Vol. 10 No. 60                        THE GLOBAL AIR CARGO PUBLICATION OF RECORD SINCE 2001                      Friday June 24, 2011

     Stranger than Fiction is the title of several movies, the last of which was released in 2006 and was about an auditor suddenly finding himself the subject of narration only he can hear. Let’s flash now to the real world and the recently published official minutes of the 2011 IATA CAC (Cargo Agency Conference) and peruse another sort of fiction that is indeed stranger.
     There is a saying that the winners write the history books; in this case, there are only losers.
     IATA has been seeing some self-inflicted criticism directed at it these last few months. How it manages its routine affairs (such as its cargo conference) is not a matter subject to high-level governance, but rather demonstrates how it conducts its core routine business. The mechanism that governs a conference like the agency conference was essentially put in place many years ago at a time when most airlines—except in the U.S.—were government owned, and the unanimous voting procedures were in tune with the times. IATA was financed entirely by membership dues in those days.
     Fast forward to 2011, when very few airlines remain in the hands of governments; ownership ranges from corporate to investment groups that are pure commercial undertakings.
     And so is IATA – in this sense, it has kept up. Where’s the beef?
     Well, if you happen to be a forwarder there might just be a few problems… You may be an accredited IATA agent, bound by the rules from the olden days.
     The CAC manages the airline/agent relationship, yet the forwarders are not sitting at the table; instead, their interests are conveyed by means of the IATA/FIATA Consultative Council and in Europe, the ECAPJC (cargo agency joint council).
     While issues of concern may find their way into the conference agenda, it’s the airline delegates alone who decide according to the rules. Let’s play the numbers and assume there are some 10,000 forwarders worldwide. IATA has 230 member airlines, of which 89 have accredited representatives to the CAC. At this year’s conference in Istanbul, given the importance of the airline/forwarder relationship, the delegates were present in force demonstrating their “commitment” – all 18 of them! That’s a staggering 20.9 percent of the accredited agency conference representatives and barely a quorum only by the slimmest of mathematical margins.
     According to the provisions for the conduct of IATA Traffic Conferences, the voting stipulates that one-fifth of the representatives of the voting member that have nominated an Accredited Representative to such Conference, or their respective designated alternates acting in their place and stead, shall constitute the quorum. Based on 89 accredited representatives to the CAC, that number turned out to be 17.8. Whatever these 18 delegates decided binds 230 airlines, which is evidently OK with the airline membership, but also a whole lot of forwarders who have no say in the matter yet are directly affected by the outcome. One can start having some understanding for the forwarders’ point of view and their reaction to the continuation of this inequitable state of affairs.
     Regardless of what takes place in a meeting, controversial material is carefully edited out and sanitized to suit institutional interests and what is published, stands. What’s different here is that as a result, there is no useful record for future reference in official documentation, which obfuscates more than it clarifies.
Just a few examples:
A new conference chairman was “duly” elected by vote; the name of the candidate who ended up being elected doesn’t appear on the attendance list. Following a more recent tradition, the new chairman is not an active airline member, although no doubt a highly qualified and well-respected professional. He is an external consultant paid on a per diem basis, all permitted under the statutes. It’s actually rather astonishing that none of the 89 accredited representatives to this conference, or rather their respective airlines, can find the time and a delegate with a suitably proficient background to fill this important role, instead resorting to a retiree. No wonder forwarders see this as an illustration of both the scant importance accorded the airline/forwarder relationship by the airlines and the quality of the delegates.
The CAC agenda carried a voting item with the intent of conferring equal footing to training programs, given the termination of the IATA/FIATA training program. The IATA lawyer present was on record stating that FIATA was encouraged to develop its own program for dangerous goods. Old habits die hard as the meeting concluded that mere endorsement by the national authority was not sufficient to ensure that all agents/intermediaries were trained at the same high standard unless they meet the IATA Dangerous Goods Board established criteria. They ended up rejecting the proposal on the basis that because the FIATA trade name had been placed on a given training organization, it would be insufficient to ensure that it had been nationally endorsed or that it had met the IATA criteria for dangerous goods training. Having agreed to the termination of the joint training program, IATA reverted to setting standards for another trade association’s training programs and depending on its endorsement of such programs. It didn’t mention whether this would not be free of charge. Imagine the reverse situation!
     Nitpicking? Forwarders see this is as routine for how things are handled and their reaction is equally predictable. In the end, this can be seen as relatively minor stuff, something the current IATA management could redress independent of changes at the very top of the organization, but it doesn’t. So why exactly does IATA deserve a break?
Ted Braun

This Cathay DC-3 outside of CX headquarters in Hong Kong harkens back to the early years of aviation in China, when the skies were also populated by the pulp fiction heroes of Milt Caniff, like Terry & The Pirates (here recalled in a 1995 U.S. Postage Stamp), and Milt’s all time hero of Air Cathay – Steve Canyon.


With two decades of experience as a senior trade executive in Asia, James Woodrow has witnessed firsthand the astonishing growth of the Chinese economy. Appointed General Manager Cargo Sales & Marketing at Cathay Pacific Airways last August, he explains to Air Cargo News/FlyingTypers why rising Chinese imports are of such significance to the global air cargo industry.

ACN/FT:   In January imports constituted 50 percent of China's air trade - the first time in recent years that uplift has been so perfectly balanced. Is this a trend that you're seeing at HKIA as well as the Mainland?
JW:   Chinese consumption is definitely growing rapidly. A McKinsey report released in March 2011 predicted that by 2015, 20 percent of all luxury goods would be sold in China. As a gateway to the Mainland, Hong Kong is certainly benefiting from these increases. [But] this growth in imports is not just luxury goods, but also perishables as the growing middle class demands higher quality food items and consumption of luxury seafood continues to boom. Machine tools, construction machinery and other equipment related to the infrastructure and new factories in China also are boosting air freight imports.
ACN/FT:   On which lanes are imports strongest?
JW:    Demand ex Europe, particularly Germany into China, is strong. Luxury goods from markets such as Italy into Asia—again, especially China—are also strong. Demand ex North America into Asia has also improved significantly. In both markets this has led to freight rate increases and improved load factors.
ACN/FT:   Why do you think exports and rates out of China are so weak this year?
JW:   There has been significant capacity growth and there is no doubt that at present supply exceeds demand. Exports to Europe are weak due to the structural weakness of many of the outlying European economies. The high fuel prices are also hurting air freight volumes. Also there is still a great deal of uncertainty about the overall direction of the world economy, so inventories are being kept at a very low level.      The Japan tsunami has also hit supplies of a number of key components in the electronics and automobiles industries. The combination of all these items is making Shanghai in particular a very difficult market.
ACN/FT:   Do you think we'll see exports resume their prominence in the coming months or years vis-a-vis imports?
JW:   My view is that export demand will improve in the second half of the year as companies try to "chase back" sales following the weaker first half. Also, I think while European demand will remain weak, North American and Latin American demand will be stronger in the second half. We will therefore have a traditional peak season. But longer term I do believe that imports into China will continue to grow and grow. This rebalancing of the long haul trade lanes is definitely good news for CX and the global airfreight industry.
ACN/FT:   How do you think rising imports will influence your future capacity decisions re China?
JW:   The destination of imports will have a larger part to play in network planning. However, the key driver is still likely to be the location of major exports. The Pearl River Delta and Yangtze River Delta will remain the key "factories of the world," however, the move West will mean that cities such as Chengdu and Chongqing will increase in importance.
ACN/FT:   Will rising imports prompt a reduction in export rates as backhauls allow you to improve yield and rates on imports to China?
JW:   With rates being soft at present, particularly ex-Shanghai, and demand ex-Europe and North America significantly stronger, there has been a narrowing of the gap between import and export rates. In my view, however, the rates are unlikely to converge in the foreseeable future as China's manufacturing capacity is now so large—export volumes ex-China will continue to be the major driver for global airfreight.
ACN/FT:   Will we see carriers cutting commercial stops on routes to China to boost uplift capacity?
JW:   For CX, we offer services ex-Europe to Dubai, India, Asia and Australia. The proportion of space allocated to these regions does differ from year to year depending on the relative strengths of each market. Thus we do have the flexibility to increase space for China given that its economy is strong - however the Indian and Australian economies are also strong at present.
Sky King



Pichler Climbs Over Hill

     German aviation manager Stefan Pichler will take over command at Oman Air, succeeding CEO Peter Hill, sources told ACNFT exclusively.
     Peter Hill, a good guy who did a great job at SriLankan and then at Oman Air, will step down from a post he has held since July 2008, when he was appointed by the Omani government.
     At 53 years, Pichler is an old aviation professional who has held a number of top positions in the industry. Currently he is heading Kuwait-based budget carrier Jazeera Airways, one of the few privately owned carriers in the Middle East. The dynamic and highly energetic manager was formerly Chief Commercial Officer at British billionaire Richard Branson’s Australian subsidiary, Virgin Blue; it was a post he took over after having been forced out of the driver’s seat at the world’s second largest tour operator, Thomas Cook.      
      Sources claim that at Cook his extremely ambitious strategy failed. He just wanted too much too fast, they say.
     Coming to Arabian low-cost carrier Oman Air will be a completely new challenge for Pichler since the Muscat-based airline defines itself as a niche player in the luxury category of international air travel. Since splitting up with Gulf Air in 2007, the once-regional Omani operator is expanding its intercontinental network rapidly. As a result, destinations like Frankfurt, Bangkok, London, Paris, Munich, Colombo or Milan have been added to the route map. Last year Oman Air carried 3.3 million passengers and 28,600 tons of air freight. The fleet is comprised of 25 aircraft with 15 additional jetliners standing in the order books of the plane producers.
     Aviation veteran Peter Hill started his career in 1961 as a commercial trainee at former BOAC, now British Airways. In 1974 the British national joined Gulf Aviation in Bahrain where he became part of the team that created Gulf Air. There he met Maurice Flanagan, with whom he put together the first business plan for newly established Emirates. In 1996 he went back to England to privatize and run a pub, as friends recall. Shortly after, however, Peter was asked by Emirates to return and take over the driver’s seat at SriLankan, in which Emirates then held a 43 percent stake. But his career came to an abrupt end in December 2007 when the state’s president, Mahinda Rajapaksa, ousted him. What outraged the politician was the airline’s inability to guarantee him and his 35-member entourage short notice seats on board of Sri Lankan on a certain flight from London to Colombo. It was peak season and the craft was jammed with vacationers that had booked their tickets in an orderly fashion.
     Rajapaksa had gone to the UK on a private visit, which was decided upon at the last minute, to attend his son's graduation from a naval academy.
Heiner Siegmund


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Although in USA, they are denying it—odds makers in Europe say Deutsche Bahn will more than likely shutter its DB Schenker operation in the United States, as red ink continues to flow adding up to “tens of millions of euros,” a media resport said. Deutsche Bahn is expected to take final decision on Schenker’s future by the end of the year.


     Built in Dessau, Germany, the Junkers Ju-52 did it all during the first generation of modern passenger and air cargo service.
     Ju-52 was an all-weather aircraft, a night-flight aircraft, and a long-distance flier; when Lufthansa started up airmail service from Europe to South America in 1934, they interfaced with the DLH flying boats and handled inland delivery of freight and mail to the entire Latin America continent.
     Flight networks were established with Ju-52s across Brazil, Argentina, Columbia and Peru.
     During the 1930s, Lufthansa utilized Ju-52 and other Junkers aircraft to develop a route network in Asia in partnership with the Chinese.
     Ju-52s were used regularly on the African continent as well.
     South African Airways flew Ju-52s, and the pioneering aircraft was also in service to the Portuguese colonies and all across the continent in both West- and East Africa.

     When Charles Lindbergh (pictured in the cockpit) visited Berlin in 1936 during the Olympics and took the left seat of a Lufthansa Ju-52 amidst adoring crowds,“Lucky Lindy” was heard praising the “toughness, durability and practical design” of the Ju-52.
     It is fair to say that while the DC-3 is remembered as “the airplane that taught the world how to fly,” Ju-52, sometimes called “The Iron Mule,” can be recalled just as versatile and perhaps even more rugged.
     In many quarters, “Iron Annie” (as she was also nicknamed) is just as beloved and iconic an airplane for the ages.
     During the Second World War, Ju-52 was the basis of the German air force transport service, with more than 5,000 of the aircraft in service. The Ju-52 was to the Germans as the DC-3 was to the Allies on the other side.
The tri-motors were pressed into service and utilized in all theaters of the conflict - for troop transport, supplies and as the airplane-of-choice for the entire logistics services; Ju-52 acted as ambulance, rescue aircraft and in one case even as a hauler of transport gliders.
     Ju-52 also saw service as an auxiliary bomber.
     Even after the close of World War II, Ju-52 remained in service as a transport aircraft in various countries around the world.
     Up until the end of the 1960s, the Spanish and French Air Forces carried military equipment, ammunition and personnel aboard Ju-52.
     Perhaps the longest record of service for Ju-52 was with the Swiss Air Defense, where she took up service in 1939 and continued non-stop for 42 years until the aircraft was finally retired in 1981.
     Luckily, today Auntie Ju, a fully restored Ju-52, is still flying in Lufthansa livery.
     Stationed at Frankfurt Egelsbach Airport (a great place to visit and see some old airplanes, the airport includes a wonderful restaurant that brews its own beer), D-AQUI often stops traffic as it rumbles down the runway escorting amazed passengers aloft via volunteer Lufthansa pilots and cabin crew.
Simon Eichinger /Geoffrey
Note: Germany will go gala over air cargo with a week long celebration that commences on August 17th and begins with the unveiling of a new book commissioned by Lufthansa entitled “100 Years of Air Cargo.”
The landing page to keep up with the latest happenings and celebration of 100 Years of Air Cargo is http://www.100-years-air-cargo.com/


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