabled it to tap into sec-tors through the U.S. company’straffic rights.

QF runs freighters between the U.S.and Brazil and across the Atlantic toFrankfurt and Dubai. In Asia, the car-rier built a hub in Shanghai for itspassenger flights as well as freightersthat continue to North America.

All of its China routings still involveits home market, as required under theSino-Australian bilateral agreement.

Last August, QF acquired Singa-pore-based express operator DPEXWorldwide. Cargo has visibly gainedin stature at the airline, as proven bythe establishment of a holding com-pany for the Qantas freight and par-cel delivery business late last year.The parent airline transferred half ofits take in the freight division to thenew entity.

“The Qantas Group is in theprocess of segmenting its business togive shareholders a more transpar-ent view of its operations,” said An-drew. “This year QF will report its fi-nancial results separately from the

rest of the Qantas Group for the firsttime and is looking to expand inscale and capability throughout theAsia Pacific region.”

The freight division also has invest-ed in facilities in Melbourne and Syd-ney, where it built a second cargo ter-minal, and is aiming to replace mostof its legacy information technologynext year.

Diversification beyond the Aus-tralian market seems to be a commontheme of major operators. Toll Hold-ings is in the process of acquiring Bal-trans, the largest independent HongKong-based forwarder, a move man-agement described as part of a strate-gic expansion in Asia.

Los Angeles-based wholesaler Uni-versal Air Cargo, one of two largeconsolidators focusing on the U.S.-Australia trade lane, agreed last yearto be acquired by AMI, the U.K.-basedwholesaler under the Menzies Avia-tion Group umbrella, now tradingunder the AMI label. AMI’s Burn,who earlier worked for Air NewZealand and Polar Airways, is bentupon growing the company’s histori-cal core market, but he also wants todevelop business to Europe, Africaand the Middle East.

… BrieflyCargo traffic at Singapore Chan-

gi Airport grew 7.8 percent in Janu-ary over the same month a year ago.… Hong Kong Air Cargo Termi-nals handled 238,689 tonnes of car-go in December, a 3 percent year-over-year increase over 2006. Ton-nage handled in the fourth quarterwas 735,778 representing a year-over-year increase of 2.6 percent. …FedEx Express launched its Inter-national Economy day-definite, cus-toms cleared service in 10 Asia Pacific

markets. … Dragonair started dailyA330-300 service between HongKong and Bangalore, India. … SASCargo opened service in Vietnam,naming Vector Aviation as its gen-eral sales agent for business the air-line said would connect to SAS dailyflights out of Bangkok to Scandi-navia. ... The Transported AssetsProtection Association grantedU-Freight security accreditation forthe forwarder’s warehouse near theHong Kong border with MainlandChina. … Nippon Cargo Airlinesstarted construction of a mainte-nance hangar at the Tokyo Naritaairport. … Royal Jordanian Air-lines is the newest customer of theHong Kong Air Cargo Termi-nals, which will be the airline’s car-go terminal operator at Hong KongInternational. … ABX Air and AllNippon Airways signed a newACMI agreement that extends ABXoperations of two 767-200 freightersfor ANA through mid-January 2010.… Rolls-Royce and Taiwan’s Chi-na Airlines signed a contract forTrent XWB engines to power a fleetof 14 firm and six option orders forA350 XWB airliners. … Japan andHong Kong signed an aviation ser-vices agreement lifting capacity re-strictions at Japanese cities, but thepact left in place limits at Tokyo. …Australia and the United Statesagreed to a liberalized aviation ser-vices agreement and Virgin BlueHoldings announced new servicesbetween the countries as a result. …Asia Airfreight Terminals, theNo. 2 handler at Hong Kong Interna-tional, saw tonnage grow 14 percentin January, including a 21 percentincrease in imports. … Chinese flagcarrier Air China is launching A340non-stop, four-time weekly servicefrom Shanghai to Milan. ■


ReportsRegional


Gulf show carriers no signs of reigning in

their growth plans but some wonder if their

massive aircraft orders are sustainable

b

Region Focus:Middle East

Gulf show carriers no signs of reigning in

their growth plans but some wonder if their

massive aircraft orders are sustainable

18F1-MiddleEastINT 3/20/08 12:18 PM Page 18

ust how long can the Arabian Gulf carriers maintain their rapidgrowth? The carriers seem to think it will last a lot longer, if their re-cent aircraft orders are any guide.

Yet the sheer scale of the ambition of the Gulf carriers is starting tocause alarm among their more established competitors. With theglobal economy showing signs of a downturn, there are growingworries the new aircraft could flood the market with new capacity,sparking a familiar spiral of cutthroat competition and falling yields

in both the passenger and cargo markets.Recent aircraft orders in the Middle East have certainly been of an eye-pop-

ping size. Emirates, which already has a record $30 billion aircraft orders, enough to

double its current fleet to more than 200 aircraft, announced another round oforders as large again at the Dubai Air Show in November. The $34.9 billion inpassenger aircraft deals — the biggest order in history — included 120 A350s, 11more A380s and 12 more 777-300 extended-range planes, and bring the carrier’stotal outstanding order book to 246 aircraft, all of them widebodies.


AnExpectations Gulf?

Jby Peter Conway

AnExpectations Gulf?


That means Emirates will not onlybe the world’s largest A380 operator— it has 58 of the aircraft on order intotal — but also the world’s biggestuser of 777s; it has 57 total orders.

The orders mark a telling contrastwith the most recent aircraft ordersby established carriers.

In September, British Airways,which has 238 aircraft, 139 of themwidebodies, ordered 12 A380s withseven options and 24 787s with 19options as part of the revamping ofits long-haul fleet. Cathay Pacific Air-ways, with a fleet similar to Emiratesin size, with 111 aircraft, added seven777-300 extended-range aircraft or-ders in November, bringing to 30 itsoutstanding orders for the type. AirFrance, which has 97 widebody air-craft, has 12 A380s and 18 777s onorder as part of its re-fleeting plan.

Emirates is betting it can grow sig-nificantly faster than all these leadingrivals, and the Dubai-based carrier isnot alone in its ambitions.

Qatar Airways ordered 80 A350sand three more A380s at the Paris AirShow in June, and in Novemberadded $13.5 billion worth of aircraftorders from Boeing, including 27777s, seven of them freighters, and 30787 Dreamliners. Abu Dhabi-basedEtihad, which has a modest 27 pas-senger aircraft, ordered 12 assortedAirbus airliners at the Paris Air Show,and is also expected to issue a majoraircraft order soon, including one forlong haul freighters, with the aim ofdoubling its fleet by 2011.

None of these aircraft will be deliv-ered at once. Some will arrive in2008, while others are slated for laterdelivery. Emirates is getting 22 air-craft this year.

Analysts are expressing growingconcern about the amount of

new aircraft capa-city being added.

While not singling out the MiddleEast specifically, DVB, the Germantransport bank, said in a January re-port, “New capacity is arriving at atime of slowing traffic,” and added:“In the past, the industry has an un-fortunate record of ordering aircraft atthe cyclical peak and taking deliveryduring the subsequent downturn.”

The Association of European Air-lines singled out Gulf carriers forconcern. However, the Centre forAsia-Pacific Aviation, a consultingand research firm based in Australia,stated in a recent report that MiddleEastern carrier growth was sustain-able because the region offers one-stop connections from everywhere toeverywhere in the world.

This high-level of connectivity of-fered by Gulf carriers is indeed oftencited as a justification for their growth,both on a passenger and cargo level.

Ram Menen, senior vice presidentcargo for Emirates, is fond of sayingDubai is a powerful transit hub becauseit’s halfway between Europe and Asia,on the doorstep of the Indian subconti-nent, and at the crossroads of routes toAfrica and Central Asia. “Dubai is anew hub for the whole world,” he said.“It is not just Emirates that benefits.Look at all the other airlines putting ca-pacity into here as well.”

But can such growth continue ifthe world economy slows?

In January Menen was complain-ing the cargo market was “very errat-ic.” despite booming passenger traffic.“It shows that the old fundamentalsdon’t really apply,” he said. Key tran-sit traffic lanes, such as exports fromChina and India were down, he said,and the political problems in Kenyahad also affected traffic from that keyAfrican market.

By past standards, Emi-rates cargo performancerecently has also been a bitdisappointing: but disappointmenthere is relative. The carrier got used toannual cargo growth of 20 to 25 per-cent in the early part of the decade: inthe last couple of years that has fallento a hardly catastrophic 13 percent.

Etihad, meanwhile, reports cargoyields are currently under pressure.Executive Vice President for CargoDes Vertannes predicts 2008 will be“a bumpy year.”

He’s also concerned about exporttraffic from Asia: “I was surprised toread comments that the Asianeconomies would ride out the storm,and believe this needs to be watchedvery carefully.”

Both expect the downturn to berelatively short-lived, and for the re-gion to bounce back. Both point toniche markets, where they continueto expect strong growth.

For Gulf carriers, the overriding ques-tion remains, if there is a downturn,will their special circumstances insu-late them from poor economic times?

Gulf carriers are creating new mar-kets to maintain market share.

Edwin Laird, managing director ofAir Cargo Management Group, pointsto the success of the New York flightsof Emirates and Etihad. “They’re al-ways packed, because they are the onlyway to get from New York to manyplaces in East Africa, North Africa, theMiddle East or the southern Common-wealth of Independent States withoutmaking two stops,” Laird said.

The same applies for cargo on manyroutes. When Emirates starts flying toGlasgow, Casablanca or Sao Paulo, itgives those cities a connection, via



Menen

“Dubai is a new hubfor the whole world.”



http://www.bas.com.bh


http://www.bahrainairport.com

Dubai, to large swaths of Asia andAfrica. And the younger carriers suchas Emirates, Qatar and Etihad have al-most certainly grown at the expenseof more moribund traditional playersin the region, including Gulf Air andSaudi Arabian Airlines, Laird said.

He also points to the many informalfreighter connections out of Dubai,which sustain it as a cargo hub andmay provide a window on the site’s fu-ture as a prominent trading point.“Look around the rim of the airport,and you will always see a dozenfreighters — IL-76s, TU-204s or turbo-props without markings — that fly toAzerbaijan or other places in CentralAsia,” he said. “Most of these aircraftwould not be allowed to fly to Europe,so they use Dubai as a transit point.”

Africa is a key transit market fromDubai. China’s massive investment inAfrica is sparking a major increase intrade flows between Asia and Africathat Dubai and the other Gulf hubs arewell placed to exploit. Wen Jibao, Chi-na’s prime minister, said in Decembertrade between Africa and China couldreach $100 billion per year by 2010, amore than 10-fold increase in a decade.

In addition, Dubai has a growingreputation as a hub for humanitarianaid. Paris-based Dynami-Aviation isjust the latest charter broker to openan office in Dubai for this reason.

“Dubai has opened up a humanitari-an village, and most of the major aidagencies have or are thinking of havingsome kind of operational base there,”said its managing director, QuintinCutler. “If you look at the major disas-ters and crises recently — the IndianOcean tsunami, the Pakistan earth-quake, Darfur — they are all withineasy reach of Dubai, so it makes sense.”

A similar kind of traffic is suppliesto the United States military opera-tions in Afghanistan and Iraq, some-

thing that Dubai undoubtedly bene-fits from to some extent.

However, Laird says the benefit theGulf carriers get from the militaryshould not be overstated. “Most ofthe supplies go via Kuwait and fly onU.S. carriers,” he said. “The U.S. hasbeen quite selfish in keeping thattraffic for its own airlines and not let-ting any get into the hands of MiddleEastern carriers.”

One other important market thatgenerates good passenger and

cargo growth for the Gulf carriers isthe Indian subcontinent.

Menen sees this as a key justifica-tion for the huge fleet growth at Emi-rates. “We are next to India and Chi-na, which are very populous markets,and where currently on a tiny frac-tion of people fly,” he said. “Lots ofpeople are now travelling because ofwealth creation and falling yields. Re-strictive traffic rights regimes alsothrottled growth in the past, but nowthose restrictions are being relaxedand we are benefiting.”

In India, however, local carriers,such as Jet Airways and Kingfisher Air-lines are flexing their muscles bylaunching international direct services.

Will these moves adversely affectthe Gulf carriers? Laird is skeptical.“Yes it might eventually happen, butnone of them have a really seriouscargo strategy yet,” he said.

All these markets give the Gulfhubs, Dubai particularly, some niche

markets that could help them ride outany downturn. But given the numer-ous orders for new aircraft, are notovercapacity and a rate war inevitable?

Menen admits the possibility, butsaid the introduction of the A380 willprompt a sharp fall in belly capacity.Emirates begins taking delivery of theaircraft in August, and although ithas not yet announced which routesthey will fly, Menen is steeling him-self for a drop in cargo capacity ofaround 35 percent or higher whenthe A380s replace the 777s.

Emirates has ordered eight 777freighters, of which the first is due toarrive in December 2008. Originallythere were plans for these aircraft to beused to start new cargo routes to makeup for the loss of belly-hold capacitywith the A380s. Now, Menen admits,such plans are on hold while he waitsto see how the market unfolds.

Despite a possible downturn, theGulf carriers are confident their ca-pacity expansion is justified.

Some industry observers believethe Gulf carriers will take marketshare from established major carriers,although the official line is that thereis plenty of growth for everyone.

With geography on their side, andspace to expand their airports —something that is almost impossiblein Europe — the ambitious plans ofthe Gulf carriers may yield dividends.Or these grand plans could be viewedas just another example of “irrationalexuberance” by industry. ■



0%

5%

10%

15%

20%

25%

Jan.Feb.MarchAprilMayJuneJulyAug.Sept.Aug.Oct.Nov.Dec.

Monthly year-over-year change through January.

Source: IATA

Middle East Freight Traffic


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U


Under seemingly ideal conditions, the development and expansion ofalternative air cargo gateways is challenging. While aspiring gateways cancite models, too often would-be ‘champions’ have failed to fully appreci-ate specific conditions supporting those successes.

As deluded thinking goes, “we’re going to start with international”makes a good bookend with the equally fallible “we’ve been unsuccessfulwith passengers but cargo should be easier.” Unfortunately, U.S. airportsunable to justify flights to Louisville or Memphis are likely to find Lux-embourg and Shanghai no less challenging.

A market’s ability to garner and sustain international service dependsupon a variety of inter-dependent factors.

“We have no congestion!” Airports precariously make thispitch without recognizing what the forwarder or carrier may be hearingis “nobody else will come here but we think you should.” For all thecomplaining about congestion at Miami International, New YorkKennedy International and Los Angeles International, diversification hasrarely amounted to more than new service at other major hubs. BeyondWest Coast beachhead LAX, for example, Asian carriers added frequen-cies at Dallas/Ft. Worth International and Hartsfield-Jackson Atlanta In-ternational, neither of which readily qualifies as an underdog.

For decades, other would-be Latin American gateways have cited con-gestion, claiming ‘everyone wants out of overcrowded Miami.’ Yet, thelukewarm distillation has been largely attributable to passenger hub car-riers’ network expansions in Latin America — Delta Air Lines from At-lanta, American Airlines from DFW and Continental Airlines from Hous-ton Intercontinental. Major Latin carriers have not abandoned Miamiappreciably — not for other hubs, let alone smaller airports seekingtime-sensitive perishables.

In spite of congestion, as well as frequently higher airport costs andland rents, traditional gateways triumph. Connectivity — sheer volumeand diversity of frequencies, destinations and carriers — is key to garner-ing consolidations that also attract competition in allied services, such asground-handlers and trucking. Non-American air cargo carriers don’thave comparable U.S. domestic networks so they interline with U.S. car-riers and rely on allied service providers — extensively trucking — for in-terior transport. Therefore, the flow of international carriers from onehub to another is unsurprising. Both cause and effect, this service superi-ority attracts shippers and forwarders whose demand then supports evenmore service.

“We just want their freighters!” Alternative airports oftentalk lightly of splitting operations of combination carriers flying bothpassenger and freighter aircraft. In the United States, this has meantmostly non-U.S. carriers that have developed the U.S. market with wide-body capacity, adding freighters as demand warranted. Belly capacity al-lows these carriers to sell additional frequencies and network destina-tions that freighters might not justify on their own. This capacity servessmaller communities as well as major segments with chronic imbalance

Feature Focus:Airport Cargo

Management

AlternativeGateways

by Michael Webber

The fundamentaltruth about

alternative gatewaysis it’s best to be an

alternative whenand where one isactually needed.

24F2-AirportManagementINT 3/20/08 12:19 PM Page 24

in directional volume. For some, freighter operators musteither triangulate service or maximize one-way revenue,while belly carriers can better tolerate imbalances in car-go by generating round-trip revenue from passengers.

Combination carriers have relationships with cus-tomers and allied service providers often based on

long-standing operations and cumulative capacity at tra-ditional gateways where they also often have fixed invest-ments in legacy facilities and may co-locate administra-tive functions. For all these reasons, combination carriersare difficult to attract from traditional gateways.

All-cargo airlines are presumed to have greater operatingautonomy than combination carriers but these airlines’principal customers often are a core group of freight for-warders, rather than thousands of individual shippers. Trad-ing dependencies, these airlines are likely to “be glad toserve your airport — if the forwarders demand it.”

Wet lease airlines fly on behalf of other carriers, season-ally when such service is not required year-round or occa-sionally for testing a route before carriers committed totheir own equipment. ACMI clients largely determineroutings, so an alternative airport’s long runways and lackof congestion won’t convince Atlas Air, for example, totell its customer they’re not going to LAX.

Forwarders rely on a mix of belly and freighter capaci-ty. Consolidations gravitate to gateways where air optionsare greatest. Network offices merely feed those consolida-tions, mostly with trucks. Simply having a variety of for-warders in an area doesn’t guarantee alternative gatewaysthe critical mass required to support international opera-tions. Local forwarder station managers have little auton-omy in routings, when the company must satisfy volume-dependent block-space guarantees at major gateways.

Expressions of cooperation come easily at local cargoassociation luncheons but fall short of contractual com-mitments that might convince an all-cargo airline to redi-rect capacity. Instead of rallying a collective of competingforwarders, at Huntsville, Ala., International, forwarderPanalpina sustains dedicated international airlift.

A legitimate success story, this service inspires envyamong airports larger than HSV, which ranked No. 66 incargo among North American airports in 2006. Contrast-ing HSV’s forwarder approach, both Nashville Internation-al and Indianapolis International have international airservice based on high-volume shippers — Dell at BNA, EliLilly and a few other pharmaceutical companies at IND.

Integrated carriers have the network operating volumesand internal resources to try less obvious options. Integrat-

ed carriers can provide their own ground handling and de-icing, which airlines with limited schedules would likely re-quire from third-party vendors serving multiple customers.

In the United States, DHL’s main hub is Wilmington,Ohio, and its Western regional hub is the former MarchAir Force Base in Riverside, Calif. Both sites as well asFedEx’s regional hub at Ft. Worth Alliance Internationalillustrate integrators’ unique ability to anchor cargo air-ports. The FedEx regional operation is sufficient to rankAlliance No. 28 among North American airports. Telling-ly, however, no other air carrier has followed FedEx fromtraditional gateway DFW, home also to UPS’ regional hub.

“How hard can it be?” In addition to LAX, Los An-geles World Airports operates LA/Ontario International,which ranks among the top 15 U.S. cargo airports. ONThosts regional air and trucking hub operations for UPS, aswell as some of its China gateway activity. ONT has superioraccess to existing users of LAX and serves the desirable In-land Empire economy. ONT possesses a proven cargo trackrecord, 24-hour availability, critical highway access and anenviable base of shippers and shared management with thetraditional gateway. Developer Aeroterm is constructingthe first phase of a one million square- feet of cargo facili-ties to accommodate operators unable to grow at LAX.

But even with LAWA’s support, forwarders and non-in-tegrated carriers have only registered interest in ONT asLAX approaches its operational limits.

With the disclosure that LAWA is a client of this writer,I cite this example to illustrate how much greater thechallenge must be for airports lacking many of the re-sources behind ONT’s efforts.

The vast majority of alternative gateways are integrator-based, including virtually every successful all-cargo airport.Alternatively, HSV greatly depends upon the commitmentof a single forwarder, while Nashville and Indianapolis’ in-ternational service depend upon a few very large shippers.Airport operators nurtured cargo growth but success wasdriven not simply by their ambitions but more by the spe-cific needs of carriers, forwarders and shippers.

Too often overlooked, perhaps, the fundamental truthabout alternative gateways is it’s best to be an alternativewhen and where one is actually needed.

Michael Webber is president of Webber Air Cargo, a KansasCity-based business development consultancy. He has man-aged air cargo affairs for Airports Council International–NorthAmerica and recently chaired the Airport Track of IATA’sWorld Cargo Symposium.


24F2-AirportManagementINT 3/20/08 12:19 PM Page 25


Region Focus:Midwest Gateways

All-cargo airports are becoming

major players throughout

the Mid- and

Southwestern states

Cargo in the Mid dCargo in the Mid dby Douglas W. Nelms

26F3-MidwestINT 3/20/08 12:19 PM Page 26

he major passenger gateway airports of Middle America havealways been the top cargo airports for the region. Massive bel-

ly capacity and well-established cargo facilities ensure that airportssuch as Chicago’s O’Hare International and Dallas/Ft. Worth Interna-tional stay among the top ranked airports.

However, changing domestic and international markets, mergersand consolidations and a growing need for rapid and easy transferto multi-modal transportation is forcing more operators, shippers

and forwarders to look at the specialty cargo feeder airports through-out the Midwest and Southwestern states. These airports include FortWorth’s Alliance Airport, Chicago Rockford International, Detroit’sWillow Run Airport and Columbus, Ohio, Rickenbacker International.

The foremost factor in the growth of the cargo feeder airports is eco-nomics — it cost less to land a freighter at the smaller airports. There isno maneuvering to obtain a landing slot. Taxi time between the park-ing spot and runway is minimized and airport operators are providingcost incentives to cargo airlines.

Td dled dle


Landing fees at Willow Run are$1.50 per thousand pounds, whilethe fees at Alliance are $1.15 andRockford has a $1.64 landing fee, ac-cording to each airport. These fees arewell below the charges at the majorgateway airports, they say.

Parking fees also are minimal, or insome cases completely waived depend-ing on the amount of time the aircraftspends on the ground. Rockford, about80 miles north of Chicago, has no park-ing fees compared to a $150 per hourramp parking fee, with a four-hourminimum, at Chicago O’Hare Interna-tional, according to Robert O’Brien, Jr.,executive director at Rockford.

It is closer to land a 747 freighterfrom China at O’Hare than at WillowRun, said Airport Director Sean Bros-nan, “but that extra fuel savings willbe burned up during the first two lapsaround Chicago waiting for [a land-ing slot] to open up.”

Cargo operators also do not have tohelp pay for airport improvement pro-grams, such as new passenger termi-nals, which are of little value to them.

Tom Harris, senior vice president ofoperations for Hillwood Properties,the owner and manager of Alliance,said savings could run into the mil-lions of dollars. “We’ve done ananalysis and believe that for a singleday’s operation, taking into considera-tion all the standard costs, we can savea 747-400 freighter operator anywherefrom $1.5 million to $2.2 million peryear, depending on what airport Al-liance is compared to,” Harris said.

Less obvious, perhaps, is the impactconsolidation in the freight market,with integrators and major freight for-warders acquiring smaller companies,is having on airport choices.

“One of the big trends is the consoli-dation and reorganization of the (aircargo) industry,” said Ken Bukauskas,

associate director of Burlingame, Calif.-based Jacobs Consultancy. “That is abig deal when we talk about all-cargoairports and how they are looked at cur-rently. Major national forwarders arebuying the regional and specialty play-ers, such as for perishables. This pro-vides a one-stop shop to all shippers.”

The grip of the integrators on thedomestic freight market has made

them the major targets for any air-ports looking to attract cargo business.

FedEx opened a sorting hub at Al-liance, with a daily flight to and fromChina, connecting through Anchor-age. That flight has been “one of thebiggest factors in the growth in cargohere in the past year,” according toDavid Pelletier, Hillwood’s director ofcommunications.

Alliance reported a 28.6 percentgrowth in 2006, moving it from 30thto 23rd for cargo operations at U.S.airports, according to FAA statistics.

O’Brien said growth at UPS, whichhas its second largest U.S. sorting hubat Rockford, has expanded the air-port’s links to international andfreight markets. UPS purchased Men-lo Worldwide Forwarding in Decem-ber 2004, improving its reach into airand ocean heavy freight shipping.

Although RFD had a 0.1 percentdrop in cargo in 2006, the airport hasseen major growth over the past de-cade, including an 8.9 percent growthin 2007, according to the FAA. And de-spite the 2006 slip, it went from beingthe 25th largest U.S. airport for cargo in2005 to 22nd at the end of 2006.

“So with the (2007) growth, we ex-pect to go to 18th or 19th in thecountry,” O’Brien said.

Market consolidation may boost toairports served by the integrators

particularly, but those facilities serving

niche markets have both the strengthsand the weaknesses of that market.

David Whitaker, vice president fordevelopment and communications atColumbus Regional Airport Authority,operator of Rickenbacker, said trafficdropped 12 percent in 2007 from2006, but that it is “a short term ano-maly as opposed to a long term trend.”

Rickenbacker reported a 26.6 per-cent growth in 2005 and a 13.9 per-cent growth in 2006, and has seen a50 percent overall growth over thepast decade, he said. It ranks 31stamong U.S. airports for cargo opera-tions, according to FAA figures.

“Our primary commodities for aircargo charters are in-bound textilesfrom Asia with consolidation at HongKong,” Whitaker said. “Everyone isaware that the retail world did not havea good 2007, which impacted the sup-ply chain as well as the retail outlets.”

He also noted one of the problemsis outbound freight. There isn’t any.“Only integrated cargo is leavingRickenbacker,” Whitaker said. “Thecharters are averaging about four tofive a week, but only with inbound(cargo) and zero outbound. However,our integrators are carrying their nor-mal integrator products on a regularbasis and doing quite well. FedEx hasa fairly large operation, with about adozen or so flights a day, and UPS hasa couple of flights a day.”

Those flights have Rickenbackertapping into an important source offreight that many airports in the re-gion see as the future of their busi-ness — Asia.

Airports as far south as Dallas-FortWorth and Houston and as far northas Calgary, Alberta, have addedfreighter connections to Asia in recentyears and experts say the flights are asign of the growing push by shippersand their forwarders to get goods clos-




er to large markets in the Midwest. “Because of transportation conges-

tion issues, the coastal gateways areincreasingly unlikely for Asian ex-porters,” said Tim Cantwell, airport di-rector at the MidAmerica St. Louis Air-port. “Based on many visits to Asianand South America countries and talkswith freight forwarders and exportersto the United States, more of them arelooking for gateways in the Midwest.”

Willow Run is also a niche airport,primarily serving the automobile in-dustry out of Detroit. Brosnan saidthe airport is working on becomingmore diversified, “such as with themedical supply industry.”

One of the problems with servingthe auto industry is that it’s seasonal.“June and July are build out monthsfor the automobile industry,” Bros-nan said.

The auto plants are closed down forabout a week to prepare for the newmodels, and then from July 4 until Sep-tember, when the next year’s modelscome out, freight traffic is greatly re-duced. Then in September the tonnagegoes up again to support the inventoryrequirements of the new models.

To improve its international mar-keting, Willow Run has gotten per-mission from the U.S. government fora free trade zone for outbound fuel forinternational flights, Brosnan said.

Aircraft flying out of the Michiganairport on an international route donot pay state or national taxes at theairport. The aircraft may make an in-termediate stop within the UnitedStates to refuel before continuing on,but it may not take on more cargo.“This will allow us to go after the in-ternational markets,” he said.

For the mixed passenger/cargo air-ports in Middle America, there was

very little cargo growth during 2006

except for Louisville, Ky., Internation-al, with 9.3 percent, and San Antonio,Texas, with 8.4 percent, according toAirports Council International.Among the top 10 airports in theUnited States, which includedLouisville, the main hub for UPS,growth figures were minimal. Mem-

phis, the perennial No. 1, reportedonly 2.6 percent growth, while O’Harehad 0.8 percent, Indianapolis had 0.2percent and Dallas/Fort Worth Inter-national had 2.1 percent growth.

One critical factor affecting airlinesand the airports that serve them isthe rising cost of fuel, a trend that is


Fort Wayne International Airport may have lost some of its lustersince the departure of Kitty Hawk AirCargo, but its one of several air-ports that have strong potential as major Midwestern cargo centers.

Kalitta Air is considering a new U.S. domestic airline freighteroperation there to run as a charter business for forwarders.

“We’ve had numerous meetings with Kalitta and they are buy-ing up a lot of equipment,” said Tory Richardson, executive directorof Fort Wayne. “They might be able to come in here and fill a uniqueniche.” The airport is in the final stages of sorting through KittyHawk’s bankruptcy and its former facility will soon be ready for newtenants. Ft. Wayne will own and manage the cargo facility.

Ft. Wayne also has held talks with freighter operators from Asia andEurope who want to tap primary markets through a secondary loca-tion. “With Kitty Hawk leaving, it’s a cautious time for us, but we hadbeen actively seeking other tenants for a long time,” Richardson said.

Even if Kalitta commits to Ft. Wayne, it will be some time beforethe freight traffic is back to normal. Before Kitty Hawk’s demise, Ft.Wayne was ranked 37th in the nation in cargo traffic, according toFederal Aviation Administration data.

DHL Express, which has been struggling of late, has not contactedFt. Wayne about serving the area. but there is a lot of interest by sever-al potential tenants, said Richardson. FedEx and UPS serve Ft. Wayne,and the airport is a designated diversion point in case the integrators’hubs in Memphis or Louisville are socked in by weather.

“We don’t have any of those delay problems operators face at theother airports, either surface or air congestion,” Richardson said.

His comments are more than the typical hype from an enthusiasticairport executive. Ft Wayne is equipped with a 12,000-foot runway ca-pable of handling fully loaded widebodies and a cross-wind 8,000-footrunway as well as a 600,000-square foot air cargo facility on 85-acreswithin a 450-acre air trade center.

The ramp area sits on 37 acres, and there is 266,000-square-foot sortfacility as well as a computerized package conveyer system. 24-hourair traffic control services are available and the airport is a recognizedForeign Trade Zone. U.S. Customs is on site.

Another plus: The airport is near major highways and rail systems.Ft. Wayne intersects with Interstate 69 running north to south, and I-90 running East to West. The airport is also near a rail line serving theNorfolk Southern and other railroads. ■

Wayne’s World



triggering a shift in modes even at in-ternational levels once consideredimpervious to competition betweenair and ocean.

In the 1990s, personal computerscost between $2,000 and $3,000 andwere filling 747 freighters. Today com-puters with the same weight and bulkcost less than $1,000. And while theselling price has dropped, transporta-tion prices have gone up considerably,particularly air freight transportationrelative to sea freight transportation,said Brian Clancy with MergeGlobal.

That is prompting air cargo opera-tors serving the Midwest to seek moremulti-modal operations on or nearairports. Cargo can be flown from in-ternational destinations, or from the

east or west coasts, to the MiddleAmerica airports, then put on trucksfor final delivery.

Whitaker said Rickenbacker iswithin a day’s truck drive “to wellover half of the U.S. consumer baseand half of the Canadian populationbase, and over 60 percent of the U.S.manufacturing capacity.”

O’Brien noted Rockford is “geo-graphically and strategically centeredfor the 13.1 million people who livewithin the Northern Illinois, South-ern Wisconsin and Eastern Iowa mar-ket area,” only a two-hour drive fromthe airport.

The growing weight of ocean trans-port is also proving to be advanta-geous for airports that have direct ac-

cess to the major seaport gateways.Rickenbacker is now the beneficia-

ry of a new intermodal facility adja-cent to the airport opened by NorfolkSouthern Railroad in March. “Thereare numerous other intermodal facili-ties in Columbus as well,” Whitakersaid, “but this literally touches theairport on one corner.”

The new facility will be connectedto the Norfolk, Va. seaport by directrail service through the HeartlandCorridor served by Norfolk Southern.

Whitaker noted there are some 20projects taking place to enlarge tunnelsand bridge clearances to allow doublestacking on trains, thus doubling thecapacity of the line. These are expectedto be completed by 2010, he said. ■


FOR MORE INFORMATION:Tim Cantwell, [email protected](618) 566-5240USA

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Feature Focus:Cargo Charters

TheOtherGuys

TheOtherGuys

Coyne Airways and Air Charter

Service are key players in

different roles in outsize cargo

United Kingdom-based companiesCoyne Airways and Air Charter Ser-vice can provide differing perspec-tives on the current state of the in-ternational outsize air cargo market.

All-cargo airline Coyne is in-volved in that business through itsoperation of scheduled 747 and IL-76 freighters in some of the world’s“difficult to serve” sectors, notablyEurope, the Caspian Sea region,Dubai, Iraq, Afghanistan and, morerecently, Europe and West Africa.

by Phillip Hastings

31F4-ChartersINT 3/20/08 12:21 PM Page 31

ACS, which is primarily a cargo andpassenger charter broker, organizesflights using 120-tonne capacity AN-124s and the even larger AN-225 tomove outsize cargo between the moretraditional markets of North America,Europe, Middle East and Far East.

One feature of the global outsizeair cargo business upon which theyare agreed is the continuing majorboost to those activities from strongworld oil and gas prices.

“We have seen quite an increase inthe use of the AN-124s as the price ofoil has gone up and driven more ex-ploration and production activityaround the world,” said ACS manag-ing director Tony Bauckham, whoseprevious experience in the outsizecargo business included being UK-based marketing director of RussianAN-124 operator Volga-Dnepr.

“As production increases, so doesthe requirement for spare parts andthat means more demand for outsizeair cargo movements,” Bauckham

said, adding, “the traffic is certainlyhelping to sustain the overall outsizeair cargo business.”

Coyne CEO Larry Coyne gave asimilar view: “We are seeing new oiland gas fields being explored and Ithink there will be further projectsdeveloped in areas where we had notpreviously expected to see them.”One example, he said, is West Africa.Hence Coyne’s recent introduction ofa new scheduled freighter service be-tween Europe and Nigeria.

Established in 1994, Coyne has tra-ditionally focused on servicing

“difficult to serve” or “hard to reach”parts of the world from offices inLondon, England and Dubai.

Coyne claims to have been the firstcarrier to operate a scheduledfreighter service into the Caspian Searegion, an AN-12 operation fromMaastricht, the Netherlands, intoBaku launched in 1996. Other ‘firsts’freighter services claimed by the air-

line include Tbil-isi in Georgia(1998), WesternKazakhstan (2000) and YuznoSakhalinsk on the Russian Pacificcoast (2002).

Coyne claims it also was the firstairline to initiate freighter operationsinto Iraq in 2004, providing the only“neutral service” to that market forthe next 18 months. In 2006, itlaunched scheduled services to sever-al points in Afghanistan.

To serve the Caspian market,Coyne currently operates a weekly747-400 freighter service out of theUK’s London Stansted airport to Tbil-isi, via Cologne. Tbilisi is Coyne’s re-gional hub for the Caspian region,with freight being moved by the IL-76 freighters to other points in the re-gion, including Kazakhstan, and Ar-menia and Azerbaijan through truck-ing operations.

“The main traffic on the Tbilisiflights is oil and gas industry freight



“As production increases, so does the requirement for spare partsand that means more demand for outsize air cargo movements.”

BAUCKHAM


coming out of the UK, ContinentalEurope and North America — andthat is pretty much all large or outsizecargo. It is not unusual for us to getindividual pieces of four to fivetonnes,” Coyne said.

“For the Caspian, there is a lot ofoutsize cargo business coming out ofboth the United States and Canada,particularly from the key oil areas likeHouston, Calgary and Edmonton,”Coyne said. We interline for U.S. andUK movements with various sched-uled main deck carriers, particularlyAir France, British Airways, AsianaAirlines and Saudi Airlines to connectwith our Tbilisi flights.”

Coyne indicates that if oil and gasindustry development in the Caspianarea continues, the airline might adda second flight on that route duringthe second half of the year.

Last year the airline launched ser-vice between Frankfurt Hahn, to Al-maty, Kazakhstan, but dropped thatoperation before the end of 2007.“The route got overcrowded and didnot really fit into our general strategyof operating to difficult to serve mar-kets,” Coyne said.

Coyne described the airline’s sec-ond established area of regular activi-ty to be the servicing Iraq andAfghanistan out of Dubai, using IL-76freighters primarily. However, hepoints out, those flights do carrysome outsize cargo. “One example isarmour-plated vehicles, mostly forcivilian use. They can be quite heavy,probably three to five tonnes.”

Coyne Airways has further expand-ed the scope of its Dubai operationswith the start of a weekly AN-12flight to Tbilisi, offering up to around15 tonnes of capacity. From Tbilisi,shipments can be transhipped to con-nect with the airline’s regional feederconnections.

“We anticipate that cargo on theDubai-Tbilisi flights be a combina-tion of oil and gas industry and con-sumer traffic,” Coyne said. “Tbilisitends to be a consumer marketwhereas Kazakhstan freight is indus-trial type stuff. There will be someoutsize cargo on those flights, partic-ularly to Kazakhstan.”

Just prior to launching the newDubai-Tbilisi connection, Coyne Air-ways started weekly 747-200 freighterservice from Brussels to Lagos, anoth-er route with “quite a bit of oil andgas industry traffic, including outsizecargo,” Coyne said. That move, im-plemented in January, could be theforerunner of further expansion in

the West African market.“A lot of the oil and gas industry

customers we serve in the Caspian re-gion are starting to move into WestAfrica and have been asking us if wecould provide a service,” Coyne said.“Some of that traffic is coming fromthe U.S., but I would say that at themoment, Europe is probably a biggersupplier of oil and gas equipment toWest Africa.”

“I think we’re going to develop a lotmore in West Africa and will be look-ing to serve other hubs in the region,”Coyne said. “West Africa is the greatnew possibility for oil developmentbecause it does not have the politicalor other hang-ups associated with



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Russian and Middle East oil. The Chi-nese were very quick to recognize theadvantages of getting oil out of Africaand now the Western oil companies

are also all trying to get in there.”

The oil and gas sector is also a ma-jor generator of outsize cargo for

aircraft chartered by ACS, along withother energy related traffic such aselectricity industry transformers andpower plant equipment.

“Mining equipment is anothergood sector and we also recently car-ried some Bergwagens, oil industryseismic research vehicles whichhave huge wheels,” Bauckham said.“Other outsize cargo includes air-craft engines, for example we doAOG (ground vehicle) work forRolls-Royce.”

To carry such outsize cargo, ACS of-ten charters AN-124s, notably throughRuslan International, a joint venturemarketing organization formed byVolga-Dnepr Airlines and AntonovAirlines in 2006, which boasts of ac-cess to a total fleet of 17 aircraft.

“Ruslan was one our largest air-craft suppliers in 2007,” Bauckhamsaid. “From January to December, wecompleted 45 outsize cargo flightswith Ruslan aircraft, so over a 12-month period, we did around fourflights per month of outsize work.That was about 10 percent of ourrevenue and 4 percent of our totalflights for that period.”

In January this year, he added, ACScompleted two flights with the AN-225, one of which involved a flightfrom Budapest to Muscat in the Mid-dle East carrying seismic vehicles andancillary equipment.

While Ruslan is the primary sourceof the AN-124 aircraft chartered byACS, there are others, includingFLATAM (a joint venture companyincorporated in France and represen-tative for Libyan Air Cargo with twosuch freighters) and Abu Dhabi-head-quartered Maximus Air Cargo.

“However, the experience Volga-Dnepr and Antonov have with thoseaircraft, plus their supporting infra-structure, means they’re usually ourfirst choice,” Bauckham said.

As a broker, ACS doesn’t order air-craft, develop new routes or havehubs; it simply charters aircraft to flythem wherever their customers dic-tate. While 55 percent of their busi-ness is cargo charters, only about 10percent deals with outsize cargo.That amounts to between 5 percentand 6 percent of their overall busi-ness. Forty-five percent of its busi-ness is passenger related.

In addition to its broking role,ACS also manages a small leasedfleet of UK-based freighters. The fleetconsists of two 340s (capacity two to




http://www.volga-dnepr.com/

three tonnes), two to three F27s (twoto three tonnes) and three AN-26s(five tonnes).

“The AN-26s have a rear-loadingramp so they can take large pieces ofcargo,” Bauckham said.

The next major development forACS is the scheduled opening thisyear of Hong Kong regional office,which will join other offices in Lon-don, New York, Moscow and Dubai.The target date for the Hong Kong

opening is June.“Obviously, China

will be a major marketfor the new HongKong office but it willalso focus on the widerregion. On the outsizecargo side, Singapore isa base for a lot of oilcompanies, some ofwhich warehouseequipment there readyfor fast movement toproduction platformsin the region,” Bauck-ham said.

One corporate de-velopment of whichACS has shelved fornow is a public offer-ing of company shareson the London Stock

Exchange’s AlternativeInvestment Market.

That plan is on indefinite hold dueto current worldwide “economicand stock market turmoil,” Bauck-ham said. ■


“I think we’re going to develop a lot more in West Africaand will be looking to serve other hubs in the region”

COYNE



http://www.aircharterservice.com/




Airlines

United Airlines: Chicago-basedUnited Airlines named Kyle Better-ton vice president of United Cargoand managing director of the airline.Betterton, who played a key role inbuilding up the carrier?s Europeannetwork, will be responsible forUnited Cargo?s sales and marketing,planning and revenue management.Betterton was managing director ofairport operations and cargo for Eu-rope, the Middle East, Africa andSouth America.

Delta Cargo: The cargo divisionof Delta Air Lines named TimStrauss managing director of globaloperations. A 23-year industry veter-an, Strauss had been vice presidentof operations at Northwest Cargo.He worked earlier as operations atEmery Worldwide.

Cargolux: The freight airlinenamed Jeannot Erpelding head ofpublic relations. A native of Luxem-bourg, he has been with Cargoluxsince 2001 and earlier was head ofregulatory and government affairs.He worked earlier for TDK in Luxem-bourg and Sweden.

EgyptAir: The airline?s cargo di-vision named Ossama Abdellatifcargo manager in Frankfurt. He hasbeen with EgyptAir for more than 25years, and has been cargo managerin Jeddah, Saudi Arabia, and in Shar-jah, UAE, and has held several man-agement positions at the airline?sCairo headquarters.

Lufthansa Cargo: The carrierappointed six new regional man-agers. Carsten Hernig is the newregional manager in India and theMiddle East, replacing DavidKeary, who is retiring. RüdigerHelm replaces Hernig in HongKong, while Alexander Kohnen

takes over Amsterdam. ChristianHaug becomes regional manager inthe U.S. Northeast. MatthiasBrazel is the new regional managerfor the United Arab Emirates, suc-ceeding Gunnar Löhr, who returnsto Frankfurt to handle quality assur-ance worldwide. Marcus Bur-chard is taking over Madrid fromWolfgang Frey, who is retiring.

ABX Air: ABX Holdings, the par-ent of the cargo airline, named ifi-nancial industry executive JeffreyA. Dominick to the board of direc-tors. He replaces Frederick Reed,who died last August. Dominick, 43,is a founding partner of MassMutualCapital Planners, a shareholder inCargo Holdings, which ABX pur-chased last year, and is a former ex-ecutive at Babson Capital Manage-ment, Chase Manhattan Bank andDeutsche Bank Securities.

ASTAR Air Cargo: The sub-ser-vice flier for DHL in the UnitedStates named Kenneth Millermanaging director of employee rela-tions. Miller has been with ASTARsince 2003 in finance and human re-sources positions. He will take someof the responsibilities of P. DouglasMcKeen, who resigned as senior vicepresident of employee relations totake a senior post at United Airlines.

Third Parties

Schenker: Theforwarder namedLutz Freytag chieffinancial officer, re-placing MarcoSchröter, who be-came CFO of semi-conductor manufac-turer Infineon Tech-

nologies. Freytag, 49, has a doctor-

ate in physics and was most recent-ly a board member for finance andcontrolling at Railion Deutschland.He earlier held management posi-tions at Stinnes and Siemens. Mean-while, Schenker Deutschland saidboard chairman Hans-Jörg Hagerwill leave the subsidiary ofDeutsche Bahn this year. Hager,who is turning 60 and is a memberof the Schenker management boardresponsible for land transport in Eu-rope, will remain in his position un-til a replacement is named.

Panalpina: The forwardernamed Marco Gadola chief finan-cial officer and member of the exec-utive board. Gadola, 44, is formergroup CFO at Swiss consumer foodsmanufacturer Hero and was CFO atStrautman Holding. At both posi-tions, said Panalpina, he worked ininternational business that includedacquisitions and integration.

IJS Global: The forwardernamed freight industry veteranHugh Cutler vice president ofsales and marketing. Cutler hasbeen in forwarding for 28 years,most recently as president of airtransport at BDP International. Hewas at Emery Worldwide and MenloWorldwide for most of the previous25 years, most recently as vice presi-dent of global transportation.

AMI: The freight-wholesaling sub-sidiary of MenziesAviation namedPaul Farnan to thenew position of salesand developmentmanager or the Pa-cific region, based inAuckland, New Zealand. The ap-pointment follows AMI’s recentmove to consolidate its acquisitionof UAC last year under the AMI

People

April 2008AirCargoWorld

Farnan

Freytag

36

36PeopleINT 3/20/08 12:20 PM Page 36

brand. Farnan had spent eight yearsat the Port of Auckland and eightyears with Pacific Forum Line.

Ozburn-HesseyLogistics: The con-tract logistics andforwarding companynamed MarkHolmes vice presi-dent of global inte-grated solutions, anew division aimed

at integrating multiple services.Holmes is a former director of logis-tics solutions at Tilion and more re-cently was national supply chainpractice director for CollaborativeConsulting.

Associated Global Systems:The New York-based forwardernamed Tom Nolan director ofsales and marketing for the Easternregion of the United States. Nolanwas at Emery Worldwide for 11years in both sales and operationspositions. He earlier spent nineyears at CSX Intermodal and alsoheld positions at Delta Air Lines’cargo division and was vice presi-dent for sales and marketing at for-warder Nations Express.

Estes Air Forwarding: The divi-sion of U.S. expedited trucker EstesExpress Lines named Mark Molloyvice president of sales and market-ing. Molloy has spent most of his ca-reer with Roadway Express, most re-cently as vice president of its Canadi-an subsidiary, Reimer Express Lines.

EGSAC: The European GeneralSales Agents for Cargo named TonSmulders, managing director ofActive Airline Representatives, presi-dent of the allied GSAs group. Hereplaces Glauco Martinelli, whohas been president of EGSAC since2002 and is retiring as chairman ofItaly’s ACSSys Group.

Ground Handling

Aviapartner: The Brussels-basedoperator named Heath White chiefoperating officer for its network of 32stations across Europe. White, 38, hasworked in the industry for 12 yearsand held commercial and operatingmanagement positions at Swissportand Cargo Service Center.

ASIG: The aviation services compa-ny named Carmine Testa generalmanager for ASIG’s new handling op-erations at Terminal One of NewYork’s Kennedy Airport. Testa workedfor 28 years at Delta Air Lines and alsowas a hub manager for cargo carrierABX Air in Atlanta.

Associations

CIFFA: The Cana-dian InternationalFreight ForwardersAssociation namedRuth Snowden ex-ecutive director. Hercareer has includedsenior positions atfreight forwarders,

and was most recently a principal inher own consulting company. ■

People

Advertiser Index

April 2008 AirCargoWorld 37AirCargoWorld

Air Charter Service............................................35Aeronautical Engineering..................................6Bahrain International........................................21DFW International Airport..................................3Cargo Network Services....................................9DNATA Cargo........................................................7Etihad Airways ...................................................23MidAmerica St. Louis Airport..........................30Qatar Airways.......................................................8Saudi Arabian Cargo .........................................15SkyTeam Cargo ...............................................CV4TIACA.................................................................CV2Volga Dnepr Airlines.........................................34

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36PeopleINT 3/20/08 12:20 PM Page 37


AirCargoWorld April 200838

Bottom LinetheAirCargo

Carrying International

2%

3%

4%

5%

6%

7%

1%1/0812/0711/0710/079/078/077/076/075/074/073/072/071/07

CapacityTraffic

Monthly year-over-year percent change in total scheduled international freight trafficand capacity worldwide, in freight tonne-kilometers and available tonne-kilometers.

1/0811/0710/079/078/077/076/075/074/073/072/071/07–6%–5%–4%–3%–2%–1%

0%1%2%3%4%5%

Asia-Pacific

Overall

Source: Association of European Airlines

Carrying Europe

Monthly year-over-year percent change in overall freight traffic and Asia-Pacificfreight traffic for European airlines.

1/0812/0711/0710/079/078/077/076/075/074/073/072/071/07–4%

–2%

0%

2%

4%

6%

8%

10%

TrafficCapacity

Source: Association of Asia Pacific Airlines

Carrying Asia

Monthly year-over-year percent change in capacity, in available tonne kilometers,and traffic, in freight tonne kilometers, of Asia-Pacific airlines.

Source: International Air Transport Association

38BottomLineINT 3/20/08 12:20 PM Page 38

AirCargoWorldApril 2008 39

U.S. Airlines

–6%

–4%

–2%

0%

2%

4%

6%

8%

10%

1/0812/0711/0710/079/078/077/076/075/074/073/072/071/07

InternationalDomestic

Monthly year-over-year percent changein domestic and international cargotraffic for U.S. airlines.

Source: Air Transport Association of America

Semi Months

–8%

–6%

–4%

–2%

0%

2%

4%

6%

8%

10%

1/0812/0711/0710/079/078/077/076/075/074/073/072/071/07

M-O-MY-O-Y

Worldwide monthly year-over-year percentchange in sales of semiconductors andmonth-to-month percent change.

Source: Semiconductor Industry Association

$1.50

$2.00

$2.50

$3.00

$3.50

3/08*2/081/0812/0711/0710/079/078/077/076/075/074/073/072/071/07

Rotterdam

Singapore

New York

* Through March 7

Source: U,S. Energy Information Administration

Pump Price

Average monthly jet fuel prices in New York, Singapore and Rotterdam over past year.

47

49

51

53

55

2/081/0812/0711/0710/079/078/077/076/075/074/073/072/071/0712/0611/0610/069/068/067/066/065/06

Source: Institute of Supply Management

Making Goods

Monthly index of manufacturing activity in the United States over last two years. Areading above 50 shows expansion, below 50 contraction.

38BottomLineINT 3/20/08 12:20 PM Page 39

April 23-25

Brussels: Council of SupplyChain Management Profession-als - 2008, the European version ofthe sprawling event for shippers looksat “Enhancing Supply Chain Perfor-mance in an Uncertain World. For in-formation, call +1 630-645-3487 orvisit: www.cscmp.org.

April 29-30

Rio de Janeiro: Sixth AnnualSouth and Central American AirFreight Conference, at the Shera-ton, with a look at what’s beingshipped, how the shipping is being fi-nanced and what aircraft are carryingthe goods For information, call +441403 230 888 or visit: www.aircraft-commerce.com/conferences.

May 4-6

Palm Beach Gardens, Fla., CNSPartnership 2008, at the PGA Na-tional Resort & Spa, the annual CargoNetwork Services meeting is a mustfor the international air freight busi-ness in North America. For informa-tion, call (516) 747-3312 or visit:www.cnsc.net.

May 12-14

Copenhagen: InternationalAir Cargo Association AnnualGeneral Meeting, a smaller, fo-cused version of the larger fall TIACAAir Cargo Forum, the event looks atthe environment and modal competi-tion. For information, call (786) 265-7011 or visit: www.tiaca.org.

May 20-22

Chantilly, Va.: Regional Air

Cargo Association Spring Con-ference, at the Westfields Marriottnear Dulles Airport, looking at waysto prop up feeder business. For infor-mation, call (508) 747-1430 or visit:www.raccaonline.org.

June 17-19

Shanghai: Transport LogisticChina, at the Shanghai New Inter-national Expo Centre, the event in-cludes a forum and a sprawling exhi-bition. For information, call +49 89949-20 245 or visit: www.transportlo-gistic-china.com.

June 23-25

Toulouse: European PLM Sum-mit, at the Airbus Toulouse facility,the event brings together experts andusers of product lifecycle manage-ment techniques and technologies.For information, call +44 0 207 2027558 or visit: www.plmsummmit.com

Aug. 20-21

Miami: MATTECH 2008, at theMiami Beach Convention Center, theMaterial Handling, ManufacturingTechnology, Logistics & SupplyChain Expo for the Americas & theWorld will focus on the total manu-facturing process. For informationcall (941) 320-3216 or e-mail: [email protected].

Sept. 15-17

Miami: CargoFacts 2008, at theMiami Loews Resort, hosting aircraftbuyers, sellers, financiers, service

providers and operators of both pas-senger and freighter aircraft. For in-formation, call (206) 587-6537 or e-mail: [email protected].

Sept. 15-17

Toulouse, Francee: The NinthAnnual Aviation Industry Sup-pliers Conference, at the HotelPalladia, bringing together the manyparts that make up the aviation in-dustry. For information, contact:[email protected]

Sept. 23-26

Vancouver, B.C.: FIATA WorldCongress, at the Vancouver Con-vention and Exhibition Centre, theannual meeting of freight forwardersfrom every corner of the the world.For information, call +41 22 33 99586 or visit: www. fiata2008.com.

Oct. 5-8

Denver: CSCMP 2008, the annu-al mega-meeting is educational, in-ventive and packed with shipperslooking for, and often finding, theleading trends in managing supplychains and moving goods. For infor-mation, call (630) 574-0985 or visit:www.cscmp.org.

Oct. 13-15

Kuala Lumpur: AirtropolisExpo 2008, at the convention cen-ter, the new Mack Brooks event looksat airport planning and takes placealongside the 14th Routes World De-velopment Forum, the World Fleet

Forum and the larger ICAO/WorldBank Conference. For information,call +44 1727 814400 or visit:www.airtropolis.org. ■


Events

For more events, visit: www.aircargoworld.com/dept/events.htm

40EventsINT 3/20/08 12:20 PM Page 40

http://www.cscmp.org

http://www.raccaonline.org



http://www.cnsc.net

http://www.plmsummmit.com

http://www.tiaca.org

http://www.cscmp.org

http://www.airtropolis.org

http://www.aircraftcommerce.com/conferences

http://www.aircraftcommerce.com/conferences

http://www.transportlogistic-china.com

http://www.transportlogistic-china.com

http://www.fiata2008.com



http://www.aircargoworld.com/dept/events.htm

http://www.aircargoworld.com/dept/events.htm

27–29 May, 2008 The Antwerp Expo Antwerp, Belgium

Modeled after the highly

successful U.S.-based Breakbulk

Conference & Exhibition in New

Orleans, the Antwerp conference

addresses general and project

cargo issues for European logistics

professionals.

The very strong breakbulk interests

in Europe have cemented the

Antwerp Conference as one of

the most important commercial

transportation events that is

dedicated solely to European

transportation and logistics for

this sector.

PLAN TO ATTEND:Contact JoC Conferences at +1-760-294-5563 or [email protected]

PLAN TO EXHIBIT AND/OR SPONSOR:Contact Julie Wallner at +1-209-369-0133 or [email protected]

www.joc.com/conferences/bb_euro

Produced by: Hosted by:

3rd Annual

Sponsored by:

Beluga Shipping GmbH

M_BB_9466_Sponsor.indd 1M_BB_9466_Sponsor.indd 1 2/19/08 2:41:59 PM2/19/08 2:41:59 PM



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