Vol. 9 No. 26                                                             WE COVER THE WORLD                                          Tuesday February 23, 2010

What Makes A Winner?

Who Profits From
Air Cargo Awards?

     Get ready for this.
     Between March 9th and June 8th, no less than three publications and probably half a dozen more organizations will be giving out air cargo industry awards at fancy bow tie affairs around the world.
     There are awards for everything, from Company of the Year to Person of the Year, from Most Influential to Lifetime Service, the awards will be handed out left and right by trade shows, industry organizations and publications.
     It all makes you wonder what’s going on, especially since the air cargo industry just had quite possibly the worst financial year on record.
     While the year in finance should not give us an ostrich syndrome (and thankfully, many of us have not stuck our heads in the sand), something rings a bit hollow when air cargo folks sit down to a $75-$150 a plate trade show dinner and pat themselves on the back whilst fellow companies face uncertain futures and bleed money like fiscal hemophiliacs.
     The idea of recognizing and awarding exemplary effort is as old as organized business itself. But right now, the idea of handing out awards seems a bit over the top, if not downright inappropriate.
     For starters, there are too many awards.
     Awards have also become money makers, especially for publications who are able to convince candidates into buying full-blown advertising programs pleading with readers to “Vote for us!”
     The amount of correspondence we are seeing from otherwise sensible, dedicated air cargo people pleading for people to vote them best airport or best airlines would be laughable were it not so pathetic. The offenders know who they are.
     Forgetting everything else, does no one smell a scam?
     Advertising programs, event sponsorships, corporate tables at galas sold as part of an awards package – these reek of set-ups, in our humble opinion. My eldest daughter, a writer, likened it to the emails and letters she sometimes receives congratulating her on her inclusion in a new book, Best Poetry of [Insert Year], for which she need only provide $50-100 to receive a copy. That small fee covers inclusion in the book as well. The judge of what is the “best” poetry is the dispassionate, almighty dollar.
     It’s sort of like purchasing a star, which you can also do if you’re willing to fork over the cash.
     The guys on the street here in New York City call it a kickback, pure and simple.
     Hard working companies and people in air cargo don’t need that kind of grief at what should be a moment of encouragement, enlightenment and reflection for a job well done.
     Heiner Siegmund, Air Cargo News FlyingTypers European Bureau Chief, who talks to air cargo people in Europe and elsewhere more than any other reporter on the planet observes:
     “By and large, there is no transparency as to what are the criteria for a great number of the awards.
     “Awards announcements go something like:
     “Our readers have decided…
     “In most cases, nobody knows how many of these readers really participated in the surveys.
     “In other words, the prerequisites for the vast majority of awards are totally nebulous. For example:
“Best Cargo Carrier of Europe, Best Cargo Carrier of the Middle East, Outstanding Cargo Carrier of Asia/Pacific, and so on.
     “Sometimes, it is the ability to make the most ‘noise’ that wins the award.
     “Between 2005 and 2008, air cargo was growing so fast that award overkill reduced credibility and increased the creation of award schemes. This led to a worldwide inflation of accolades that popped up like mushrooms in every corner of the planet. This wound up devaluing those few awards that are based on thorough and scientific research.
     “The best thing would be for the major and most respected cargo carriers to form a sort of informal alliance demanding that the number of awards be reduced to a comprehensible number, let’s say, four or five per year, honoring different transport and service categories and items along the entire supply chain.”
     In past rants about industry awards we have wondered why IATA or some other multinational and neutral body might not manage awards by initiating and conducting surveys in close cooperation with international airfreight and transport media.
     Instead, IATA, while still not in the awards loop, has acquiesced to another publication’s awards shindig during WCS in YVR next month. No doubt that there is plenty of constructing thought out there when it comes to the giving and receiving of air cargo industry awards.
     A highly-placed air cargo executive who has requested anonymity thinks that maybe awards committees need to look a little closer when they go about the business of recognizing true winners:
     “We think too highly of our senior teams and not enough of the people making it happen every day at the terminals, sales offices and GSA locations.
     “Air cargo needs to recognize the great job all of our people do to make this industry successful.
     “Maybe there should be some new award categories to include a broader spectrum of people and businesses.
     “For example, what would be wrong with selecting the best third-party cargo handling service or, for that matter, recognizing the best GSSAs?
     “Both are daily integral forces in air cargo that rarely, if ever, get respect, let alone receive awards.
     “There are plenty of other categories that could and should be considered outside of the aforementioned ‘narrow band’ of awards recipients as the industry gears up for the rest of 2010.”
     Another top executive in air cargo (unnamed) thinks awards should come in part from customers with some benchmarking:
     “Performance should be based on profitability and the views of our customers.
     “They should decide who is performing best and we should use more analytical methods to measure performance.”
     Another thought is that maybe air cargo should skip awards altogether and hold a series of fund raisers to help the legions of people worldwide who are being thumped to distraction by out of control, politically driven prosecutors in the U.S., EU and elsewhere as air cargo is increasingly being targeted for alleged price fixing.
     In the meantime, there is no doubt in our minds that the air cargo awards trend will continue.
     It will just be a matter of what the awards now mean for those who win them, considering they mean very little in the grand scheme of things.
Geoffrey Arend

     The walkout of Lufthansa pilots is over – at least until March 8. Last night the conflicting parties, Lufthansa Airlines and the pilot’s union Vereinigung Cockpit (VC) agreed in a joint statement on getting back to the table “immediately and without conditions,” to resume negotiations on tariffs, pilot’s rights, job security and working conditions.
     Hence the originally announced four day-long walkout ended surprisingly last night at 11:59 pm German local time after only 24 hours of strike action. However, despite the return of captains and first officers to work, many flights of Europe’s leading airline will continue to be disrupted until next Friday.
     Although of short duration and only suspended until 8 March, the walkout impacted the carrier considerably.
     More than half of the daily 1,800 flights had to be scrapped causing financial losses of an estimated €25 million Euros on Monday alone.
     Affected negatively by cancellations were also Lufthansa Cargo, budget airline Germanwings and commuter carrier Eurowings that all belong to the German crane’s aviation empire.
     The decision to solve the disputed questions during the next two weeks without any union pressure caused by walkouts on short notice was initiated by judge Silke Kohlschlitter of the local Frankfurt-based labor court.
     After hearing both sides last evening she suggested a resolution including the cancellation of all pilot strikes at once and resumption of talks between the parties immediately. In a related development, the VC unionist dropped their main demand in which they had urged LH to apply German labor conditions to cockpit crews of all non-German subsidiaries like Milan-based carrier Lufthansa Italia plus the other Lufthansa group airlines flying under foreign licenses.
     Obviously, this particular concession, which Lufthansa’s executive board had always strongly rejected had no legal possibility of success.
     “We offered (Lufthansa’s management) a ceasefire,” trumpeted VC’s chief negotiator and hardliner Thomas von Sturm in martial diction when asked by the media for a comment after walking out of court.
     Klaus Walther, head of LH communication stated that he expects a lasting tariff agreement in short time. “We are optimistic that the upcoming negotiations within the next two weeks will lead to successful and enduring results.”
     Lufthansa shares were up 1.7 percent to €11.19 in Frankfurt trading this morning.
     The walkout of the well-paid and highly privileged Lufthansa cockpit crews was extremely unpopular in Germany. “Luxury pilots on strike” titled the biggest newspaper ‘Bild’.
     Berlin’s Tagesspiegel commented:   “LH walkout – short but harmful”.
     Internet blogs are full with comments today, most of them heavily criticizing the pilot’s demands for maintaining and further enlarging their influence.
     Meanwhile in France, a strike by air traffic controllers is expected to shake up air traffic at Paris CDG airport.
     At British Airways cabin crew union Unite has announced a walkout for better pay and working conditions after a remarkable majority of 81 percent of the union members that participated in a ballot had opted for abandoning work. After a judge had ruled against the strike during Christmas last year, BA’s flight attendances now seem to be ready for another go.
Heiner Siegmund

     According to CEO Mats Jansson, getting together with a strong partner would be the best option to secure the future of his airline.
     “Autonomy is not a target in itself,” stated Jansson in an interview with Danish paper Boersen.
     “By becoming part of a bigger enterprise, one is better sheltered from the enormous fluctuations our business tends to,” the Swedish born executive said.
     As an exemplary model, he mentioned Switzerland’s Swiss Air Lines’ merger with German Lufthansa in 2005 that has nicely paid off for both sides.
     SAS and Lufthansa are long-term members of the globe spanning Star Alliance and code-share flights on routes between northern Europe and Germany.
     Furthermore, Hamburg-based Lufthansa Technik is responsible for maintaining more than 30 Airbus aircraft that make up the fleet of the Scandinavian carrier, including the nine long haul A330s and A340s.
     It’s worth noting that SAS/Lufthansa held merger talks in fall last year with SAS pulling back.
     “Most urgent step for securing a prosperous future is to solve our financial problems by ourselves without intervention from any other carrier," SAS prioritized in a public statement at the time.
     What followed was the announcement by the airline of a capital increase, the sale of subsidiaries that are considered not necessary to the core business, a fleet reduction, and a restructuring of the carrier.
     The moves reduced losses but the SAS Holding Company including the cargo subsidiary are still posting red figures, analysts say.
     When asked about SAS recently, a Lufthansa spokesman did not respond to Mat Jansson’s comments.
     Last November Christoph Franz, LH’s Deputy Chairman of the Executive Board rejected a role as savior for problem-ridden airlines after the SAS talks had ended, by saying:
     “We cannot solve all the difficulties global aviation is confronted with.
     “First we have to integrate the new group members (AUA, BMI, SN Brussels Airlines) with each of them facing their own problems.”
     What might come up next, Franz did not reveal.
     Interestingly SAS itself is an airline founded upon an amalgamation of three small airlines that once upon a time at the dawn of modern aviation served Sweden, Norway and Denmark.
     Later many aviation-minded people in the Nordic countries hoped that Finnair would join the SAS Group but that was never to be for a variety of reasons including that AY had spent the majority of the 20th Century serving Finland nestled uneasily against an aggressive, and at the time unruly Communist Russia.
     In any case, AY preferred to go it alone and, today as yesterday, competes mightily with SAS for business.
     No question that SAS plus Finnair could have changed and maybe weathered the down times and with an even thorough thoughtful expansion it might have moved into the league of super carriers.
     Now today as SAS may be morphed into yet a larger group, the clock is ticking ever louder toward change.
Heiner Siegmund

     Air cargo may be headed to YVR next month but come Sunday February 28 almost everybody else will be headed out of town as 2010 Winter Olympics end and 39,000 athletes, all at once, each carrying up to seven bags apiece head out of town en-route back home.
     YVR says that it is ready for the crush that is expected to set a record here for one-day passenger traffic, reportedly having spent nearly a billon dollars since 2003, when the city was selected for the winter games including construction of an auxiliary terminal.
     Much of the trappings of the Olympics including the illuminated rings on the airport road to the city and other banners and decorations will be in evidence for a while longer as the 2010 Paralympics begin in Vancouver March 12.


     FedEx will launch its first Boeing 777 cargo service from Shanghai to its hub in Memphis, Tennessee.
     The new service will give clients in Shanghai, Suzhou and Kunshan a two-hour improvement in cut-off times easing international shipping.
     By 2014, the company will have 15, 777 freighters in its fleet.
     Per aircraft will have a payload capacity of 178,000 pounds flying 5,800 nautical miles.
     Last year, FedEx moved its Asia-Pacific airtrans-shipment hub from the Philippines to Guangzhou, China.


     Danang topped the Vietnam Chamber of Commerce and Industry’s 2009 provincial competitiveness index (PCI) ranking followed by Binh Duong Province in the south.
     This is the second consecutive year that Danang finished first place in the index. Vietnam’s northeast Lao Cai Province ranked higher than Vinh Phuc Province to be included in the top three localities with favorable business conditions.
     On the other hand, Ho Chi Minh City and Hanoi fell in the PCI rankings with Ho Chi Minh City dropping by three places to 16th place and Hanoi sinking by two places to 33rd place.
     The list shows the emergence of increasingly competitive destinations.
     Binh Dinh, Ba Ria-Vung Tau, Tien Giang and Bac Ninh climbed up the rankings to be included in the top 10 provinces in the country.
     The top places showing marked improvement in their business environment were Ca Mau, Dien Bien and Long An. The chamber said overall there was improvement in the competitiveness of all localities since the number of localities rated under the “medium” and “low” groups dropped from 34 to 10 provinces.
     The head of the Legal Department of VCCI and a member of the PCI survey team, Tran Huu Huynh, told Vietnam Net Bridge that transparency is considered the most important index that decides ranking.
     The index weighed in the quality of the management work done by local authorities. Huynh said:
     “We do not care about the factors such as the geographical positions, infrastructure and market scale to rank localities.”
     Danang is an important seaport in the central region and is the country’s fourth largest city.
     Seoul’s Incheon Airport has topped the list of the world’s best airports in a passenger survey conducted by global airports body Airports Council International.
     It is the fifth year in a row Seoul has taken the prize.
     Singapore’s Changi airport was second, Hong Kong third, both also for the second year in a row. Two newcomers — Beijing’s Capital Airport and India’s Hyderabad Rajiv Gandhi International Airport — moved into fourth and fifth place.
     The ACI survey is based on regular monthly questionnaires filled in by passengers passing through well over 100 leading world airports in some 45 countries. A total of 118 airports were involved in the latest survey.
     “All (these airports) have learned to focus on key performance factors that their passengers appreciate,” said ACI Director General Angela Gittins (right) in a statement on the ACI website.
     Other Asia regional airports picking up category prizes included Taipei, Dubai, Nagoya, Shenzhen, New Delhi, Tokyo Narita, Shanghai Pudong, and Kuala Lumpur.


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