Vol. 12 No. 66                         THE GLOBAL AIR CARGO PUBLICATION OF RECORD                        Thursday July 25, 2013

anagers at Singapore’s Changi airport are confident they can continue to pick up new cargo in niche industry verticals and emerging markets to offset a contraction in air freight volumes across Asia.
The Association of Asia Pacific Airlines reported a 3.3 percent decline in air cargo incomes last year, and carriers saw a further 3.2 percent slump in the first four months of this year.
     These foul trade winds did not bypass Singapore. Total cargo throughput at Changi contracted 3.2 percent to 1.81 million tons last year and in the first five months of 2013 fell 2.4 percent to 727,000 tons.


     However, James Fong, Assistant Vice President, Cargo & Logistics Development at Changi Airport Group, believes the airport’s cargo glass is half full, despite a stalling of volume growth at the airport that has lasted far longer than the start of the global recession in 2008.
     “Over the past decade, the industry has seen several key trends—including better supply chain planning, electronic goods that form the bulk of air freight becoming lighter, and high fuel costs—which have and will continue to slow the growth of air freight volumes worldwide,” he explained. “Overall, cargo volumes at Changi Airport have been impacted and did not witness high growth. However, there has been a healthy growth in terms of the value of goods carried. To illustrate, between 2000 and 2012, Singapore’s air trade by value grew by 45.1 percent as compared to an 11.9 percent growth in Changi’s airfreight throughput.”
     Moving forward, Fong believes Changi’s best chances of improving performance will develop from pursuing growth in industry verticals and betting on a global rebound in freight traffic moving via the skies.      “While general air freight demand is presently depressed, we remain optimistic as we have seen growth spots in niche cargo segments and markets such as pharmaceuticals, perishables, and emerging economies in Africa,” he told FlyingTypers.
     “These are opportunities where we will continue to develop with our partners. For instance, in 2012 cargo volumes for pharmaceuticals and perishables grew by 7.3 percent and 4.4 percent respectively. Similarly, airfreight volume between Changi Airport and Africa increased by 21.7 percent.
     “In the long term, we expect cargo volume at Changi Airport to grow beyond current levels in tandem with the growth of the global economy.”
     The cold chain has long-been viewed as a strategic target, hence the launch by SATS of Singapore’s first on-airport perishables handling center in 2010. The $12million, 8,000 sq. m. SATS Coolport facility has an operating capacity of 250,000 tons a year and helped boost total perishables tonnage at Changi by 16.2 percent over 2010-2012.
     “We expect this growth to continue in the coming years with the rise of Asia’s middle class who will demand for more and more high quality perishables,” said Fong.
     With the increasing focus on the perishable trade, CAG is now in discussions with Dnata to develop its own perishables handling center that could open later this year, boosting shipper options for handling temperature sensitive cargo.
     “CAG is also working with partners to promote Changi’s temperature-sensitive service offerings and capabilities to shippers in countries such as Indonesia, Australia, and New Zealand,” said Fong.
     “We are also keen to develop the pharmaceutical cargo segment that grew 7.3 percent in 2012. In fact, 30 of the world’s top pharmaceutical companies have set up regional headquarters in Singapore to leverage on Changi’s connectivity to better manage regional supply chains in Asia.”
     High value cargo has also seen healthy expansion since the establishment of Singapore Freeport in May 2010. Between 2011 and 2012, Changi Airport registered 16.1 percent growth in valuable cargo and the segment surged 55 percent in the first quarter of this year.
     The growth of Changi Airport as a passenger hub will also strengthen Changi as a cargo center in the long term, believes Fong. The airport now links to 250 cities across 63 different countries to offer multiple options for forwarders and airlines.
     “Additional capacity on passenger bellyholds to new and existing destinations will also result in new trade flows and boost Changi’s transshipment cargo tonnage,” he said.
     Further opportunities will develop with the rise of the Association of South East Asia Nations (ASEAN) which is due to establish a common Economic Community in 2015. “The ASEAN population grew to more than 600 million in 2011 and, coupled with the gradual reduction of trade tariffs, international trade volumes between ASEAN and the world are expected to increase in the coming years,” said Fong. “With Changi Airport being the hub in South East Asia, we are well positioned to tap on the increase in trade volumes.”
     Cargo operators at Changi are also being offered a welcome helping hand. CAG announced in March that all scheduled freighter flights at the airport will continue to enjoy a 50 percent landing fee rebate until the end of the year, when it will be adjusted to 30 percent for the first quarter of 2014. Further support has also been proffered in the form of rebates based on cargo tonnage handled for tenants leasing CAG cargo facilities at Changi Airfreight Centre for a one-year period starting April 1, 2013. The offer is worth up to 20 percent of the rental cost.
     “Together with growth incentives available to freighter airlines, CAG’s support package for the cargo industry will amount to $17 million for the current financial year,” explained Fong, who said the aid was aimed at reducing the operating costs of CAG’s partners in light of the current tough operating environment.
SkyKing

 

hen Biman Bangladesh—the national carrier of India’s neighbor, Bangladesh—recently sent out two ‘Requests for Information’ for ground and cargo handling by foreign companies, the staff of the airline protested.
There was slogan shouting outside the carrier’s headquarters (Balaka Bhavan) in downtown Dhaka.
     The protesters carried a simple message for the newly-appointed Managing Director and CEO, Briton Kevin John Steele: ground handling was the largest source of income for the carrier and the authorities were planning to hand it over to foreigners. Such a decision, the staff said, was against the nation’s interest.
     Steele, the first professional to head the carrier, was unfazed. The advertisement posted by the carrier on its website had sought ‘partnership’ proposals for ground handling services. If there was a positive response, a RFP (request for proposal) advertisement would be published, he said. In fact, the matter was still in its primary phase.

     A veteran, Steele was Senior Vice President (Commercial) of Nigerian airline Arik Air. The government appointed him on March 18 of this year with a one-point agenda: turn the loss-making airline—Biman had a loss of $75 million last year—into a profitable one. Steele has taken charge of Biman at a very crucial juncture: the airline, ever since it was transformed into the country’s largest public sector-limited company by the government in July 2007, has not only seen losses but also witnessed a series of scams. As Steele put it, rather matter-of-factly: “Yes, the airline has a troubled past.”
     The CEO has drawn up a two-year strategy, which he presented to Prime Minister Sheikh Hasina, to revive the carrier. Topping the list is his 200 percent increase in cargo in the coming 12 months. Incidentally, in 2012-13 (July 2012 to June 2013), Biman carried 27,235 tons of export cargo and 3,170 tons of in-coming cargo. Steele pointed out: “We have major plans for cargo. Biman would like to link up with: a) freighter operators to operate flights under the BG code; b) cargo codeshares and blockspace agreements; and, c) if these prove successful, then our own freighter aircraft.”
     Steele’s plans include doubling the fleet size and network, profitability by 2014-15, major improvements in punctuality and customer service, new systems architecture, and a strategic partner. Biman’s fledgling fleet comprises eight aircraft, aged between two years and 30 years. The oldest of them are two DC10s that will be retired this year because they are difficult to maintain fuel-guzzlers. Speaking about the fleet, Steele said, “We are dry leasing two B777-200ER aircraft plus two turbo-props for domestic operations by November 2013. We also have two brand new B777-300ERs coming in March 2014, along with more later in the year.”
     A part of the revival plans include the exploitation of Dhaka as hub. Discussion to initiate the process had started but they were still in the early stages, Steele informed. For the time being, Biman would first like to increase the number of flights to Delhi and Kolkata and later to Mumbai and Chennai as well.
     To improve cargo tonnages, the CEO is focusing on the Cargo Village at Shahjalal International Airport (capital city Dhaka’s airport), which suffered a huge fire in the beginning of April this year. The fire caused major damages. As a result, tons of raw materials have been lying around in the open. According to Steele, the conditions at the import cargo warehouse were “very poor.”
     To boost the cargo facilities, a company with experience in building cargo warehouses around the world had been called for a proposal and the CEO hoped that the village would see a major facelift by the end of the year. Among the facilities that have been proposed are bar-coding for security, electric forklifts, CCTV, and fire systems. All this would increase throughput by 50 percent.
Tirthankar Ghosh

 

   Tip of Emirates Swath . . . Emirates looking at flights from UK to USA, as Emirates’ Laurie Berryman, Vice President UK and Ireland, tells “Emirates could flood the North Atlantic with swathes of Airbus A380s and 777-300ERs out of places like Birmingham and Manchester, two cities which are bursting with pent up passenger demand, tempered only by the lack of long haul airlines operating there, particularly for Birmingham.”
   If the Dubai carrier goes through with the plan, “British Airways and Virgin Atlantic will be the big losers,” Berryman said.




s FT has already reported, the recently restarted German Airport of Kassel (KSF) encountered a number of troubles. So is KSF just another case of wasting taxpayer’s money or is there more to it?
Sure enough, an unsuspecting visitor to Kassel Airport will likely feel a bit lonely when entering the premises. Everything one would expect from an airport is there—except people.
     FT spoke to Maria Anna Muller, recently appointed MD of the Kassel Airport Corporation and FT Woman of the Year 2006. Ms. Muller came to our attention as the hard driving, opportunistic airport marketeer at Frankfurt Hahn that year.
     Later she moved up to the German Baltic coast, becoming the first ever woman manager of a major German aerial gateway at Rostock - Laage.
     Today serving as MD at a high profile, heavily invested new gateway during a rather tough business year, Maria still keeps focus on the great benefit and dream of building aviation alive in what she believes will eventually become a major regional airport success.
     The first thing we wonder about in 2013 is if regional airports in Germany—and Kassel in particular—fulfill any useful function. In a state which has probably one of the best rail and highway systems, why is another regional airport needed within 200 km of Frankfurt Rhein-Main on one side, Hanover on the other, and just 70 km from Paderborn?
     “I wouldn’t be here if I did not believe in the potential of this airport,” Maria said emphatically. “Indeed, regional airports—in Germany and elsewhere—fulfill a multitude of important functions: boosting and supporting local economy, providing jobs, connecting the region with the HUBs, and leisure destinations.
     “Regional airports with their leaner structures are more efficient and thus benefit both the need of business and leisure travelers—easy and free parking, short distances, and short check-in times.”


     “In terms of the reported reconstruction cost of 271 million Euros compared to the 151 million Euros projected, we are grateful for the opportunity to correct a few obvious misperceptions here.
     “I have a hard time understanding what’s expected.
     “KSF has been operative for about eight weeks and the construction work is far from finished.
     “New flights are typically added at the beginning of either the summer or the winter schedule. I’m sure that you are also aware that right now aviation in total, and specifically the German aviation industry, is in a recessive phase—Air Berlin is shrinking their fleet, Lufthansa is outsourcing most domestic traffic to
100 percent subsidiary Germanwings, and OLT and ACG just went bust.
     “Kassel has potential, and with its location almost in the middle of Europe’s strongest economy and a number of large sized corporations—Mercedes, Volkswagen, Wintershall, Eurocopter, just to name a few—there is both a need for corporate traffic and a base well-paid workforce interested in touristic air travel.

     “Besides, the German population is aging and older people especially have a strong dislike for traveling through mega-HUBs such as FRA.
     “Compare to the efficiency you have here the inconveniences of a two-hour train ride to FRA, having to carry your baggage for the almost mile distance from the basement railway station to the correct check-in counter, and then to the right gate.
     “There is also an overall benefit—an overall stimulation, if you will—to the regional economy. For highways, rail (especially the super speed railways) and inland waterway everyone takes it for granted that the infrastructure investment cost is absorbed by the taxpayer.
     So, why should aviation make an exception?
     “The question whether such investment pays off will ultimately not be answered within a few weeks, but in the years to come.
     “As to the considerable criticism voiced by people in the surrounding area and the taxpayers in the state of Hesse, regrettably there is hardly any infrastructure project which is not plagued with such criticism – sometimes justified, sometimes unjustified.
     “Look at the Blockupy protests in FRA and the FRA night curfew because of noise issues, or the similar noise issues in BER.”


     “Basically, the mistakes were made more than 40 years ago when the former Airport Kassel-Calden was planned with a too short runway (1,500 m) that pointed towards a hill and didn’t allow efficient operation of aircraft like the B737 and A320.
     “Likely, 40 years ago not many would have objected (had it been done right that time) and KSF could have tapped the boom of air travel for holiday in the late 1980s and 1990s.”
     Instead, because of the operational limitations KSF never really got off the ground.
     “There was once a Hamburg Airways holiday flight to Spain operating on the former premises that could only operate with about half the maximum payload and with special approval of the German LBA. Under these circumstances, success was impossible.”
     “It is all the more important to understand that KSF, as it is now with its new facilities and its 2,500m runway, is by no means a continuation of the old airport which, by the way, is a prime commercial development location that we will market as such. It’s a brand new regional airport.”


     “Let me also say,” Maria insisted, “that the way such infrastructure is seen by the public changes in due course of time.”
     “Look at the intercity railway station in Kassel.
     “When it was planned 30 years ago, it met forceful resistance from people in the well-to-do area of Wilhelmshoehe objecting to noise and fearing that the surrounding area would change into a second Bahnhofsviertel, like in Frankfurt.” (Note from the Editor: The Bahnhofsviertel in FRA is the area close to the main railway station and the traditional stronghold of the legal and illegal prostitution and drug use in Frankfurt).
     “None of these fears have come true, and the Wilhelmshoehe area has actually received a strong boost, as the railway area is now a prime business location as well as it is still a prime residential area in the German Gruenderzeit style.”


     “We’ve recently had a request to uplift a helicopter directly from KSF airport by means of an IL 76 cargo charter instead of trucking it as outsized load to another airport.
     “Given the costs associated with trucking outsized cargo via the notoriously congested German highways, uplifting this cargo from KSF would have been both cheaper and quicker.
     “Even AN 124 cargo planes can lift off here, provided the payload is not maxed out, and A310, A320, or B737 equipment has no restrictions at all.
     “For the time being, KSF regrettably does not yet have any cargo handling facilities, since we also do not have onsite customs clearance facilities.
     “This a bit of the proverbial ‘egg and hen issue’—customs authorities, who in general are extremely helpful, say ‘well, have some cargo first and we’ll provide,’ while potential airline customers of course expect it to be a given.
     “We have dedicated suitable areas for the construction of a cargo warehouse and the apron areas that go with it, but frankly we rather prefer if one of the large handling companies would come aboard and take the cargo handling business over in its entirety.
     “With current regulatory burdens and applicable ISAGO and industry standards, cargo is no longer a business one can run effectively as a byproduct.
     “However, I must stress that for any project—cargo or charter business—that might materialize, the necessary arrangements with customs authorities and alike could be made on short notice on an ad-hoc basis,” Maria said.
Geoffrey/Flossie

     The news for KSF has so far been a hot potato tabloid feature, at least in Germany, with most criticism containing charges that in various degrees appear to be premature at best and unsubstantiated otherwise.
     In particular, the local newspaper HNA (Hessisch – Niedersaechsische Allgemeine) seems to have taken to disliking to the new airport.
     Insiders note that HNA is pretty much involved in covering the 2013 election year in Germany, both at the federal and provincial levels, and any big project that costs a lot of money—like a big empty airport—is easy pickings for a headline, even on a slow news day.
     The KSF media feeding frenzy has also included casting doubt upon a “scientific study” undertaken by Prof. Dr. Richard Klophaus of the “Centre for Aviation Law and Aviation Economy” in Mannheim during April 2013.
     The short review of the Klophaus study is that it has failed to come up with any scientifically justified approach for the studies predictions; including that KSF will handle 640k passengers via 41,100 flight movements by 2023, a year in which the professor also predicts KSF will move 3,000 tons of cargo and deliver a projected turnover of 262.4 million Euros.
     All of these numbers are “based on the statements made by the corporations in question, gaps closed by means of press releases, and other publicly available data whereas missing data were substituted by model calculations.”
     In any case, the Klophoff study, to say the least, has done little to dissuade criticism voiced by the public and the HNA newspaper.
     That being said, one should not mistake such study with straightforward business.
     Ms. Muller is certainly correct when she outlines that conclusions about achieving business goals cannot and should not be made after eight weeks, so FT will be happy to check back soon to have a look at what’s up at KSF.
     Given Ms. Mullers’ highly successful track record, we feel cautiously optimistic that KSF will be a success story as well.
     Break a leg, Maria!


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Turkish Airlines Cargo said it is adding a weekly IST/Tehran (IKA) freighter flight beginning next week on July 31, 2013.
In total, Turkish Cargo freighters connect 46 international destinations



“Although the current market is a bit soft, we still expect to achieve a 10 percent growth during the second half of the year,” said Nabil Khojah, CEO of Saudia Cargo as the carrier reported business grew by 6 percent for its first six months through June 30.
The Jeddah-based carrier moved 270,000 tons with 15 freighters, up from 2012 by 6 percent in revenue and a 4 percent in tonnage.
“Our growth is principally due to the boost in our charter activity, optimization of our freighter network, adjustments to freighter schedules, and increases in the number of freighters to some of our key destinations,” Mr. Khojah concluded.
During the first half, Saudia Cargo added freighter capacity from Dhaka and commenced B747 freighter flights to Mumbai and Kano, Nigeria.
SV also launched its first B747-8F in June, which is currently scheduled on Riyadh-Hong Kong-Riyadh-Frankfurt-Saudi Arabia flight rotations.


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     In 1926 Irving Berlin penned the immortal “Blue Skies”.
     Here is a minute plus of that tune sung by Doris Day, and our wish during Summer of 2013 for “nothing but Blue Skies from now on.”



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