Vol. 7 No. 34                                                  WE COVER THE WORLD                                                       Wednesday April 2, 2008

SAS Cargo On Its Way Out?

     March 31 was be Ulrik Marschall's last day with SAS Cargo. The spokesman of the Scandinavian air freight carrier abandons his chair in Copenhagen's
     SAS headquarters to switch over to the SAS passenger airline. When FlyingTypers asked his office who would replace him, we were told, "up to now we do not know who will follow Ulrik as head of media at SAS Cargo." Ulrik is not the only one to wave goodbye to the Nordic cargo airline. Another staff member is SAS Cargo's Stuttgart sales manager,
     Peter Sommer who recently retired. However, instead of hiring a successor SAS will leave his position vacant. "The Frankfurt and Munich stations will be in charge of the market in Southwest Germany," said SAS. Same thing might happen in Hamburg where Northern Germany regional representative Jens Imbeck, a local SAS institution will step down soon, after having served the Scandinavian Airline for ages. Whether he will be replaced is an open issue.
     Fact is, instead of following a global growth strategy, SAS Cargo is concentrating their efforts increasingly on the Scandinavian home market.
     There, some very big boys and worldwide renowned players like Volvo, Ikea, Hennes & Mauritz, Scania, Alfa Laval, and Bang & Olufsen are based.
     Therefore, more and more players are entering the markets in Copenhagen, Gothenburg and Stockholm to compete for the business.
     "Our home market is extremely competitive and does not generate enough volume for feeding the mouths of those many carriers," a high ranking cargo official puts it.
     Consequently the pressure on the Nordic freight carrier mounts.
     The airline, making the 2007 yearly results public, titled their press release "SAS Cargo's result hit by hard competition.”
     A turnover of €363 million Euros which lead to a meager profit of €2.4 million Euros were the disappointing figures presented by the management.
     To improve the finances the SAS board has decided to sell Spirit Air Cargo Handling, the handling subsidiary of SAS Cargo.
     A more ambitious plan by the SAS grandees however, had to be put back into the drawer for the time being: the entire selling off of SAS Cargo.
     The unions had fiercely protested and vetoed that plan.
Heiner Siegmund

Menon To Air India

     No, this is not dear Ram, who stays put at Emirates.
     But get ready for two top airline executives making world headlines and both are named Menen or Menon depending on which one you are reading about.
     At Air India, Vasudevan Thulasidas has hung up his wings.
     Although not a flier, VT nevertheless piloted Air India and later the National Aviation Company of India Limited (NACIL) in its most troubled period.
     A civil servant well known in government parlance as an Indian Administrative Service (IAS) officer (people who are trained to administer the country) Thulasidas retired on March 31, 2008.
     Which brings us to Raghu Menon, also an IAS officer.
     Menon has been Special Secretary and Financial Adviser in the Civil
Aviation Ministry.
     As Chairman and Managing Director of NACIL, Menon was chosen out of 51-odd aspirants for the post.
     The process to find a successor took around three months prompting many in the corridors of power to comment that Thulasidas' tenure had been extended.
     However, Minister Praful Patel had his say and decided on Menon.
     The new man faces a number of hurdles: how to stem the losses of both Air India and Indian.
     Incidentally, in the financial year 2006-07, Air India had a loss of Rs 447.93 crore while Indian showed a loss of Rs 240.29 crore.
     The losses for both in 2007-2008, the financial year that ended on March 31 this year, amounted to more than Rs 800 crore.
     The other big challenge that the new man at the top will face is ensuring a successful merger of the two carriers.
Tirthankar Ghosh

      The International Air Transport Association (IATA) downgraded its industry profit expectations for 2008 to US$4.5 billion based on global economic growth slowing to 2.6% and an average oil price of US$86 per barrel (Brent Crude).
     This is the second downgrading of the 2008 forecast.
     In September 2007 IATA predicted a US$7.8 billion profit for this year.
     The initial impact of the credit crunch saw that lowered to US$5.0 billion in December 2007.
     “We still expect a positive bottom line of US$4.5 billion, but it’s turning out to be a very tough year,” said Giovanni Bisignani, IATA’s Director General and CEO.
     “Things are slowing down,” he said.
     Traffic numbers fell (PLF) fell to 73.3% in February, the most significant drop in the PLF in 4 years.
     Although traffic data for February is affected by the leap year showing year-on-year increases of 9.2% and 5.9% for passenger and cargo demand respectively, Mr. Bisignani adds:
     “When we adjust for the impact of the leap year, passenger demand increased by 4-5% while freight was even more sluggish in the 2-3% range.
     “Demand is still growing.
     “But clearly we are in a different league from the 7.4% and 4.3% growth that we saw in 2007 for passenger and freight respectively.
     It’s time for governments and labor to get serious about the future structure of the industry.
     “A fragmented industry of over 1,000 players is generating net profit margins around 1%, in a good year.
     “There is no secure long-term future for an industry that is constantly on the verge of intensive care,” said Bisignani.

PIA Coming Back

     Now with new elections finally completed and a new government in power, hopes are rising for the return of Pakistan International Airways (PIA), a carrier that somehow gets up off the mat and comes back despite turmoil all around.
     This time, following the ending of the EU ban on flights, PIA has regained some of its routes back into Europe.
     Elsewhere as March came to a close the carrier took delivery of an aircraft it had pioneered into the sky as first carrier to operate, when Boeing delivered a ninth PIA Boeing 777.
     PIA's newest airplane, a Boeing 777-300ER, departed Paine Field last Friday on a delivery flight to its home base in Karachi with its unique tail design representing Pakistan's Northwest Province.
     Two other PIA B777s have tail designs in honor of the country's Punjab and Sind Provinces.
     Meantime in a move to get an airline executive with solid management and financial experience to run things, Aslam R. Khan was named Managing Director at the carrier.
     A corporate aviation veteran with over three decades of multi-faceted airline experience, he started his career with Lufthansa and then moved to PIA.
     At the national carrier he has held senior positions both in Pakistan and aboard.
     As Deputy Managing Director (Marketing), Mr. Khan was responsible for overall marketing and sales management of PIA.
     Mr. Khan was also the Managing Director of PIA Investments Limited for fourteen years.
     Big success at that post was a $700 million dollar turnaround he engineered at The Roosevelt Hotel in New York City.
     In addition to new aircraft and a new boss, other signs, some a bit smaller at PIA are encouraging.
     As example, in April 2007 regular flights Moscow-Karachi were halted due to a shortage of aircraft.
     As from yesterday April 1, 2008 PIA Airbus 310s began Tuesday and Friday twice-weekly service from Sheremetyevo Moscow to Karachi via Dubai.
Geoffrey

Celebrating A New Beginning
     They brought in a Catholic Priest from Holy Rosary Church, Staten Island, New York USA, a Hindu Priest from Queens, New York and Buddhist Clergy from a Princeton, NJ Temple and an Islamic Mullah from an undisclosed location as Sri Lankan Travel Inc. - GSA for SriLankan Airlines celebrated the return of full management rights and operations of Sri Lankan Airlines back to the Sri Lanka Government after 10 years, effective April 1, 2008.
     Traditional Sri Lankan food including Kiribath, Lunumiris and a variety of sweets were served.
     Dillan Ariyawansa, Head GSA for SriLankan Airlines in North America said:
     “We are fully confident that SriLankan Airlines will fly into even greater heights and "we will continue to do our part towards achieving that goal.
     “After all, we are all SriLankan."
     Meantime SriLankan’s partner for the past decade and while holding 43% of the airline into the foreseeable future, Emirates Group was carrying on its own business as usual, even as its management contract was twisting in the wind amidst the hoopla.
     Fair to say that SriLankan Airlines was crafted into a money-making machine, capturing a lion’s share of the India market and healthy respect, even admiration during the Emirates management era, as former CEO Peter Hill raised an exuberant team at the island carrier into their current “Hub of the Ocean,” mode.
     Maybe the clerics were the right touch as a new and fairly uncertain era dawns and as stiff competition and soaring fuel costs will certainly test the mettle of every airline.
Geoffrey


AAPA Security Top Issue

     A recent Asia Pacific Aviation (AAPA) Security Forum in Kuala Lumpur jointly organized by AAPA and the USA TSA managed to achieve a historic first as high-level security chiefs gathered.
     So what happened?
     AAPA without much in the way of transcripts was upbeat, saying that more than 100 representatives attended from aviation security regulators around the world, including the U.S. Department of Homeland Security (DHS), European Commission (EC), the Australian Department of Infrastructure, Transport, Regional Development and Local
Government, Department of Civil Aviation Malaysia (DCA), airlines, airport authorities, and technology experts.
     AAPA noted that discussion included the need to create sustainable partnerships, also a balancing of security and facilitation and overall enhanced cargo security.
     “Conferees agreed that deployment of technology and the benefits of sharing internationally agreed upon best practices in aviation security is in everyone’s interest,” AAPA said.
     Sounds good to us.
     Dato’ Azharuddin Abdul Rahman, Director General of the Department of Civil Aviation Malaysia, said in his opening address:
     “As a member of the ICAO Council, Malaysia is motivated and ready to play a greater leadership role in shaping the future development of the international civil aviation industry.”
     He added: “Countries must work together with common goals and objectives in order to effectively develop and enhance their security systems and standards.”
     AAPA Director General, Mr. Andrew Herdman, added:
     “Aviation has an excellent record in terms of safety and security.
     However, we always look to governments and regulatory agencies to develop and implement regulations in ways that are technologically feasible, operationally efficient and cost effective.
     Mr. Herdman added:
     “We need a global approach to security, and look to ICAO for leadership in establishing harmonized standards. “Effective security measures need to be based on objective assessments of risk and threat levels, and must balance costs and perceived benefits, with governments accepting their full share of the resultant costs imposed on society. “Maintaining public understanding and support is an essential ingredient of any secure and sustainable security regime.”
     David B. Shear, Deputy Chief of Mission, United States Embassy, Kuala Lumpur, Malaysia noted:
     “The United States Transportation Security Administration (TSA) looks to engage with foreign governments and airlines to mutually address security requirements, with the aim of strengthening cooperation in responding effectively to security threats.”
     Agreeing that security measures need to be practicable and effective for regulators, airlines and the traveling public at large, Geoffrey Askew, Group General Manager, Qantas Airways Ltd, and current AAPA Security Committee Chairman, said:
     “The goal for global aviation is to ensure that security measures are genuinely effective, that they are consistent worldwide, that they are implemented according to sensible risk assessments and that they do not confuse the traveling public.”
     Mr. Askew insisted that all stakeholders must work together to “develop and maintain a strong and pro-active security culture”.

 

     In China, AVIC1 Commercial Aircraft Company signed a memorandum of understanding (MOU) with GE Commercial Aviation Services (GECAS) to place firm orders for five ARJ21 regional jets.
     The ARJ21 is China’s bid to build and market a 70-90 seat regional jet that combines Chinese intellectual property with advanced engines, and airborne systems supplied by European and North American companies.
     GE Commercial Aviation Services (GECAS), the U.S. and Irish commercial aircraft financing and leasing business with 1,475 owned aircraft, which it leases to more than 230 airlines, is seen as a big breakthrough for the China effort.

     “This place is going to the dogs,” or “See what the bears in the back room will have.”
     On February 22nd, 2008, Lufthansa Cargo started operations at its new animal station at Frankfurt Airport - the Frankfurt Animal Lounge.
     The new building with an area of 3,750 sqm. offers a temporary home for animals from all airlines, no matter whether they are departing, arriving or just passing through.
     The new animal station will be officially dedicated with a festive ceremony, animal treats and all on April 11th.

Iraqi Airways purchases 40 Boeing aircraft with an option, which includes 15 Boeing 737’s, and 787 Dreamliners
Baghdad also announced a 400 million dollar contract with Bombardier to purchase 10 planes.
Deliveries in the multi-billion dollar deal begin this year.

     Malaysia Airlines is ordering up to 55 B737-800 aircraft.
The national carrier will also take delivery of 6 A380-800 in 2011.
     Managing Director/ Chief Executive Officer, Dato’ Sri Idris Jala said:
     “We have placed a firm order for 35 B737-800 with an option for another 20 aircraft to replace our existing B737-400 fleet and to allow us to expand to points which were not previously economically viable.
     “Malaysia Airlines also has the option to swap the B737-800 to the larger B737-900.”
     Jala also said that Malaysia Airlines will take delivery of all 6 A380-800 in 2011, with the first aircraft to be delivered in January and the sixth in August.

     Sick of coach or business or even first class?
     How about Love Class?
     In Russia, Ural Airlines offers just the ticket for married people.
     Ural says Love-Class flights can be bought only if the couple holds a certificate of marriage registration.
     The Love-Class area aboard the plane is separated from the business and economy classes with a cover and is equipped with special seats that have a bigger inclination angle than the standard passenger seats in case the marrieds are inclined to recline.
     Couples also get a personal steward who apparently leaps under the covers at the signal of the call-button.
     Ural says Love-Class flights allow marrieds to carry 30% more liquids aboard in hand luggage.
     What the liquid may be we wonder about, but choose not to go there.
     What’s the catch?
     For one thing, Love-Class tickets are non refundable unless the couple provide proof of divorce.
     So maybe Love Class joins death and taxes as another aspect of no way out?
     Your move.

Publisher-Geoffrey Arend o Managing Editor-Flossie Arend o Advertising Sales-Judy Miller
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