Vol. 9 No. 97                                            WE COVER THE WORLD                                         Thursday August 19, 2010

 

 

Asian Cargo Rides X Factor

Left to Right—Azran Osman-Rani, Chief Executive Officer, AirAsia X and Sathis Manoharen, Regional Head of Cargo, AirAsia Cargo.

     For Malaysian low-cost airline AirAsia, every course that brings in revenue has to be explored. So it is with cargo.
     Well aware that cargo can be a major revenue-generating channel, AirAsia is optimizing the potential of its otherwise empty belly space to bring in cash by offering cargo services at rates considerably lower than its competitors and by tapping into its own extensive network and flight frequencies to reach more destinations and achieve faster delivery time. The carrier expects its cargo revenue to grow by more than 40 percent from last year.
     During his visit to Delhi to announce the launch of direct flights from Delhi to KL beginning in August this year, Azran Osman-Rani, Chief Executive Officer, AirAsia X, the low-cost, long-haul associate of AirAsia, told Air Cargo News FlyingTypers that he was optimistic about the cargo business.
     “Cargo may not be part of our business,” said Osman-Rani, but “we will stay there.”
     Air Cargo News FlyingTypers also spoke to Sathis Manoharen, Regional Head of Cargo, AirAsia Cargo.


ACNFT:  How did the idea of starting cargo develop for AirAsia?
SM:  The idea was introduced by the (AirAsia) Group CEO, Tony Fernandes. As he was inspecting the aircraft upon the arrival of the first A320, he asked many questions about the bellyhold. And he kept on saying, ‘Why can’t we maximize this (bellyhold) space and let it be a revenue generation stream?’
      Ingrained in Tony’s core belief (and one that is followed by everyone in AirAsia) is: Never shy away from questioning conventional wisdom. Whilst experts in the industry have said low cost carriers and cargo do not fit as a business model due to the short turnaround time, Tony created the cargo department and said, ‘We will be in the cargo business.’
      In fact, AirAsia is strengthening cargo operations to protect its bottom line against fluctuations in fuel prices.
ACNFT:  As far as freight is concerned, how do you view the domestic and global outlook with special reference to AirAsia? What is your forecast for the Asian market?
SM:  We are optimistic about our growth and we are looking at a 40 percent growth this year.
      With a population base of approximately over 500 million people in ASEAN, our forecast for growth is in the double-digit region.
      In our view, Asia will continue to fuel the cargo growth for us.
ACNFT:  The freight business is time-consuming and therefore needs more money. How have you planned to take care of these two factors?
SM:  Regimented outsourcing. It helps us manage the cost aspects of the business.
      Time is a relative measurement tool. For some, it is time consuming, but for us, with our structured methodologies and harmonization with our passenger operations, we don’t find it time consuming as cargo is a revenue generation stream.
ACNFT:  One of the major measures that airlines are doing to cut costs is ULD management. What has prompted you to outsource it?
SM:  We explored various channels and we made a decision to be on the pooling system with Unitpool. This has given us a sizeable cost advantage and economies of scale operations-wise – not managing the administrative burden of inventories, hiring resources for maintenance, repair and storing activities.
ACNFT:   Talk about IT systems.
SM:  We were on a manual booking and tracing platform until January 1, 2010, where we migrated to our web-based cargo booking and tracing system domestically.
      On June 1, 2010, we started using our web-based system for international stations.
      We did not purchase the system off the shelf.
      We worked with our outsourced business partner to tailor and customize the web-based system based on our business and operational needs. We started from ground zero and AirAsia is probably the first major low cost airline to have a web-based cargo booking and tracing system.
ACNFT:  We understand that you have planned to strengthen your foothold in the Indian airfreight market through more frequencies this year. What prompted this move?
SM:  There are ample opportunities of air cargo traffic between India and Malaysia and beyond. It's about capitalizing on the opportunities and understanding market dynamics for cargo transshipments within the ASEAN region.
      There remains a huge scope for air cargo movement in the ASEAN region, especially for perishables and pharmaceuticals. From August 2010 we expect significant growth from India, both in terms of tonnage and revenue. We are expecting India to be a very important and valued business partner for us.
ACNFT:  Has AirAsia management any plans to launch a low cost dedicated cargo unit sometime in the future?
SM:  At the present moment no, but who knows what the future holds. We have never been rigid in exploring business opportunities. It’s all about being flexible to changes, understanding demand and capitalizing on economic opportunities.
Tirthankar Ghosh/Flossie

 

 

Seafood Special

     “With such a huge demand for fresh fish across our network, Dakar Senegal is a real catch for Emirates,” said SkyCargo Ram Menen - Emirates’ Divisional Senior Vice President, Cargo (tongue in cheek) as EK readies September 1 flights from Dubai into Léopold Sédar Senghor International Airport.
     “Senegal has a reputation for fantastic seafood and Emirates is delighted that, as well as contributing to the development of the fishing industry, more and more people will be able to experience this wonderful taste of Africa.”
     Emirates will go non-stop Dakar from Dubai every Tuesday, Wednesday, Friday, Saturday and Sunday.
EK 709 departs Dubai at 09:55 arriving at 16:00hrs the same day. Return departs Dakar at 17:40, arriving in Dubai at 07:15 the following morning.
     Emirates five new destinations for 2010 ups total to 105 adding Tokyo, Amsterdam, Prague, Madrid and Dakar.

 

 

India's Airports
Regulatory Overhaul

     India’s Airports Economic Regulatory Authority (AERA) has sent out its draft guidelines for fixing airport charges.
     Air Cargo News FlyingTypers
understands that the tariffs for cargo, ground handling and fuel would be ready by the end of August 2010.
     Recently, during an interactive session organized by the Indo-American Chambers of Commerce in Delhi, AERA Chairman Yashwant Bhave said, “We are in the process of finalizing the draft guidelines for fixation of charges on airport services and this would be put up for public review and comment by August-end.”
     In fact, the norms for ground handling, cargo and fuel supply charges are ready and will be put on the AERA website soon.
     The AERA chief’s words may have reassured aviation watchers, but for the moment the air cargo industry is up in arms – at least in Delhi – against the Indira Gandhi International Airport operator, GMR, for charging exorbitant fees for cargo handling.
     Most said that in the absence of any competition, the airport operator had a monopoly. Sidharath Kapur, the CFO of GMR’s airport projects, immediately doused the sparks of a nasty quarrel when he said that another cargo handler would come on board within the next 12 months and, he hoped, that by then the charges would come down.
     While air cargo stakeholders from Delhi will have to wait for a year, the establishment of AERA has raised a number of queries from the cargo community. Some time ago, the Air Cargo Agents Association of India (ACAAI) – the national body of IATA-approved cargo agents in India – sent out a note to the Secretary of AERA.
     ACAAI’s Honorary Secretary General, Hemant Bhatia, (left) shot off the note in response to a position paper put out by AERA on airport tariffs, which especially pertained to cargo operations at the air cargo complexes situated in the various airports across India.
     Bhatia stated that “until a few years ago, the entire cargo activities was under the monopolistic control of the Airports Authority of India (AAI) and there was a total lack of transparency of the tariff imposed on various activities covering both Imports and Exports.”
      The note also mentioned that at meetings convened by the AAI, “summary increase on the existing tariffs used to be proposed and the entire discussion stood restricted to the percentage of increases. There was no scientific process and no data on the costs involved was tabled at these meetings.” This ad hoc manner in which users were imposed tariffs prompted ACAAI to go to the Civil Aviation ministry and ask it to include all cargo-related activities within the ambit of AERA.
     The move was done in the belief that AERA would ensure sufficient financial data on investments in cargo related infrastructure, deployment of the revenues earned by the custodian from cargo activities and the justification for any increase or decrease in tariff would be done in attempts to review the tariff. The ACAAI Secretary-General also wrote “ACAAI also believes that certain minimum benchmarking would also flow to these custodians, from AERA, on performance of the various cargo related activities. Unfortunately, no such mechanism is in place currently. These measures have become imperative in order to improve the efficiency and cut down the transaction costs to the users. While there has to be equity in terms of return on the capital deployed by a cargo operator for the creation of infrastructure, absence of effective competition has ensured arbitrary tariff, no transparency and extremely erratic service standards.”
     Having stated the ground reality, the note mentioned that a certain section of the position paper put out by AERA “causes a lot of disquiet amongst the users.” The section states that “the Authority’s (AERA) approach to regulation of tariff/end-user charges with respect to cargo facilities, ground handling, etc. would comprise two key steps: materiality assessment and competition assessment. Only where the Authority assesses that there is insufficient competition and the impact of regulation would be material on users, would the Authority seek to set tariffs. Elsewhere, the cost of tariff regulation could outweigh the benefits and the Authority would not seek to intrusively regulate tariffs and would only approve annual tariffs.”
     The note then goes on to point out that there was a need to carefully study export and import from the cargo complexes. There was also a need for the constitution of a strict monitoring mechanism “for an equitable and just cargo operation.”
     ACAAI is not alone in expressing displeasure over tariffs. Blue Dart, the country’s only air express company, pointed out in a similar letter expressing its apprehensions. Tulsi Nowlakha Mirchandaney, (right) Managing Director of Blue Dart Aviation, in her letter to Sandeep Prakash, Secretary, AERA, stated: “We believe that the future competitiveness of Indian airports will greatly depend on the collective will of all stakeholders to ensure viable and efficient airports, where non-monopolistic price fixation together with high standards of service quality will be key determinants. Currently, the competitiveness of our airports does not measure up to those of major hubs in the region that would be more befitting of a country of our stature.”
     She also mentioned that that air express operators be recognized as a distinct group of stakeholders by AERA. She stated that there should be a clear distinction between express airline operators and cargo operators in terms of the business model and requirements at airports and despite Blue Dart obtaining a scheduled cargo airline status, it had been clubbed with cargo operators.
     Pointing out that globally, air express had outpaced air cargo growths and had very large dedicated fleet and airport infrastructure, Mirchandaney believed that air express operators be provided an opportunity to present an outline of the air express industry to AERA for a greater understanding of the needs and the services of the industry and the resultant opportunities for the country.
     The next few months will see more discussions between the cargo sector and AERA. The feeling among air cargo stakeholders is that AERA would work out an actionable regulatory framework that would provide a stimulus to greater competitiveness and sustainability of the industry. “That,” according to Mirchandaney, “would propel at least one of our airports to achieve the status of a major regional, if not global, hub. Such a move can only serve to support our country’s economic growth.”
Tirthankar Ghosh/Flossie


 


Irvin Varkonyi

     What changes have taken place since I began my air cargo career with KLM Royal Dutch Airlines in 1977?
     Deregulation is the most obvious, but certainly the industry has been impacted by moving from a legacy of regulated operations with restrained competition to immense uncertainty beset by the challenges of technology, security, global supply chains, fuel and natural disasters.
     Have we forgotten human capital?
     Yes, we offer less professional development today; the industry feels it may not be able to afford to educate its personnel or feels that employees come and go, so why bother?
     The lack of professional development, along with time pressures to complete formal degrees, is felt throughout the industry.
     Compounding this is the demographic pressure of an aging workforce.
     So how do we creatively attack this problem?
     We can’t take extended leaves of absence away from the office or devote time to go to college for an undergraduate, graduate degree or even a certificate.
     Technology has evolved in this 24/7 world to provide the means for transportation industry personnel at all levels, from the CEO down to the warehouse and to their outsourced partners, to further their professional and personal development goals through on-line education.
     Certainly, companies use the web for specific training such as HazMat, sales management, etc.
     But few use the web to earn accredited BA’s or MA’s.
     Before re-entering the aviation world as a pilot for Atlas Air Cargo, Kevin Ryan earned an MA in Transportation and Logistics Management from the American Public University System, which is composed of American Public University and American Military University. He did this while being deployed to Iraq and Afghanistan as a mobilized Army Reserve officer.
     “I was attracted to AMU because they offered me portability, relevance and affordability.
     The teachers and many of my classmates were senior members of the Transportation Industry, and the ability to study in remote locations helped immensely,” Ryan says.
     What is online learning and how does it work to earn a degree? The education model for online learners has rapidly evolved since exploding during the past decade. Here are a few items to consider:
      What is online learning?
     Online learning utilizes the Internet to deliver learning through multiple models.
     The asynchronous model, with courses not held in real time, provides full classroom features, interaction between faculty and students and flexibility to enter the classroom when the student’s schedule permits.      Other online models are real-time interactive video conferencing and webcasts as well as self-directed, non-interactive web-enabled content.
      What is the difference between online learning and the traditional classroom?
     There is normally no difference in content. The syllabus and subject matter should be identical, as are the learning outcomes. The main differences focus on the type of interaction between instructor and students along with scheduling. Virtual interaction with online learning is through real time or asynchronous conversations, such as Discussion Boards (DB).
       How do I know if an online institution is legitimate?
     Universities which award undergraduate and graduate degrees and certificates will be regionally accredited by the regional Higher Learning Commission, http://www.ncahlc.org, the same institution which accredits traditional brick and mortar institutions.
      Can I only earn a degree or are there options for certificates or individual courses?
     Yes, yes and yes. There is great flexibility with online institutions to offer individual courses without obligating students to take an entire degree. Further, scheduling of classes is more flexible as many online schools offer monthly starts without the need to limit dates of enrollment.
      Do I have to be a technology wizard to succeed in online learning?
     No. Online learning systems utilize similar tools to what most of us now use on our laptops and desktops.      These include Discussion Boards, which function similarly to blogs. These can be real time or asynchronous discussions.
       Can I find a ranking of online learning institutions?
     There is greater diversity in programs and styles of online institutions, which have not supported rankings in the same manner as the traditional rankings of brick and mortar schools. However, there are organizations which assess institutions’ online capabilities, such as the Sloan Consortium, http://www.sloan-c.org, a consortium of institutions and organizations committed to Quality Online Education.
     Online Learning is a great adventure. Don’t miss the ride!
Irvin Varkonyi

Editors Note: Irvin is Adjunct Professor and Marketing Manager, American Public University, Transportation and Logistics Management, ivarkonyi@apus.edu, 703 334-3259. Kevin Ryan, APUS graduate, class of 2008, contributed to this article.

 


     Have you ever thought of owning a really old airplane, an airplane that was up in the air when people like Lindbergh and Earhart were still flying?
     This might be your chance.
     NC16522 is a 1936 Waco Model YKS-6 going on auction in about two weeks at The Spirit of Aviation.
     Starting Bid is $79,000, but the news gets even better.
     If yours is the winning bid, you can fly this baby home – it is completely airworthy. In fact, she flies as good as she looks!
     This baby has less than 100 hrs on new remanufacture.
     It also has floats in case you want to land at the lake.
     The inside of YKS-6 features new leather interior and headliner (2008) and a brand new, outside paint job.
     But don’t take our word for it; in 2009, YKS-6 was winner of the Judges Trophy at Oshkosh.
     The airplane was built for Socony-Vacumm Oil Co and comes delivered with its complete history.
     But if you are itching to just go barnstorming, this aircraft is up to that task as well having been actively involved in American Barnstormers Tour 2008.
     Best of luck to all the entrants, and if you win, can we hitch a ride?
http://www.auction.com/auction_calendar.php?auctionType=aviation
Geoffrey/Flossie

 

 

 

     

     In our last issue we did not identify our friend Brandon Fried in the article "Screening Heading Forward."
     Brandon is Executive Director of the Airforwarders Association.

 

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