ir Cargo Germany filed for bankruptcy on May 3.
The news has been fairly widely circulated, but here is the inside story.
A statement published on the ACG website states “the management and shareholders of ACG (have) unanimously decided to declare insolvency. Through the insolvency proceeding both management and shareholders envision creating an opportunity to restructure the company and restore operational activities. All options will be taken into account to restore customer confidence.”
      The latter, however, is highly doubtful and it is not that likely that ACG aircraft will ever be airborne again. As reported, a cash infusion by 49 percent shareholder Volga-Dnepr would have to be matched by the EC shareholders, namely former CEO Michael Bock, something they are either unwilling or unable to do.


      Sources close to the matter, speaking on condition of anonymity, have said that the revocation of ACG’s operating permit was not just based on a lack of available cash for the coming 12 months, but factual incidents relating to cargo security.
      “As long as it was cargo and paid for, not too many questions were asked,” one source said.
      Furthermore, ACG’s pricing model for both linehaul and charter was described as “highly aggressive” and “obviously not sustainable.”
      “In fact, in their attempts to fill their cargo holds, ACG drove cargo rates down for everyone.”


      One of ACG’s four 747 aircraft has already been returned to its lessor. ACG’s home base Hahn Airport HHN (82.5 percent owned by the state of Rhineland-Palatine and 17.5 percent owned by the state of Hesse) converted ACG’s 5 million Euro debt into a loan. However, Hahn airport is reportedly in dire financial troubles itself. Hahn’s business model, which established the airport as a 24-hour operation (a less costly alternative to Frankfurt Rhein-Main given its recent night-curfew imposition), is not working out. Heinz Rethage, Managing director of HHN airport, reported to the Rhineland-Palatine parliament on May16 that the first half of the 5 million Euro loan given to ACG had already been written off in the books earlier, and that the second half was just written off now.
      No further income is expected for the period of May to December 2013 from HHN management.


      In 2009, the State of Rhineland-Palatine provided another 5 million Euro loan to ACG through the development bank ISB. A 50 percent share of this loan was initially covered by Hauck and Aufhaeuser, a private bank. On the advice of their chartered accountants, in 2011 Hauck and Aufhaeuser bailed out completely, fearing the volatility of ACG’s precarious financial state.
      At the time, ACG would not have qualified for loans from a commercial bank; however, the ISB loan was guaranteed by the State of Rhineland-Palatine . . . ultimately becoming the responsibility of the German taxpayers.
     Their attempts to re-finance by selling off airport property to the State of Rhineland-Palatine and leasing it back has met stiff objections from EC watchdogs because of allegedly unlawful state aid. Although Rhineland-Palatine has nevertheless offered loan guarantees for ACG loans despite the legal questions raised, so far ACG has failed to come up with the required balance sheet or bank support necessary for such an operation.
     Market conditions being what they are, airports competing with Hahn and operators competing with ACG—among them Lufthansa—object to such unfair competitive advantages offered through rather short-sighted subsidies, citing the graft and corruption associated with the privatized racing track Nuerburgring as an example of how, at the end of the day, German taxpayers are forced to foot the bill for Rhineland-Palatine politicians’ lack of economic common sense.


      Furthermore, when looking at the facts coming to light in the ACG bankruptcy, one must wonder whether ACG’s filing for insolvency was as “unexpected and sudden” as Mr. Schaechter’s public statement might suggest.
      Last Thursday Salvatore Barbaro, Secretary of Finance in the State of Rhineland-Palatine, outlined to German press agency dpa that there had been “considerable influx of private cash equity to ACG during the period in question,” which apparently was another reason for the German watchdog LBA to suspend ACG’s operating permit, since it is questionable whether some of that cash influx originated within the European community; if it did, it would be in violation of majority EC ownership rules.
      However, it also must be said that the German market is kind of unusual and has certain rather unique conditions. A good example is Lufthansa, which, as the only carrier with a domestic network to speak of, has always had a practice of offering cargo prices as “valid for departure from all major German airports.” This in effect means that operators from Frankfurt or Munich have to offer cargo originating from secondary airports for the same price as for delivery on their departure hub, notwithstanding the terminal handling fees and trucking charges associated with such operations.
Jens

Exquisite . . . As Saudi Arabian Cargo becomes simply Saudia Cargo, here comes a brand new dominator trade show stand that will debut in Germany next month at Air Cargo Europe June 4-7, in Munich.
    “Come by and have a coffee,” invites Peter Scholten, SV VP Commercial.

he Russian air cargo industry is on the verge of big change due to state plans to adopt a package of measures aimed at increasing Russia’s share in global air cargo traffic.
According to estimates of the Russian Ministry of Transportation, currently the country’s share in global air cargo traffic is estimated at only 2.5 percent, despite the fact that the country's air space has some unique competitive advantages as it is located on the world’s most intensive cargo routes.
     However, so far, the country has not been in the sphere of interests of the world’s leading cargo airlines, due to underdevelopment of the national air freight industry and the existence of numerous problems, among which are non-competitive prices for air cargo services, lack of freight aircraft of all classes, low level of development of ground infrastructure as well as ATM system, the underdevelopment of the segment of logistics operators, cumbersome process of cargo clearance at the border, and the lack of an e-freight standard.
     Valery Okulov, Russia’s Deputy Minister of Transport, comments:
     "Today, the image of Russian air cargo transportation services in the global market remains bad due to several factors, among which are the cost of services and their quality, as well as the level of bureaucracy, complicated by various administrative barriers."
     According to data from the International Air Transport Association (IATA), 23,279 cargo flights on the Europe-Asia route in 2011 were flown on international transit routes in Russian airspace, of which only 2,481 flights refuelled by landing at Russian airports.
     At the same time, according to Okulov, Russia has a number of advantages that may be of interest to the world’s air cargo carriers.
     One major positive is the country’s unique geographic position, the access to routes close to the great circle route, resulting in critical operating efficiencies and even major cost reduction.
     However, according to Okulov, good geographical position alone is not enough, and there is a need to design a package of measures to help attract international air cargo carrirs in to domestic Russian airspace.
     Among such measures would be the establishment of cargo hubs at some leading domestic airports, facilitating the issuance process of visas to members of foreign aircraft crews flying through Russian airspace, the provision of tax benefits, and, in particular, VAT zeroing, as well as a number of other measures.
     In addition, the government plans to create favorable conditions for domestic and foreign airlines to promote refuelling landings at Russian airports.
     All of these measures are expected to take place as part of the pre-existing regulations in the field of air cargo traffic, such as the “Federal Program Development of transport system of Russia 2010-2015, as well as subprogram of the Development of export of transport services in Russia."
     Russian analysts in the field of air cargo have welcomed these new state initiatives.
     Rano Dzhuraeva, President of the Innovation Center of Civil Aviation, one of the largest Russian analytical agencies in the field of air transportation, comments:"Due to the fact that the rate of growth in the domestic air cargo market is rising very slowly, there is a need to create conditions to attract global cargo air traffic in the country’s airspace.”
     According to her, much can be learned from the experience gained in establishing air cargo hubs such as Dubai, Anchorage, Singapore, Alma-Ata, that have already been operational for a period of 3-5 years.
     According to plans from the Russian Ministry of Transport, such hubs can be established at existing Russian airports, such as Novosibirsk Tolmachevo Airport, the airport for Russia's third largest city, and some others.
     The Tolmachevo Airport is situated strategically in the middle of a route that connects important East-Asian cities (e.g. Seoul, Shanghai, Hong Kong, etc.) to Europe, which makes it attractive for cargo airlines to use for refueling stops.
     Ministry analysts believe that the Tolmachevo Airport could become one of Russia’s leading air cargo hubs in the near future, especially taking into account that the number of its air cargo flights for the last several years has significantly increased from 182 in 2007, up to more than 2,000 in 2012.
     In addition to Tolmachevo, another such hub may be established at Moscow Sheremetyevo airport, which had cargo traffic in excess of 350,000 tonnes.
     At the same time the Ministry analysts also believe that future development of the national industry of air cargo traffic will depend on the activities of leading local players; some of whom are already prepared for the competition with leading global players.
     Representatives of AirBridgeCargo, Russia's leading cargo airline, welcome the potential arrival of global carriers to the Russian market, believing that this will stimulate competition. AirBridgeCargo is ready for it; they are in position with good results generated in 2012, when cargo traffic exceeded 400,000 tons.
     The same opinion is shared by Aeroflot, Russia’s second largest air cargo carrier, with annual cargo traffic of 170,000 tons in 2012.
     According to experts of the Center of Civil Aviation, successful implementation of these measures will allow Russia to receive annual revenues of up to $3.5 billion from freight services on Europe-Asia routes, with the annual number of transit flights at more than 70,000.
Eugene Gerden/Sabiha Arend

      There is word right now Fed Ex may be testing unmanned freighters somewhere in USA, “maybe in the Las Vegas desert,” according to one source.
      Back in 2009, FedEx founder Fred Smith told the publication Wired that he would like to “switch the Fed Ex freighter fleet to Unmanned Aerial Vehicles (UAV) as soon as possible, but had to wait for the FAA, which has a tough road ahead in figuring out the rules of NAS integration.”
      “Unmanned cargo freighters have lots of advantages for FedEx: safer, cheaper, and much larger capacity,” said Chris Anderson, former editor of Wired, who spoke to Smith. Today he is CEO of 3D Robotics and founder of DIY Drones.
      “The ideal form is the ‘blended wing,’” Anderson wrote.
      In the military, UAV is nothing new.
      Currently (pictured here) the U.S. Navy is testing a new UAV, the X-47 B unmanned combat air system.
      “That (blended wing) design doesn't make a clear a distinction between wings and body, so almost all the interior of both can be used for cargo,” Anderson wrote.
      “The result is that the price premium for air over ocean would fall from 10x to 2X with all the speed advantages of air.”
      “Today the B777 is already capable of being an unmanned vehicle that can take off, fly, and land itself,” he said.
      “Today pilots drive the planes on the ground, but there's no reason why the computer can't do that, too.
      “Smith's perspective is that humans in the cockpit make the airways more dangerous, not less,” Anderson concluded.
Geoffrey

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     The Saigon Air Freight Logistic Conference & Exibition on April 24-26 drew about 300 attendees.
     Pictured here is Halit Anlatan, Turkish Cargo VP marketing, awarding some free tickets to SGN-BKK winners of a lucky draw.
     “Good first time event,” Mr. Anlatan said.
     “There is much interesting and valuable market information and intelligence that can only be gained first hand on the ground attending these events,” he declared.
     “It’s also a good opportunity to spend a few days operating with our local people.
     “Our Asia Pacific Director Huseyin Ceyhan delivered The Turkish Cargo perspective in a session titled ‘Strategic Utilization of Freighter and Belly Cargo Capacity.’
     “Our display stand was quite active all show long, as Turkish Cargo discussed our networks and distributed brochures providing information about truck schedules, cargo freighter’s schedules, and special cargo carriage services.
     “Overall, it was a positive, satisfying experience in Southeast Asia,” Mr. Anlatan said.

t might not seem like a big deal for a business partnership to last for two decades, but in an ever changing world, with alliances made and broken as quickly and easily as the changing seasons, an enduring partnership is truly something to shout about.
leisure Cargo and Champ Cargosystems, two FlyingTypers faves, mark twenty years of doing business together and this is what the people making the going great had to say:


     “In the past two decades, we have found CHAMP Cargosystems to be a very reliable partner, always responsive to our needs and prepared to go the extra mile to give excellent service.
     “The collaboration has been very smooth and professional at all times, marked by mutual respect,” says Ralf-Rainer Auslaender, Managing Director, leisure Cargo Group.


     ”We have a very complex business that demands a lot of customization from our IT provider.
     “All our partner airlines have different IT systems and requirements. Seamless connectivity is not easy to achieve for a virtual airline marketing the capacities of 19 carriers.
     “In addition, business conditions in the airline industry have changed considerably in the past twenty years. Cost pressure has increased and it is absolutely essential that we have yields at AWB level at our fingertips.      "Thanks to CHAMP, we have been able to stay at the forefront of technological developments in the IT field,” adds Christian Weidener, Director Operations, leisure Cargo.


     "The success of our collaboration demonstrates the innovative power of CHAMP and the versatility of the IT solutions. leisure Cargo is a partner that has actively contributed to our user community over the years. It has shown a great pioneering spirit that continues to inspire and impress us. The company is always keen to try new applications, product enhancements, and upgrades. It uses several solutions of CHAMP’s eCargo Suite and is currently trialing our new customs solution for Israel.
     “We are truly looking forward to continue working with leisure Cargo in the years to come and to continue on our win-win course,” says James Fernandez, Vice President, Global Commercial Operations, CHAMP Cargosystems.
Sabiha Arend

     The loss of life and stunning devastation in Oklahoma City’s suburbs after a monster tornado ripped through on Monday has been met with immediate help from The American Red Cross.
     The Red Cross has set up shelters in various communities.
     You can donate to the Red Cross Disaster Relief Fund at http://www.redcross.org/charitable-donations, or if you’re in USA, you can send a $10 donation to the Disaster Relief fund by text messaging the word REDCROSS to 90999.
     As in the case with other mobile donations, the donation will show up on your wireless bill or deducted from your balance if you have a prepaid phone.
     You need to be 18 or older or have parental permission to donate this way. (If you change your mind, text the word STOP to 90999)
Phone: 1-800-RED CROSS (1-800-733-2767); for Spanish speakers, 1-800-257-7575; for TDD, 1-800-220-4095.

Airbus may absolutely steal the Paris Air Show in one swelled foop with a tantalizing fly by of its newest passenger jet—the A350. Sources say the aircraft is expected to be airborne in less than a month.
So with The Paris Show scheduled for Le Bourget June 17-23, the math suggests Airbus is reaching a fork in the road, and taking it!

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