Vol. 8 No. 102                                                                  WE COVER THE WORLD                                  Wednesday September 23, 2009

Mixed Bag AF/KL Push Belly

 Michael Wisbrun and Florence Parly addressing the press.

    AF-KLM Cargo are pushing bellies
     Due to unprecedented losses caused by the global economic downturn Air France Cargo-KLM Cargo announced a major turn of their strategy.
     Instead of clinging any longer to loss making freighter operations they will strongly market the belly-hold capacities of their combined passenger fleet together with strong sales initiatives for the air freight compartments of the sixteen B747-400 Combis KLM is presently operating.
      “First we will fill the bellies of our fleet then come the freighters,“ prioritized Chairman Michael Wisbrun of AF-KLM Cargo in a press meeting held in Amsterdam this Monday.
     To add that “up to 90 percent of the global air freight tonnage can well be transported in the belly-hold compartments of passenger aircraft.” He spoke of “three factories”, which consist of the 2003-formed French and Dutch combination plus newly acquired KLM subsidiary (100%) Martinair Cargo. All three units would soon offer “specialized services” as a result of the group’s newly defined work sharing model.
     According to this plan (as reported exclusively last week in Air Cargo News FlyingTypers) Martinair Cargo will become the central main deck provider of the trio.
     “They are extremely flexible and can react immediately to changing market demands,” said Wisbrun.
     Both Air France Cargo and KLM Cargo instead need at least three months to pull a cargo plane out of an existing route.
     Main consequence is that KLM Cargo will get rid of their entire freighter fleet. Two out of a total of four B747-400 Extended Range Freighters the Dutch capacity provider possesses have been transferred to Martinair Cargo already. The other two units supposedly will follow soon although details of the shift still have to be straightened out among the group members.
     If the deal is concluded, Amsterdam-based Martinair will actively operate nine freight planes after having grounded four of their B747BC’s in order to reduce capacity and thus save costs because of ongoing lack of tonnage. The aircraft will mainly be deployed on routes between Amsterdam Schiphol airport and Latin America, Central and South Africa and on some additional intercontinental lanes. KLM’s Combis will mostly cover the Asian/Pacific market and major U.S. destinations.
     Finally, Air France Cargo for the time being will keep five freighters within its own fleet to offer services between Paris CDG and places in Africa as well as on trunk routes like Hong Kong, Chicago, Shanghai, Houston, Guadalajara and Mexico City.
     These network adjustments between the three individual carriers within the AF-KLM-Martinair Group brought the overlapping of mutually served destinations down from formerly 15 to now only six.
     These are Shanghai, Houston, Chicago, Hong Kong, Seoul, Istanbul, Atlanta and Mexico City.
     Future freighter operations will only be continued if the aircraft deliver a positive contribution to the network. This is a strong commitment and a severe internal warning since it was mostly the main deck capacity that accounted for heavy losses of AF-KLM Cargo in recent months.
     According to sources close to the case the cargo division’s deficit went up to a record €363 million euros in first half 2009.
     Although the management did not confirm this figure officially, Chairman Wisbrun admitted that “because we are big we were hit harder (than others).”
     Meanwhile Air France Cargo will stick to their five freighters they are presently operating.
     Two of the seven units have been grounded meanwhile.
     “We don’t intend to transfer these five aircraft to Martinair Cargo but will keep them within our own fleet,” assured Florence Parly, Executive VP AF Cargo. Therefore, she contradicted announcements made by French Unions last week that the carrier would get rid of the entire freighter fleet.
     However, if the crisis should last and more capacity has to be axed “we might have to readjust our freighter fleet policy to get the three factories more efficient,” said Wisbrun not excluding any additional shift of freighters to Martinair Cargo or the additional grounding of equipment.
     As Madame Parly further explained negotiations with producer Boeing have commenced to possibly delay the delivery of three B777LRF’s ordered by AF Cargo.
     In order to cut costs and to enhance revenues AF-KLM Cargo will hike rates substantially as of October.
     Further the cargo managers intend to “mobilize” (Wisbrun) their staff to retire earlier, taking unpaid holidays or work part-time.
     “We tune manpower to our lower capacity levels by deploying numerous initiatives,” the carrier announces.
     At the end of the day this means a cutting of between 10 to 15 percent of all jobs.
Heiner Siegmund

Future Investment
Landscape Changes

     The economic and financial crisis seems to have altered the global investment landscape considerably.
     It is now the developing countries that are taking the lead in attracting investments as well as investingglobally, according to the Unctad World Investment Report 2009.
     Unctad predicts global inflows to fall from $1.7 trillion in 2008 to below $1.2 trillion in 2009. Recovery is expected to be slow in 2010 (to a level up to $1.4 trillion) and gain momentum in 2011 (approaching $1.8 trillion).
     According to Unctad secretary-general Supachai Panitchpakdi, “The BRIC
countries (Brazil, Russia, India, China) are the most favored destination for FDI. Not all trans-national corporations (TNCs) have been affected by the financial crisis, particularly those involved in food and agriculture. Others that have not been affected are those that put their targets on long-term prospects such as the pharma industry.”
     The report stresses agricultural production and development as a means to development and food security for these countries, and as Mr. Supachai said, “We believe that it is up to national governments to do their bit to revive their agricultural process as the World Investment Report 2009 tries to propose.”
     The report shows that there was a huge surge in investments in developing and transition economies, increasing their share in global FDI flows to 43% in 2008. This was partly due a concurrent large decline in FDI flows to developed countries (29%).
     FDI inflows to South Asia in 2008 amounted to $51 billion. In 2007, the growth rate in South Asia was 49%. Inflows to the two largest emerging economies, China and India, continued to increase in 2008. China and India have been steadily gaining importance as host economies.
     According to Unctad’s World Investment Prospects Survey 2009-11, both India and China ranked third and first, respectively, as the most-preferred FDI locations. Their strong performance, even during the current crisis, has reshaped the landscape of FDI flows to the region as well as to the world at large. China became the third-largest FDI recipient country, after the U.S. and France, with India catching up in 10th position.
     In recent years, leading TNCs in many manufacturing and services industries, ranging from steel and automotives to retail, have sped up their market entry and expansion in India. FDI flows to India in 2008 surged to a record $42 billion.
Outward investment in regional outflows from China and India rose from 23% in 2007 to 37% in 2008. India ranked third among all developing and transition economies and 13th in the world as a source of FDI. In addition to oil companies, large mining and metal companies from China and India have become more and more aggressive in acquiring overseas assets.
     Unctad states that for many Chinese and Indian companies, in particular, the desire to acquire undervalued assets (such as mineral deposits, technologies, brand names and distribution networks) during the global and financial crisis may boost Asian investments in developed countries.
     There has been an overall trend by Asian countries to change national policies and legislation to become more favorable to FDI, leading to the further opening up of markets. Thus, in 2008 and early 2009, India has either raised or abolished existing FDI ceilings for certain industries.
Gordon Feller

Women In Air Cargo     

Lisa Wilczek

Lisa Schoppa
   

     Cargoitalia—Italy’s ‘reborn after financial turmoil’ all-cargo carrier –celebrated the launch of its first scheduled freighter service between Milan and Hong Kong on September 10 2009, in collaboration with its newly-appointed handling agent Hong Kong Air Cargo Terminals Limited (HACTL).
     To commemorate the launch of the new service, Cargoitalia and HACTL jointly hosted an inaugural ceremony the evening of September 10th at SuperTerminal 1, the headquarters of HACTL at Hong Kong International Airport.
     Over 100 guests including dignitaries and members of the Hong Kong air cargo community attended the gala event.
     Cargoitalia’s first scheduled service follows the airline’s trial charter flight to Hong Kong in late July.
     Cargoitalia will now operate twice-weekly scheduled MD-11SF freighter services between Milan and Hong Kong, on Wednesdays and Saturdays.
     HACTL is providing Cargoitalia with physical cargo handling, air cargo documentation, ramp handling and crew transportation services at the Hong Kong International Airport.
     Says Lilian Chan, General Manager, Marketing and Customer Service of HACTL:
     “We are very proud to have been appointed by Cargoitalia, we extend our warmest welcome, and we congratulate the carrier on its successful launch.
     “Cargoitalia’s appointment of HACTL as its cargo partner signifies the strong ties and mutual trust between both companies.
     “We will strive to add value to the airline throughout the supply chain, raising its overall competitiveness and contributing to its success.”
     Roberto Gilardoni, Commercial Director of Cargoitalia, says:
     “This is a tremendously encouraging start to our scheduled operations, and we sincerely thank the airfreight communities in both Hong Kong and Italy for their support and trust.
     “We are delighted to have HACTL as our physical handling partner in Hong Kong. Its well-deserved reputation for efficiency, security and customer service will make a major contribution to the future success of our business in the region.”
Geoffrey