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The weekly newspaper for air cargo professionals Volume: 18

Issue: 31

10 August 2015

$2.8bn Swissport sale to HNA

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wissport International has been bought

by Hainan Airlines’ parent company the HNA Group for 2.7 billion Swiss francs ($2.82 billion).

The cargo handling and services firm has been bought by HNA from its owner, the private equity firm PAI Partners (PAI).

HNA says, under its ownership it will continue to expand Swissport’s global footprint and, “deliver the highest quality and value added services to existing and future customers”.

Closing of the transaction, which is subject to anti-trust approvals and approval of Chinese authorities, is expected to occur around the end of the year.

Swissport chairman, Thomas Staehelin, says: “We are pleased to become part of HNA Group and to continue to further strengthening our service offering and global network.”

Swissport handles 4.1 million tonnes of cargo a year on behalf of

around 700 clients. The company is active at more than 270 stations in 48 countries. Last year, it generated an operating revenue of three billion Swiss francs.

HNA president, Adam Tan, explains: “HNA is excited to support Swissport’s world class management team as they continue to provide the highest quality service to the airline industry and their passengers. HNA is committed to Swissport’s future success in the global aviation market.”

In 2014, the HNA Group had revenues in excess of $25 billion.

During the period of PAI’s investment, Swissport increased its exposure and developed positions in markets in Latin America, the Middle East and Africa. It closed and integrated several acquisitions, including Flightcare, a ground handling operator in Spain and Belgium, IAS in Costa Rica and ground handler Servisair.

PAI partner, Ricardo de Serdio, explains: “The acquisition by HNA of Swissport confirms the strategic value of the company as being the worldwide leader and consolidation platform in the still

fragmented airport services market. The acquisition by HNA will enable the company to grow in the under penetrated Asian markets and in China, in particular, thanks to HNA’s strong roots in the region.”

On 26 November last year, Swissport lost an appeal at Ukraine’s Supreme Court on Economic Affairs, which legitimised Ukraine International Airlines’ (UIA) purchase of a 70.6 per cent stake in Swissport Ukraine. It is now named Interavia. Swissport had fought a long battle since losing its share of the joint venture on 27 March 2013. The company claimed it was the victim of a raider attack followed by a flawed legal process led by UIA. Later this year, Swissport will enter the market in Accra in a joint venture with the Ghana Airport Cargo Centre. In July, Swissport formed a joint venture with Flughafen Graz Betriebs, called Swissport Cargo Services Graz.

It will operate at Graz Airport.

Half year volume growth at European airports

Airfreight traffic across European airports grew by 0.5 per cent year on year (YOY) in the first half of 2015, according to the Airports Council International (ACI) Europe.

Europe’s two busiest airports, by cargo volumes, posted tonnage falls. Frankfurt Airport saw a 2.3 per cent YOY fall to 981,655 tonnes and Paris Charles de Gaulle (CDG) Airport, a drop of 4.7 per cent YOY to 895,363.

Volumes at Amsterdam Airport Schiphol fell by 2.1 per cent YOY to 784,567 tonnes, but Heathrow Airport saw tonnage rise in the period by 2.1 per cent YOY to 741,846.

Airports seeing significant increases in cargo in the first half of the year were Munich Airport by 11.6 per cent YOY to 156,418 tonnes, Brussels Airport by 10.2 per cent YOY to 231,810, Milan Malpensa Airport by 6.6 per

cent YOY to 245,951 and Liege Airport by 13.1 per cent YOY to 318,703.

European airports seeing a fall in the first half of 2015 included Gatwick Airport, which saw a 14.7 per cent YOY decline to 36,497, Moscow Sheremetyevo Airport by 11.5 per cent YOY to 70,510 and Helsinki Airport by 21.8 per cent YOY to 68,417 tonnes.

ACI Europe director general, Olivier Jankovec, says the figures in the first half of 2015 have been affected by geopolitical instability, and the weak economy in Russia. As for the future outlook for freight, Jankovec explains: “The situation in Russia, as well as slower growth in emerging markets, is likely to keep constraining traffic performance.” ACI Europe says in June, cargo volumes rose by three per cent, but the four busiest by volumes all saw a

YOY monthly fall. Frankfurt was down 2.6 per cent to 164,780 tonnes, CDG by 1.2 per cent to 154,520, Schiphol 1.6 per cent to 132,218 and Heathrow by 1.9 per cent to 122,964.

June’s performance continues the unstable year for cargo across Europe. In May, airports saw a 0.4 per cent YOY fall.

In April, there was YOY growth of 0.8 per cent, but in March, volumes fell YOY by 1.8 per cent. In February there was YOY growth of 2.9 per cent, but in January there was 0.5 per cent fall.

ACI Europe says year to date cargo volumes on the continent are up by 1.1 per cent on 2014, up 5.3 per cent, compared to 2013 and 5.9 per cent on 2012. The airport trade body published the figures in its traffic report for the first six months of this year and for the month of June.

obama visits ethiopian airlines

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weak euro softens slow market impact on iag CARGO

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twEntY years for acs’ ceo juSTin lancAstEr

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7,153 SQUARE METRE FREIGHT CENTRE OPENS

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Pressure mounts for hunting trophy bans THE Humane Society International (HSI) has called on all international airlines to ban the shipment of hunting trophies as freight after the killing of Cecil the lion in Zimbabwe.

Last week, Qatar Airways, DHL Express, Delta Air Lines, Air Canada, United Airlines and American Airlines all banned the transport of lion, leopard, elephant, rhinoceros and buffalo trophies as cargo.

None of the carriers gave exact reasons as to why they had enforced the bans, but Delta was subjected to an online petition to ban such shipments.

HSI is calling on all 250 international airlines to stop wild trophy carriage.

The animal protection charity is also urging parcel carriers to no longer be the, “get away vehicle for unethical trophy hunting”.

HSI director of wildlife, Teresa Telecky, says airlines must, “wash their hands of this horrific, cruel and wasteful hobby once and for all”.

Virgin Atlantic Cargo has banned trophies. It says it is time to adopt a strict ethical cargo policy. For South African trophy bans see page eight.

NEWSWEEK

US airlines oppose open skies change

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our US airlines have set up a coalition in support of open skies agreements with Gulf states and opposing demands from three big US carriers.

The US Airlines for Open Skies coalition is made up of Atlas Air Worldwide, FedEx, Hawaiian Airlines and JetBlue Airways, who between them move around eight million tonnes of cargo a year.

They have sent a letter to the US government to express their opposition to the demands of United Airlines, Delta Air Lines, and American Airlines relating to the US open skies agreements with the United Arab Emirates (UAE) and Qatar.

They are calling on the US government to initiate consultations with the Gulf states to address alleged subsidies to Emirates, Etihad Airways and Qatar Airways (see story below). The coalition says the letter

addresses the, “significant economic benefits,” of open skies, stresses the harm to US consumers, commercial and military supply chains, and the US economy, if the US were to freeze new routes from the UAE and Qatar and insist on renegotiation of its agreements with those countries, as demanded by United, Delta and American.

The letter came hours before the government closed a public comment period

on 3 August asking for views on whether Emirates, Etihad Airways and Qatar Airways have dumped capacity and begun pushing competitors out of key markets with the help of $42 billion in alleged subsidies over the past decade. Each Gulf carrier has denied the claims.

FedEx CEO and president, David Bronczek, says the actions by United, Delta and American undermine open skies, which all three say they support. Hawaiian Airlines CEO and president, Mark Dunkerley says the coalition believes the US should honour its open skies commitments, which, “opens markets for US carriers, promotes competition on international and domestic routes, and facilitates US exports”. Atlas Air Worldwide chief executive officer (CEO) and president, William Flynn, says: “Open skies has allowed US cargo airlines to develop global networks.”

Obama visits Ethiopian Airlines

US president Barak Obama went to Ethiopian Airlines during his three day visit to Ethiopia from 26-28 July. Prior to his departure at Bole International Airport, the president visited the first Ethiopian Boeing 787 Dreamliner dubbed, “Africa First”. He also held brief discussions with Tewolde GebreMariam, chief executive officer of the Ethiopian Airlines Group.

Qatar responds to US claims QATAR AIRWAYS has responded to the allegations of subsidy and unfair competition made by US airlines in recent months, five weeks after Emirates published its own response.

Qatar is refuting allegations made by American Airlines, Delta Air Lines and United Airlines in their joint white paper, Restoring Open Skies: The Need to Address Subsidized Competition from State-Owned Airlines in Qatar and the [United Arab Emirates] UAE, published in March. The White paper accuses Qatar, Emirates and Etihad Airways, of profiting from unfair subsidies and benefits. The US airlines have been calling for changes to the open skies agreement the US government has with the Qatari, Dubai and Abu Dhabi authorities.

In the white paper, the US airlines cite studies they claim show that the Middle Eastern airlines are driving down yields on long haul routes to and from the US with their fleet investment. Qatar points out that it: “does not compete with any member of the [three US airlines] in any nonstop market.”

In its response, Qatar also challenges the claim by the US airlines that they are being harmed by pointing to recent US airline financial results that show, what the Qatari carrier says is those airlines’: “best financial years on record”.

In June, Emirates published its own response. Its president, Sir Tim Clark, said: “The [US airlines’] white paper is littered with self-serving rhetoric about fair trade, [a] level playing field, and saving jobs, but their mess of legal distortions and factual errors falls apart at the slightest scrutiny” The US white paper, released by American, Delta and United, was produced along with the Air Line Pilots Association, the Allied Pilots Association, the Association of Professional Flight Attendants and the Airline Division of the International Brotherhood of Teamsters.

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ACW 10 AUGUST 2015

Weak euro softens slow market impact on IAG

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nternational Airlines Group (IAG) Cargo was helped by a weak euro to achieve an 8.8 per cent increase in its second quarter (Q2), April, May, June, commercial revenue to 259 million euros.

The carrier has increased its capacity by 2.1 per cent, saw Q2 volumes fall by the same figure, 2.1 per cent and its yields shrank three per cent, but its revenue still increased 8.8 per cent.

As a large proportion of IAG Cargo’s income is in US dollars and currencies linked to it, the airline benefitted from the strength of that currency, against the euro. IAG accounts in euros. It claims that the volume fall is because it was still using its Boeing 747-8 Freighters in April last year and if that capacity is excluded from the Q2 comparison, the volume change is zero.

The currency effect was so large, IAG tells Air Cargo Week (ACW) that, “at constant currency we were down four per cent [for revenue].”

Speaking to ACW, IAG Cargo chief executive officer, Steve Gunning (see picture below), paints a brighter picture, but warns of a difficult future: “We think those are a strong set of results given the market conditions...in quarter two. Those numbers are helped with a significant foreign exchange benefit, but there are also some strong underlying business performing in them as well,” adding that the second half of the year is expected to be challenging, the market softened in Q2 and that, “this is the new normal for the industry. We expect these conditions to prevail for the next few years, to be honest.”

IAG is continuing to increase its capacity despite the difficult outlook. Its capacity increase to date is due in part to new Boeing 787 at IAG subsidiary British Airways and new routes such as Kaula Lumpur and Havana. Last week, it announced that it is increasing the available freight tonne kilometres it books on the regional

routes covered by its Qatar Airways partnership. However, IAG was not available to state how much more tonnage this represented. It is also increasing the routes it uses Qatar capacity on, with an additional Shanghai (China) to Madrid service and a what IAG calls, “a new feed from Islamabad”. Last year, IAG stopped leasing 747-8F and obtained hold space on Qatar Boeing 777 Freighters. Of this Qatar 777 capacity agreement, Gunning, also announced that IAG Cargo was, “extending the deal indefinitely”.

IAG Cargo has also increased its number of flights by 47 for its Euroconnector service, for cargo that can be carried on its European bellyhold routes. Worldwide, IAG Cargo saw its premium product volumes increase 40 per cent, which are its Constant Climate and Prioritise products. IAG Cargo chief financial officer, Rachel Izzard, says it is a, “signficant swing away from general freight to premium products.”

NEWS WEEK WorldNews LINK SHIPPING, a UK multimodal logistics company providing air transport worldwide, has a new online quote tool.

Link’s tool includes collection costs from anywhere in the UK and is designed for the commercial market. It can provide an airfreight rate in 20 seconds, according to Link. The tool also provides prices for 630 different airports. The tool can also be used on smartphones.

SAS SHARJAH AVIATION SERVICES and road feeder services Luxembourg company Wallenborn have extended their agreement. Sharjah and Wallenborn offer general cargo and temperature controlled feeder services to all main Gulf cooperation countries’ airports and selected international destinations. The cooperation includes 12 stations across the region and an annual volume of 130,000 tonnes.

Net income rise for Atlas Air ATLAS AIR WORLDWIDE has seen net income for the first six months of the year reach $55.2 million, up from the $27.1 million in the same period in 2014.

In the second quarter, for the three months ending 30 June, net income was $29.4 million, compared with $15.9 million for the same quarter last year.

Atlas Air Worldwide president and chief executive officer, William Flynn, says earnings in the second quarter were driven by contribution and margin strength in aircraft, crew, maintenance and insurance (ACMI) charter and dry leasing.

Flynn continues: “We are seeing good demand for our aircraft and services as we enter the second half of 2015, as many of our customers are outperforming the overall market.

We are working closely with our customers to provide them with the most efficient aircraft and effective operating services for their needs.

“As we gather additional insight into second half demand, yields and military requirements, we continue to look forward to a strong year and a significant increase in earnings compared with 2014.”

Atlas Air says it is implementing a range of fleet initiatives that are incorporated into its business performance expectations for the rest of the year.

These include, placing an additional Boeing 747-400 Freighter in ACMI service with DHL Express at the start of the third quarter, acquiring a new Boeing 747-8 Freighter which is scheduled to be delivered in November and returning an owned, unencumbered 747-400 converted freighter to active service to meet additional charter demand.

Other Atlas Air fleet plans are, securing a short term operating lease on a second 747-400 converted freighter in charter with more favourable terms, and expanding its Titan Aviation Leasing portfolio by acquiring and converting two Boeing 767 into freighter configuration.

Atlas Air says that the freighters will be leased to DHL on a long term basis when they are delivered in the fourth quarter.

ACW 10 AUGUST 2015

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NEWSWEEK

2015 delivers increases in tonnage and revenue for Lufthansa Cargo

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ufthansa Cargo has seen revenue and total tonnage for the first half of 2015 increase year on year (YOY) by 3.7 per cent to 1.1 billion euros and 0.5 per cent to 811,000 tonnes.

However, the carrier says it performance in the second quarter was down on the first quarter, due to the introduction of the summer timetable where competitors increased their freight capacity in many markets, thereby, “placing prices under increasing pressure”.

Lufthansa Cargo’s revenue for the first half of the year was 1.1 billion euros, a YOY rise of 3.7 per cent. Total saw a YOY tonnage rise of 0.5 per cent to 811,000 tonnes. Capacity in available cargo tonne kilometres rose by 3.2 per cent to 6.1 billion. Revenue cargo tonne kilometres fell by 0.4 per cent to 4.4 billion. The cargo load factor for the first half of 2015 was 67.6 per cent, a YOY drop of 2.5 percentage points.

The carrier says: “Demand on global airfreight markets picked up in the first quarter of 2015, but lost momentum in the second quarter. Competition on global airfreight markets remains intense. Airlines from the Middle East and Turkey especially are increasing their freight capacities, particularly due to their many

new passenger aircraft. Faced with these market conditions, Lufthansa Cargo focuses on the utmost quality and flexible capacity management. Some airlines altered their pricing models at the beginning of the year, taking the first step towards all-in rates that no longer show the fuel surcharge separately. Lufthansa Cargo is observing this trend, analysing developments in pricing structures and evaluating them carefully” (see story below).

The Lufthansa Group as a whole saw cargo tonnage fall YOY in

the first half of the year by 0.9 per cent to 924,000 tonnes, down on the 932,000 tonnes in the same period of 2014. The group’s cargo load factor was 67.6 per cent, a fall of 2.6 percentage points on the 70.2 per cent last year.

Available cargo tonne kilometres went up 3.1 per cent to 20.5 billion. Revenue cargo tonne kilometres were up two per cent to 15.1 billion, from 14.8 billion.

For the first six months of 2014, the Lufthansa Group saw revenue rise 8.5 per cent to 15.3 billion euros, up from 14.1 billion in the first half of 2014. Net profit was 954 million euros, compared to a 79 million euro loss in the same period last year.

Deutsche Lufthansa chairman of financial and aviation services, Simone Menne, says results in the first half of the year were, “solid”. He says the fall in fuel costs is largely responsible for the improvement in the results.

On1 August, personnel changes at Lufthansa took effect. Since that day, Frank Naeve has been a vice president, responsible for area management of the Asia Pacific region. He had been managing the airline’s e-cargo programme. Naeve succeeds Helge Krüger-Lorenzen, who has become vice president for capacity management.

Fuel, security surcharges gone LUFTHANSA CARGO and Swiss WorldCargo are to change their pricing structures for the winter schedule in 2015/16 to include a new airfreight surcharge.

As of 25 October, the pricing of both airlines will consist of just two components: a net rate and the airfreight surcharge. This will see the surcharges now in place for fuel and security scrapped.

The carriers’ say as the new airfreight surcharge will be much lower than the total amount of the existing surcharges, the net rates will be re-aligned so overall prices of transportation will remain at current levels.

Lufthansa Cargo board member for product and sales, Alexis von Hoensbroech, says: “The new pricing structure is uncomplicated and ensures that we are well positioned for the future, given the changes that the markets have undergone.

“We have listened to our customers. The net rate will be considerably more important, and we will be able to significantly reduce special processes, such as negative rates, with the lower airfreight surcharge. That cuts down on complexity and makes us faster.”

Swiss International Air Lines chief cargo officer, Oliver Evans, says the new airfreight surcharge reflects the volatility of external cost factors beyond the airlines’ control, such as fuel, currency rates, airport charges and fees.

“The airfreight surcharge will be adjusted whenever one of these external cost factors changes significantly and thus will display necessary price adjustments in a transparent way. This would not have been the case with an all-in rate, which both airlines reviewed in detail. An all-in rate would have been less transparent,” Evans adds.

The carriers say, to accommodate customer requests for price stability with long term contracts, it will be possible in the future to fix the overall price subject to a risk add-on, across the entire term of certain contracts.

The adjusted pricing structure will go into effect in most markets worldwide on 25 October.

For legal reasons, the surcharge structure will remain in place only in countries where pricing is subject to government regulation, such as in Japan and Hong Kong.

Twenty years for ACS’ CEO Bowman AIR CHARTER SERVICE chief executive officer, Justin Bowman, is celebrating 20 years at the company. He joined on a student placement in 1993 when he rented a room in company chairman, Chris Leach’s (on left in photo) home. He was then employed after university in 1995. Bowman says when he saw his first charter take off from Ostend Airport, he knew what he wanted to do.

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ACW 10 AUGUST 2015

7,153 sq metre freight centre opens at Hamilton

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ohn C. Munro Hamilton International Airport opened its new 12 million Canadian dollar ($9.1 million) cargo centre on 30 July, which aims to boost the airport’s freight volumes.

Canada’s federal and Ontario governments joined with Hamilton’s municipal government, TradePort International Corporation and Cargojet to mark the opening.

Cargojet will be the anchor tenant of the facility, occupying around half of the space with the balance available to existing carriers and others such as courier company Purolator along with the integrators DHL and UPS. The 77,000 square foot (7,153 square metres) centre will support the expansion of the airport’s cargo operations. It is also aimed at stimulating job creation and economic development for the city of Hamilton and the region.

John C. Munro Hamilton International Airport president and chief executive officer, Frank Scre-

min, says: “We’re thrilled with the new cargo centre and look forward to the opportunities it will help facilitate. This facility will allow us to maintain Hamilton airport’s dominant presence in the overnight express cargo segment in Canada, and create new opportunities to diversify the types of goods that can be processed through the airport.” The development has a common-use warehouse and office space, as

Heathrow 10 year lease for WFS

well as a temperature controlled storage area.

The airport says this area will open the door to shipping high value perishables like seafood, pharmaceutical products, produce and flowers.

The centre was opened with a ribbon cuttinc ceremony with a number of local officials and politicians (see picture, left to right, Vantage Airport Group president and chief executive, George Casey, Canadian government’s minister of education, Liz Sandals, and the administration’s minister of public works and government services, Diane Finley.) The airport hopes to entice more cargo business as it has 24/7 cargo operations, what it says are, “competitive operating fees,” and a key location in central Canada’s Southern Ontario region.

In 2014, the airport saw an eight per cent rise in cargo volumes to 75,000 tonnes, compared to 2013. This was driven by an increase in express cargo, high speed logistics, growth of e-commerce and a surge in the cargo charter segment.

NEWS WEEK WorldNews CHARTER firm Air Partner has announced that it is expecting its pre-tax profit for its financial year ending 31 July 2015 to be less than £2 million ($3.1 million), compared to to £1.1m reported in the same period last year.

The firm says it continues to trade in line with its management board’s expectations and expects to release its interim results on 23 September 2015.

LATAM AIRLINES GROUP now offers cargo customers credit for travel for every tonne shipped internationally by LAN CARGO, TAM Cargo, LAN CARGO Colombia and Mas Air. Called Cargo Rewards, it is exclusively for cargo agents who transport freight using the LATAM Airlines Group’s network and its cargo affiliates.

WORLDWIDE FLIGHT SERVICES (WFS) has signed a new ten year lease to take over an 82,000 square feet facility at the Heathrow Cargo Centre.

The cargo handling firm will move into its fourth facility at the cargo transit centre, which is located close to Heathrow Airport. This move adds to another lease WFS took on in March when it moved into a 150,000 square foot building at the centre. It now occupies nearly 400,000 square feet across four units at the Heathrow Cargo Centre.

WFS’ vice president for UK and Ireland, Patrick Roberts, says: “We are pleased to continue our partnership with SEGRO as we continue to expand our portfolio of airline customers at Heathrow.”

Other occupiers of buildings at the Heathrow Cargo Centre include Airworld, Air Canada, DHL Aviation, Air France, and Menzies Aviation. SEGRO and Aviva Investors, through their joint venture, Airport Property Partnership (APP), secured the letting for WFS. SEGRO’s business unit director for greater London and director of APP, Alan Holland, says: “WFS is a major player in the cargo handling industry and works with many of the world’s leading airlines. Their continued expansion at the Heathrow Cargo Centre will help them accommodate their growing client base.

“We pride ourselves on working with our existing customers and this signing is testament to how we are able to meet their needs and help them to achieve their business objectives.”

Surging airfreight at Doncaster DONCASTER SHEFFIELD AIRPORT has seen its cargo throughput surge in the first six months of the year, compared to the same period in 2014.

The UK airport transported more cargo from January to June 2015 than it did throughout the whole of 2014, but no figure was available. In 2014, the airport saw a 112 per cent rise in its cargo volumes to about 750 tonnes, compared to the 354 tonnes handled in 2013.

Doncaster Sheffield Airport’s cargo terminal consists of 12,000 square feet (1,114 square metres) of operational space and a full range of equipment and facilities capable of handling any aircraft. The airport has a 2,893 metre runway, and can handle the smallest parcel to large cargo carried on an Antonov AN-225.

Doncaster Sheffield Airport cargo manager, Dayle Hauxwell, says: “The growth of the business in recent months has been excellent. The amount of freight being transported has and continues to increase significantly and this can only be positive news for the airport and the regional economy.”

Through the cargo operations firm Anglo World Cargo, the airport has managed consignments during the sixmonth period to Nepal, Kenya, Venezuela, the US and European destinations such as Greece and France.

ACW 10 AUGUST 2015

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MIAMI

Cargo redevelopment long term planning underway

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iami International Airport (MIA) handled 2.2 million tonnes of goods shipped in 2014, a rise of about 55,000 tonnes more than 2013 and its third consecutive year of growth, and a reason for further infrastructure development.

In 2014, Miami handled 70 per cent of all US perishable air imports, according to the airport, with volumes up seven per cent over 2013. The value of pharmaeutical exports from MIA grew 17 per cent in 2014 year on year to nearly $2.4 billion.

These results mean Miami continues to be the busiest US airport for international freight, according to its operator, Miami-Dade Aviation Department. With ongoing growth, but no new facilities being developed right now, the department is close to completing a cargo re-development plan that will address the air-

port’s long term infrastructure needs. Florida state’s Department of Transportation is already working on a reconstruction project that will deliver separation of cargo truck and commuter traffic, reduced travel time and a direct connection to the airport’s cargo area from the North West 82 Avenue. Phase one of the project, which constructed an overpass directly connecting the airport’s cargo area to Florida State Road 826, was completed in July 2011 and phase two, will connect the new overpass west of state road 826 to North West 82 is scheduled for completion in 2016.

While development work is ongoing, through June of this year, total freight activity by tonnage has been the same as last year. In the first quarter, cargo grew by two per cent overall and by four per cent in international cargo.

“We expected to see a levelling out during the summer, followed by an upward trend again

beginning in the autumn. End of year tonnage is typically the highest,” says Miami airport’s marketing director, Chris Mangos (see picture).

The airport, with its cargo business partners, continues to pursue accreditation as a pharma hub from the International Air Transport Association. Venezuelan carrier Transcarga International Airways became the 40th allcargo airline now serving the airport when it launched a scheduled cargo service on 23 April.

Transcarga flies between Miami and Venezuela’s

capital city of Caracas with an Airbus A300-B4 Freighter. Low cost, US all-cargo carrier Western Global Airlines, based in Sarasota, Florida, is continuing to develop its charter operations from Miami after launching services to Latin America last November 2014 with a fleet of Boeing MD-11 Freighters.

“Continued decline or slowing of Latin American economies, particularly in Brazil, in addition to the fate of the US dollar’s value, have affected our activity,” admits Mangos. “Signs of such fallout were already apparent when looking extensively through regional and individual country activities during the first three months of this year.”

Total cargo tons for Miami in the year to date (June) were 1,074,658, representing a 0.24 per cent increase compared to 2014. Domestic was 135,061, a 0.17 per cent decrease, and international trade showed a marginal 0.3 per cent increase on 2014, with a total cargo tonnage of 939,597.

Miami continues to schedule more flights to Latin America and the Caribbean than any other US airport, it claims. In airfreight terms its mid to long term goal is to continue its growth from a recognised hemispheric hub to a global airport of choice, offering an expanded route network with direct cargo access to all world regions.

A bellwether for American markets UPS Air Cargo, the largest air cargo carrier in Miami for the last four years with close to 15 per cent of market share is continuing to capture more business despite a generally flat market.

UPS Air Cargo marketing manager for the Americas, Domingo Mendez, tells Air Cargo Week (ACW) that his firm continues to grow year on year despite a one per cent decline for Miami International Airport in the same period.

“The general market is pretty much flat while UPS Air Cargo has been able to gain market share by monitoring and reacting to opportunistic air cargo market conditions,” he says.

Miami airport is a Boeing 767 and Boeing 757 operation for UPS. “Both aircraft share the same cockpit platform permitting the interchange of aircraft or crew without issues, a combination that has allowed us to capture demand and resulting in growth,” claims Mendez.

Miami is the gateway to Latin America (LatAm), handling about 83 per cent of all imports and 81 per cent of all exports to and from LatAm and the Caribbean.

“UPS Air Cargo is generally acknowledged as the premier on-time airline,

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ACW 10 AUGUST 2015

offering best in-class service to and from Latin America and the Caribbean. Based on these strengths, we expect to continue to grow this enabling UPS Air Cargo to grow both now and in the future,” he adds.

Last year, UPS Air Cargo rearranged its ramp parking at Miami, allowing it to park an additional aircraft, which it says has added to its ability to capture market share.

“Many of the economies in Latin America are tied to the US economy and as the US comes out of the recession, it will have positive effects on the economies in the region,” Mendez predicts.

South Florida’s predisposition to weather extremes renders the region’s infrastructure acutely vulnerable and though Miami’s location has many plus points the vagaries of its weather can be an issue and adversely affect day-to-day operations.

“One of the challenges we encounter that affects the entire market in Miami is its changes in weather,” says Mendez. “We have talented staff that work around the clock to deal with various conditions that may affect our operations. Our team members in the region and in Miami do a great job listening to our customers, providing them solutions that help their business.”

MIAMI

Expansion to the Americas can be all year round

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aunching Finnair’s seasonal service to Florida last year has opened up a fast track cargo gateway to the Americas, according to the airline. The nordic airline with expansion plans that include operating Airbus A350 eXtraWideBody from October, Finnair introduced a new service to Chicago (US) in June.

“With good results for our seasonal Miami route last winter, we’re confident opening this new destination to round out our daily flights to New York,” says Finnair Cargo’s vice president of global sales, Pasi Nopanen. Finnair tells Air Cargo Week (ACW) it plans to re-start its seasonal service between Helsinki and Miami International Airport in December offering passengers a non-stop Airbus A340 connection with belly capacity for streams of cargo bound for the Americas.

“We were very satisfied with the Miami service last winter and therefore took the decision to operate Miami also for winter 2015/16 and also prolong the period for the three times a week service,” says Finnair Cargo head, Antti

Kuusenmäki. “It’s now going to operate the whole winter season and we have changed some of the operating days, so the departures with the A340 from Miami are now on Tuesdays, Fridays and Sundays.” Last year, Finnair started the winter season service to Miami in mid-December.

Finnair and IAG Cargo have announced a partnership that means Finnair has a hub in London and can also offer a year-round service to Miami through London. “The partnership also widens the capacity bottleneck we had on the route, in a very effective way,” adds Kuusenmäki.

Though Asia remains Finnair’s core strategic focus, the launch of the new Miami service in 2014 made a clear statement, North America is definitely on Finnair Cargo’s radar. “We’re always on the lookout for new opportunities to expand our network and did not want to be dependent on just one daily flight to New York’s [John F. Kennedy International Airport], but could offer direct services to Southern USA,” explains Nopanen. “The US is an important trade partner for Scandinavia and the Baltics, so Finnair is always evaluating demand across the

Atlantic. Offering belly capacity on direct flights to Miami during the winter season opened a new gateway to destinations across the US and South and Central America.” To expand its trans-Atlantic bellyhold network, Finnair recently joined a transatlantic joint venture with American Airlines, British Airways and Iberia. Finnair Cargo also cooperates with American. “Our cooperation with American means that Miami

is a stepping stone to dozens of new destinations. Finnair was able to fly shipments to Miami and the cargo will then continue aboard American Airlines to destinations such as Sao Paulo [Brazil], Santiago de Chile, Rio de Janeiro [Brazil], Lima and Buenos Aires,” adds Nopanen.

Finnair Cargo also offers trucking services from Miami across Florida and to US cities such as Chicago, Dallas and Atlanta.The top items shipped to Miami and beyond last winter included perishables, particularly salmon, machinery, ship parts and garments from the Far East. Flowers, IT goods featured on return flights from Miami to Northern Europe. A long history of overcapacity has created extremely tough competition on the US cargo market, but the shorter lead times offered by Finnair’s Miami gateway make it a seasonal option for shippers and increase the likelihood of Miami becoming a year-round non-stop destination.

Miami is Turkish target TURKISH CARGO is to launch a service to Miami on 25 October as it builds on ambitious plans for North America, supported by an aggressive marketing strategy in what is sees as a lucrative market.

Turkish Cargo’s vice president for cargo marketing and sales, Halit Anlatan, confirmed the airline intended launching a Miami (US) service from October.

The airfreight arm of Turkish Airlines is expanding its global network of cargo operations and also began operating a weekly freighter service to Chicago (US) in April.

“This all-cargo weekly flight added to our already substantial cargo capacity on multiple passenger flights to cities in both the United States and Canada,” says Anlatan.

“The Miami flights will operate seven times a week in both directions. We will then be serving eight destinations in the United States which besides Chicago and Miami,

includes New York, Boston, Washington, Houston, Los Angeles and San Francisco,” he explains.

Turkish Cargo says it will maintain a presence at more than 265 global destinations, including 50 freighter destinations in 109 countries through its freighters and its bellyhold aircraft.

The airline has a fleet of 10 freighters with seven Airbus A330 Freighters and three Airbus A310 Freighters. It has placed an order for three more freighters, two of which will be delivered in 2016 and one in 2017.

In recent years the company has built an intercontinental service to the US, transporting cargo via the Far East and Europe.

“Our focus in the past was on Middle Eastern and African countries, but we are now also going to tap opportunities in the US market,” says Anlatan.

ACW 10 AUGUST 2015

7

SOUTH AFRICA

Hunting trophy ban lifted after three months

J

ust three months after announcing a worldwide embargo on legally hunted trophies, South African Airways (SAA) announced at the end of July it was lifting its ban.

SAA was one of several airlines, including IAG Cargo, Emirates and Lufthansa, which stopped transporting trophies earlier this year. Delta Air Lines also came under pressure to enact an embargo, but at the time refused and continued to accept trophies as usual.

The Professional Hunters Association of South Africa (PHASA) was a driving force in convincing SAA to drop its ban, calling on the South African government’s Department of Environmental Affairs (DEA) to step in directly and intervene with the state-owned airline. After meetings between DEA officials and the carrier’s executives, SAA announced it will now adopt other methods of controling the illegal transport of wildlife.

“We have decided to lift the embargo after extensive engagements with the DEA and the commitment we received that the compliance and inspection areas will be strengthened to ensure that the risk of shipment of illicit goods and falsification of permits and documentation is eliminated,” states SAA. The air-

line says it will collaborate with the DEA for these additional measures, but did not specify what they included. Safari Club International (SCI), PHASA and other hunting and conservation groups are now working with other airlines to persuade them to reverse their embargoes as well.

The original move by SAA and other airlines to ban the trans-

port of trophies was made with little in the way of advance notice for hunters and was immediately criticised by organisations like SCI and PHASA. “The airlines are denying service to lawful hunters who have followed every rule and regulation. It’s the equivalent of a restaurant deciding it won’t serve alcohol to any patron, in order to ensure that no one under age is served,” SCI president Larry Higgins states.

SAA said the embargo was originally put in place to stem the illegal transportation of wildlife, but SCI speculates that airlines would not only alienate their hunting customer base, but also restrict funding that is vital to protecting wildlife.

PHASA chief executive officer, Adri Kitshoff, suggests there should be a clear distinction between illegal wildlife products, such as poached rhino horn or ivory, and legitimate hunting trophies. “The export of trophies is strictly regulated by both the country of origin and the country of import,” he says.

But, the recent high profile killing of a popular Zimbabwean lion named Cecil sparked worldwide outrage on social media and elsewhere against safari hunting and may ultimately make attempts to lift bans all the more difficult to achieve.

Following publicity surrounding the killing of Cecil, Delta decided to change its rules about transporting hunting trophies and announced a ban from 3 August. Its announcement came as other airlines, including Air France, KLM, Iberia, IAG Cargo, Singapore Airlines and Qantas, also signalled they would consider banning the transport of trophy hunting kills.

In a statement, Delta says it would immediately call a halt to the shipment of all lion, leopard, elephant, rhinoceros and buffalo trophies worldwide as freight. Previously, Delta’s acceptance policy called for absolute compliance with all government regulations regarding protected species. Delta says it will also review acceptance policies of other hunting trophies with appropriate government agencies and other organisations supporting legal shipments.

Planning for the long term

LONG term planning to replace outdated warehousing with a new cargo handling facility at Johannesburg’s O.R. Tambo International Airport run by the Airports Company of South Africa (ACSA) has been welcomed by cargo handling firm Africa Flight Services (AFS).

Such improvements are part of a $648 million investment programme unveiled earlier this year by ACSA and include upgrades for the international and domestic terminals at Cape Town International Airport. The improvements are to be completed over the next three years. ACSA operates South Africa’s 10 principal airports, including O.R. Tambo and the international airports at Cape Town and Durban.

AFS cargo general manager, Malcolm Tonkin, says the new cargo handling facility is an essential development for the future of the area’s airfreight business. “A number of cargo handling companies based at O.R. Tambo share the challenge of using extremely old and outdated warehouse facilities, with little possibility of expansion due to the location, warehouse size restrictions and availability,” he tells Air Cargo Week (ACW). “There is, however, a medium to long term plan which will eventually see a new cargo handling facility built here.”

AFS was set up in 2012 to provide services at key airport locations across South Africa. It is a joint venture partnership between Worldwide Flight Services and the South African Airways’ franchisee SA Airlink, a regional airline.

AFS’ facilities at Johannesburg include four warehouses totalling 3,000 square metres (Continued on next page).

8

ACW 10 AUGUST 2015

SOUTH AFRICA

Action plan reduces multi-million dollar losses

S

outh African Airways (SAA) says it made, “substantial progress,” during the first quarter of 2015 after the successful implementation of a 90 day action plan designed to reduce its operating losses.

The airline posted a net loss of $200 million in its last financial year, up from $91 million in 2013. A sustained currency decline of the rand against the US dollar all but wiped out any advantage to the carrier of lower oil prices in the global markets. According to the company’s latest annual report, total fuel costs actually increased by 16 per cent as a result of the weaker rand despite an average three per cent decrease in the average price of Brent crude oil.

Since 2011, the real rand cost of fuel to SAA has increased 77 per cent, which wasn’t helped after the company also suffered a $15 million loss from fuel hedging after oil prices went down instead of up as it had anticipated.

“SAA continues to drive implementation of its long term turnaround strategy across the business,” says SAA. “Commercially the airline has adjusted capacity against declining demand and aggregate load factors of 81 per cent marked the first quarter of the 2015 to 2016 financial year.”

SAA says the business has reduced operating costs by 14 per cent and has made significant strides toward business stability during implementation of its action plan earlier this year. This

was plan followed by the positive first quarter of its long term turnaround strategy’s implementation.

In a review of the first few months of its new financial year, which started 1 April 2015, SAA says it realised positive year on year gains in almost all of the market segments in which it is active. However, domestic market conditions remain tricky. Against generally weak demand there was a seven per cent growth in available capacity across the domestic market compared to overall growth of just over two per cent. This is indicating an oversupply of around five per cent.

In June, SAA saw a 14 per cent reduction in operating costs compared to the same period last year and unit costs were seven per cent lower than a year ago and 10 per cent below budget, in part driven by lower oil prices.

Africa remains SAA’s strongest performing business segment with all routes trending upward, despite some segments impacted by the Ebola disease outbreak in 2014 and early this year. Its airfreight division, SAA Cargo, uses bellyhold space and operates four Boeing 737-300 Freighters.

SAA Cargo moves general cargo, perishables, courier, express

and mail globally, as well as transporting livestock, dangerous goods, and vulnerable and valuable cargo as part of its special services, along with an ad hoc charter service for more urgent deliveries.

The national carrier, SAA, is represented in 12 countries across the Asia Pacific with direct passenger flights to Hong Kong and Perth, the rest of the region serviced through interline agreements with other carriers.

Regionally, SAA Cargo leverages the passenger network in accessing markets such as Lagos, Accra, Lusaka, Entebbe (Uganda), Kinshasa, Harare, Luanda, Maputo and Nairobi.

In Europe, the markets include Germany, Italy, France, Switzerland, UK, Ireland, Spain, Eastern Europe and Nordic countries, while the North and South American markets include Argentina, Brazil, Mexico and the US. The airline strengthened its presence in West Africa at the start of the month after the launch of its inaugural flight between Accra, Ghana, and Washington DC in North America.

It also introduced a Johannesburg (South Africa)to Abu Dhabi service in March.

(Continued from page eight) and two warehouses of 1,200 square metres at Cape Town. Both operations have recently been refurbished and equipped with new pallet handling systems, including integral weighing beds and a fleet of new forklifts and pallet trucks. Investment also included new dual view x-ray screening equipment at both stations.

AFS, which announced its appointment as cargo ground handling agent for Turkish Airlines in Cape Town in mid-July, provides cargo handling to both foreign and domestic airlines. Airline customers in Cape Town and Johannesburg include Emirates, El Al, SA Airlink, AV Cargo and Turkish Airlines.

The ACSA investment programme also includes the re-alignment of O.R. Tambo’s primary runway, which will see it extended to 3,500 metres in length and re-built to international specifications. The expansion will include the construction of parallel and rapid exit taxiways, paving the way for increased capacity by allowing larger aircraft such as the Airbus A380 to land and take-off.

Beyond infrastructure, the digital realm is another challenge, according to Tonkin. For him, the move to a paperless environment remains one of the pressing challenges still to be properly addressed by the South African airfreight business as a whole. “It is happening at a very slow pace and there remains the notion that there must be physical paperwork and documents in order to process airfreight shipments,” he says. “It seems like an ongoing battle to convert the mind set of those who should be taking the lead in driving this initiative forward.” While Africa is seeing large scale development, it is not immune from the worldwide overcapacity. Tonkin explains: “Since there exists an over supply of capacity with all airlines competing for the same export cargo, export airfreight rates are considerably lower and more competitive than other countries.”

ACW 10 AUGUST 2015

9

E-FREIGHT

Platform for espousing change

F

reight forwarding networks are struggling with e-freight as many airlines with widely varying electronic systems bring their own challenges to firms that have limited resources.

WCA, a global network of independent freight forwarders, tells Air Cargo Week (ACW) that independent forwarders have been criticised for not being at the vanguard of electronic ticketing and e-billing, but says this is unfair.

“Airlines have been targeting multinationals first and it’s been a lot more complicated for us. We certainly realise its importance and many members are already using systems with some airlines.

But, complexity and being able to cover all airlines and their different systems is the

challenge, not a lack of will. The WCA has invested in the WIN [Worldwide Information Network] e-platform and we can now provide e-commerce and electronic airway bills (e-AWB) facilities for members.

Airlines now need to work closely with the independent sector to bring them on board,” he says.

E-commerce growth is a driver of e-cargo and WCA held its first e-commerce workshop in Miami (US) on 20 June. The electronic messaging langauge extensible markup language, XML, is one standard that could be adopted industry wide.

WCA tells ACW that many in the industry have been surprised by a trend that, according to it, has seen the top 20 multinational shippers slip backwards while

independent, smaller freight forwarders have gained market share. “The independent freight forwarding sector is very healthy and networks are becoming ever more important because shippers really value the quality of service independents can provide,” he told ACW. “Large global operators are also increasingly using smaller independents for niche services, such as time critical deliveries. It is not always just about saving money, but also about the value of supply chains and ways of finding efficiencies across the chain.”

New opportunities for smaller freight forwarders as part of large international forwarder networks are also being aided as airlines increasingly upgrade and make their data networking and online platforms more accessible.

Internet shopping is king E-COMMERCE will help drive compound annual growth rates of 4.5 per cent for airfreight worldwide, according to a report about the industry’s future.

Looking ahead to 2019, the report, Global Air Cargo Market 2015-2019 – Market Landscape, Growth Prospects and Key Vendors, by market research firm TechNavio, predicts annual revenue tonne kilometres (RTK) of 268.4 billion, 53.7 billion more than 2014. In 2014, TechNavio says that the market saw 214.7 billion RTK. Internet shopping by the growing consumer classes of India and China are expected to drive intra-Asian airfreight in the years to come.

“Online retail stores, especially online fashion stores, are a major source of revenue for the market. Another important driver is the increased demand in just-in-time manufacturing,” the report’s executive summary states.

Just-in-time manufacturing was developed in Japan. It organises a factory’s logistics around the concept that materials are only ordered when they are needed, pulling them through the factory so they arrive just in time at each work station.

The report also found that airlines were preferring to acquire companies to enter the airfreight market and that carriers’ research was increasing and is leading to more new routes.

Pictograms hinder e-cargo JAPAN and Korea are ready for e-freight, but the characters in both countries’ languages provide challenges, according to Lufthansa Cargo director for Japan and Korea, Michael Stoermer.

Stoermer says e-freight penetration was about 20 per cent in 2014 and he is aiming for 30 per cent this year.

Speaking to Air Cargo Week (ACW) in Tokyo, he says that customers’ IT systems are the biggest challenges, but the airline has been through a successful test phase with Japanese freight forwarders, Nippon Express, Yusen and Kimtetsu.

Data from the International Air Transport Association’s monthly report in December 2014 show that Lufthansa Cargo ranks 12th worldwide for electronic air waybill (e-awb) take up, and its new Japanese partner, All Nippon Airways is 40th.

Stoermer told ACW: “Our customers have special IT solutions for Japan and Korea, which adjust for the language and the characters. Forwarders explain to me that IT systems are adapted for e-freight. Sometimes they are the last countries as they need to cost in the language. We are working very closely with them, there are growing e-freight shipments from these freight forwarders.” Stoermer also said Lufthansa will consider more joint ventures depending on how well the ANA deal goes. He added: “We are looking for any opportunities to grow in these markets. Korea is more difficult as they have strong home carriers.” Last year, Lufthansa announced a joint venture with ANA. Stoermer adds that Lufthansa has about a 10 per cent market share to Europe from Korea and 21 per cent of the Japan to Europe volumes.

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ACW 10 AUGUST 2015

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ACW 10 AUGUST 2015

11

NEWSWEEK Air waybills go digital at Trans Air Cargo

Forwarders make new connections

THAILAND airfreight forwarder Trans Air Cargo (TAC) is increasing its use of electronic air waybills (eAWB).

TAC began using eAWB in the second quarter of this year and says it is already sending 400 to 500 per month. The forwarder’s managing director, Keree Chaichanavong, says: “Continuous engagement with airlines on a local level is an important factor, as airline headquarters may be ready but that doesn’t mean their local offices are.”

According to Chaichanavong, selecting the right technology partner is vital because of the challenge of not just sending electronic data, but of meeting the requirements of the International Air Transport Association (IATA) resolution 672 and becoming a paperless business.

“First, we needed to get connected and begin transmitting data to all our airlines.

FREIGHT forwarders’ network Cargo Connections has approved new members in Australia and India.

Australian company Tidal Logistics has gained membership with the UK freight networking firm. Tidal provides services throughout the whole of Australia from their Western Australia office.

Tidal Logistics managing director, Ben Miles, says: “Tidal Logistics is a privately owned, family company specifically providing international freight forwarding, logistics and customs clearance services across a broad spectrum of industries within Australia.

“We are strategically located 15 minutes from Perth International Airport and within 30 minutes from the Port of Fremantle. Tidal Logistics looks forward to working with the various members within Cargo Connections on inward and outbound enquires of any size.”

He says Tidal Logistics recently moved exhibition goods travelling from Brisbane, Australia to Chengdu in China.

In India, FreightBridge Logistics (FBL) has also been approved as a Cargo Connection member. The firm has a network of 13 offices across the country in Mumbai, Ahmedabad, Baroda, Bangalore, Chennai, Coimbatore, Delhi, Hyderabad, Ludhiana, Pune, Rajkot, Tuticorin and Tripura.

FBL director, Mayur Aiya, says: “We are driven by the common motto of providing seamless logistic services and specialised LCL consolidation services both inbound and outbound of India. FBL has carved a niche for itself as a South American carrier, consolidator and allied logistic services provider over the years and is now a recognised name in the industry.

“FreightBridge is capable of handling cargo of any type, size and nature, ensuring the seamless movement of cargo, linking various modes of transports and arranging smooth transfers through the various handling agencies involved.”

Then we engage with each locally to coordinate the switch to full eAWB,” he adds. TAC has selected Worldwide Information Network (WIN) for its eAWB technology because of WIN’s airline coverage, and what TAC says is its experience in helping independent forwarders make the switch to eAWB, WIN’s ease of use and its pro-active support.

“By using WIN to transmit electronic master and house AWB data to airlines, we save money and get full tracking,” Chaichanavong adds. WIN has coverage of 90 airlines and in Thailand it has implemented a connection with Bangkok Flight Services, to automatically update actual weights in the system from the warehouse receipt. WIN managing director, John DeBenedette, says it is refreshing to see an independent forwarder engage the airlines locally to accelerate the roll out.

Cameron urged to approve runway

L

et Britain Fly, a pro-airport expansion campaign, has sent a letter to UK prime minister David Cameron signed by business leaders, calling on the government to back its Airports Commission’s recommendation to expand Heathrow Airport.

The airport expansion campaign group is urging an early parliamentary vote on runway development by mid-2016 at the latest. Letter signatories include a number of business leaders from some of the UK’s largest companies by value.

Last month, the commission recommended that a third runway be built at Heathrow, rather than a second runway at Gatwick Airport.

Let Britain Fly says: “After nearly three years examining the evidence, the view of the Airports Commission is unequivocal: Britain needs airport expansion and the best solution is to build a new runway at Heathrow. We back this recommendation and believe the government must now provide a swift and positive response to the commission’s final report that sets out a

clear timetable for an early parliamentary vote to take place by [mid-2016].

“With Heathrow already full for a decade and all of London’s other major airports likely to be full by the end of the next decade, the government must now address the need for a new runway with urgency and give the green light as soon as possible.”

The letter continues to say that airport expansion is about more than where to build a new runway; it is about securing long term prosperity and creating jobs and growth for future generations. “By value, 40 per cent of our exports go by air and we trade up to twenty times more with countries with which we have a direct air link,” the letter adds.

Let Britain Fly says a new runway will deliver significant connectivity and economic benefits to Northern Ireland, Scotland and the regions in northern England, ensuring key cities across the UK such as Belfast, Glasgow and Newcastle have easy access to the capital and international markets beyond.