Vol. 8 No. 105                                                                  WE COVER THE WORLD                                 Saturday October 3, 2009

Building Airports
Like An Egyptian

     Egypt’s World Bank-funded Airport Development Project (ADP) will soon receive additional funds. What is the project all about?
     In the early 1990’s, Egypt began moving away from central planning and downsizing its massive public sector. Between 1995 and 1999, the economy responded to the new market-oriented environment, and growth increased to around five percent per annum.      Following slower growth in the early years of this century, the economy responded strongly to moves toward liberalization, and this, combined with an increase in international tourism, has resulted in increasing demands on air transport in Egypt. Expanding the capacity for air transport is key to continuing economic growth, particularly in the tourism sector.
     Approximately 50 percent of Egypt’s air passenger traffic is handled at Cairo International Airport (CAI). In 2000, passenger traffic was 8.9 million passengers, and total capacity of the two existing terminals at the airport was estimated at 9 million. Since then, however, passenger traffic has experienced steady growth, and the airport has been operating well above capacity – at about 12 million passengers per year. Freight traffic, which is almost entirely concentrated at CAI, has grown steadily, reaching over 285,000 tons in 2007. For both passenger and freight traffic, terminal and apron capacity constraints have constrained growth; for example, foreign charter flights to CAI had to be limited. Elsewhere in Egypt, the country’s other international airports, which primarily serve tourism, experienced growth rates averaging nearly 13 percent per annum between 1993 and 2002. Between 2003 and 2007, traffic at Sharm el Sheikh (SSH), the nation’s second largest airport, grew from 3.4 million to 6 million, the latter figure only possible due to the opening of a new terminal in mid 2007.
     The original World Bank/IBRD Loan of US$ 355 million for the Airports Development Project financed works for the construction of Terminal 3 at CAI (TB3), the construction of a new terminal at SSH, and technical assistance and goods to strengthen air sector operations and environmental management. The loan was approved on March 30, 2004; it became effective on August 24, 2004, and is scheduled to close on June 30, 2009. The US$ 40.0 million Additional Financing Loan will finance cost overruns in the construction of TB3.

      The project’s objectives are to increase performance at the Cairo International airport (aerial above) and the Sharm El Sheikh airport and promote public-private development of such airports. There have been no changes to the original objectives, design, or scope. The additional financing will enable the completion of the project and contribute to the achievement of the above objectives.
     At the time of preparation of the ADP, private financing for Egyptian airports was unlikely, and public financing for necessary infrastructure investments was the only feasible alternative.
     The World Bank says that the project is thus far “considered to be a success”. The second component of the project – construction of a new terminal at Sharm El Sheik Airport – has been completed, and the new terminal successfully opened to commercial traffic in June 2007. All technical studies under the project have been completed and the Egyptian Holding Company for Airports and Air Navigation (EHCAAN) has formed technical committees to consider the recommendations in many of the final reports, including liberalizing air transport, developing an air cargo strategy, and strengthening sector capacity. The air and noise quality monitoring equipment have been installed and the Environmental Management Plans have been satisfactorily implemented.
     The World Bank believes that its continued involvement in the financing of TB3 is justified on the grounds of maintaining consistency in supervision of works, as well as of continuing the overall dialogue on air sector liberalization, which has thus far proven highly productive.
     The additional loan would help finance the costs associated with cost overruns of TB3, the construction of which was expected to be completed in September, 2008. The bulk of the overrun is due to “necessary updates to the original terminal design documents”. In addition, additional costs were incurred under the main construction contract to integrate the older designs for the terminal building with state-of-the-art IT systems that were procured separately.
      Finally, the designs were updated to incorporate changes in Government of Egypt and International Civil Aviation Organization (ICAO) standards since 1995. The changes do not affect the scope of the component; altogether they increase the overall quality of the construction and ensure that the terminal meets the needs of today’s air traffic at CAI.      The total additional cost of the terminal is expected to be US$ 58.8 million, of which approximately US$ 40.0 million is in foreign currency expenses. The additional financing will only finance foreign currency expenses; local currency expenses will be financed by the borrower.
      The financing of the program will be as follows:

Financing Plan (USD$m)





Borrower/Govt of Egypt



International Bank for Reconstruction and Development/WORLD BANK







     EHCAAN, as the Project implementing agency, assembled a Project Management Unit (PMU) to manage the ADP. Technical implementation of Component 1 of the project, which continues under the additional financing, is managed by the Cairo Airport Company (CAC), in coordination with the PMU. The PMU monitors and evaluates progress, coordinates and advises on all fiduciary matters, maintains project financial accounts and the Special Account, submits replenishment requests and requests for direct payment to the Bank, and prepares supervisory reports, including financial management reports. The PMU also verifies compliance with agreed procedures. Implementation of the additional financing will continue under the same arrangements. The additional financing will result in no additional procurement or changes to project management.
     Airport management in Egypt has strengthened significantly over the last five years. Fraport Company, the owner and operator of Frankfurt International Airport, has been managing CAI since 2005 under a management contract with the Cairo Airport Company. Reforms in the airport sector include a significant increase in passenger tariffs – from US$4.00 to US$15.00 for international passengers, and from US$1.00 to US$3.00 for domestic passengers. Such changes have formed a solid foundation for continued sustainable management of airport assets.
Gordon Feller

Rise Of Fall In Air Cargo

Andreas Gutberlet
Sales Director Europe / Middle East
Continental Cargo

FT:   How has 2009 been so far?
AG:   We have never seen such a dramatic gap between capacity and demand as in the first three quarters of 2009. Consequently, pricing has become extremely aggressive and we are faced with a revenue environment where many carriers’ market rates do not appear to be covering costs. Of strong concern is the ongoing trend from air to ocean freight that in quite a few cases has proven to be irreversible. Our cargo traffic has been outperforming the overall IATA market statistics, but we have been on the same roller coaster ride as everyone else.
FT:   What lies ahead for Q4?
AG:   Continental will end its participation in SkyTeam on October 24, 2009 and will join the Star Alliance on October 27, 2009. The move is driven by passenger considerations; however one of the early enhancements is a new daily departure between FRA and IAH, using a B767-400, effective 02 November 2009. We are very optimistic about this new route linking Europe’s major cargo gateway with the economic strength of Houston and Continental’s global hub there.
     We continue to invest in our long haul business. In 2010, we will take delivery of two new Boeing 777s. While we successfully launched Newark Liberty-Shanghai (Pudong) daily 777 services this year, the new aircraft will ensure continued growth in our cargo business.
     We expect aggressive competition to continue in Q4 but we may find that carriers act a little more careful in their pricing decisions.
FT:    How does early 2010 look?
AG:   We anticipate the end of some more unprofitable freighter flying, which will result in a healthier capacity situation across the Atlantic. One of the major demand drivers of the 2007/2008 airfreight boom was private consumption in the U.S. We may not see this demand simply bounce back in the near future but rather experience a bumpy and very moderate increase in traffic over the first part of 2010.
FT:    What has CO Cargo done to weather this (awkward) business climate?
AG:   We addressed costs wherever possible – keeping in mind that we cannot simply cost-save our way out of the financial crisis. We have a serious revenue dilemma that can only be resolved by finding the necessary demand in an adapted capacity environment. Our sales efforts in all European markets have been intensified and fine-tuned to defend all existing business and moreover, increase our customer base wherever possible.
     From a product standpoint, CO Cargo is a quality franchise. Last week we were honored with our second consecutive Quest for Quality award in the U.S. We excel with products that require special handling. As a result we are expanding our portfolio with a new valuables product COSECURE, that will cater to bank notes, gold, gems, artwork and electronics. In addition, we are extending our cool chain brand ClimateSecure as the first U.S. carrier certified for the Accutemps RKN active container (that is efficient for more temperature ranges such as 15°C-25°C.) We believe that these products will mesh well with the needs of our customer base.
Heiner Siegmund

Part I of this feature can be read by clicking here

     Prestige and austerity are battling it out in the Air India Survival Sweepstakes and the first round has, incidentally, gone to austerity.
     Here is what you need to know of the situation.
     The National Aviation Co. of India Ltd (Nacil) that operates India’s national carrier, Air India, recently went to its master, the Government of India, with a demand for one billion US dollars.
     The monies we are led to understand are to be used for equity infusion.
     On its own, meantime, the carrier has worked out a series of initiatives which it hopes will help it become financially stable in the next two-three years.
     Among these measures are the launching of more low cost flights – a number of full-fare flights that are presently unviable will become low-cost operations and air cargo will morph into a separate business unit, etc.
     These turnaround plans will apparently help Air India to get out from under its whopping losses and also give it more muscle to get what it has demanded from the government.
     The AI self initiatives may also turn out to be well timed.
     Right now as you read this, a high-level committee headed by the Cabinet Secretary (one of the bureaucrats in the country) Mr. K M Chandrasekhar has sent a directive to the Air India management to make a plan that would be the blueprint for a turnaround plan. The widely held opinion here in aviation circles is that once the government is satisfied that the plan is achievable, it will go ahead and sanction the loan or stand guarantor.
     As part of the austerity measures, Air India had delayed the June salaries of its 30,000+ staff and had even hinted that it would delay or cancel the orders it has placed with Boeing and Airbus.
     The plan to cancel the airplane orders was given up when it was found out that the cancellation would incur a whopping fee.
     As for the salaries, the hue and cry by the Air India unions seems to have sent shivers and today, no one from the management wants to even broach the subject.
     So, the question that is now being asked by most of the country’s aviation pundits is:
     Will the government listen and hand out the money to the carrier?
     If the reports emanating from the Ministry of Finance are any indication, the government is going slow in handing out the largess.
     The aviation ministry has demanded Rs 2,000 crore as equity and subsequent cash infusions of Rs 5,000 crore.
     The finance ministry, however, is only ready to give Rs 1,350 crore as equity.
     As for the government guarantee, Air India wants the government to rework and lower the interest rates of its high-cost borrowings from the banks. Apparently, these banks have sought government guarantee to lower the interest rates.
     These measures apart, the carrier is trying to make the best of its international operations.
     Some of the loss producing stations have been taken off Air India’s flight path and new ones have been introduced.
     One of the destinations Air India has plans to fly to is Washington.
     The U.S. capital would probably be connected to New Delhi while Boston will be on the schedule from Mumbai in the winter schedule starting October this year.
     The Washington touchdown will be done by the new Boeing 777-200 LRs (of course only after the required permissions are received) that are now flying on the New York-New Delhi and Mumbai routes everyday.
     Air India expects, the flights to Washington and Boston, will be filled up by the high-paying business and first class passengers comprising the diplomatic and business community.
     The idea to send these planes onwards from New York came after someone discovered that they were sitting idle on the tarmac at JFK for eight hours before their return flight to India.
     According to aviation pundits, flights from New York had never been thought of because flights within the U.S. were not permitted.
     There is no provision in the U.S., which allows Air India to pick up passengers originating from New York.
     The carrier is also toying with another option: stationing smaller planes in JFK that will fly international passengers from New Delhi to Washington and Boston after they clear U.S. immigration.
Tirthankar Ghosh

DUR Begins

     For months Cargo Manager Nathan Padayachy and his team comprising Cargo Supervisor Jitesh Baichan, Senior Cargo Assistant Patrick Cele and Cargo Assistant Rajiv Sarjoo have been working to ready Emirates SkyCargo’s newest operations.
     Now as EK has launched direct services to the South African port city of Durban, its third destination in the country and 17th in Africa touch down in KwaZulu Natal province with 14 tons of cargo in the belly of an Airbus A330-200 passenger aircraft went without a hitch.
     Peter Sedgley, Senior Vice President Cargo Commercial Operations:
     “We have appointed a great team with more than half a century of combined experience in the Durban cargo industry who are geared up to take Emirates to the next level.
     “There is a variety of commodities moving out of Durban – car parts, pay channel decoders, electronic parking meters, aluminum, electronics, tools, perishables such as pineapples, and textiles – to markets as far afield as Europe, the Middle East, the U.S. and Australia. Emirates, with our short connection times and modern facilities, has been serving South Africa for 14 years and we are looking forward to better serving Durban with this new service.

Waiting In The Wings

     On August 28, 2009, three new apprentices embarked on their practical training in HAM, DUS and STR, which are thus now part of the group of stations with training operations.
     With the opening of the new training stations, Lufthansa Cargo has reached a further milestone in the continuous development of vocational training.
     The new Lufthansa Cargo employees have been prepared during the last four weeks at the Frankfurt Training Center and in Seeheim for their practical training.
     Together with other "Cargo Apprentices", who will gain their practical experience in the existing training locations of FRA and MUC, in addition to acquiring comprehensive information for their career start with Lufthansa Cargo, they all successfully passed the A1 course.
     The challenge is now to successfully integrate the new training locations into the existing training network and to support them in attaining the necessary quality standards.
     In the 2009 financial year, a total of 20 apprentices started their traineeships with Lufthansa Cargo - that was three more than in 2008.15 young people started their training at the location of Frankfurt this year and, as in the previous year, two trainees embarked on their professional careers in Munich.




Women In
Air Cargo

Our exclusive series “Women In Air Cargo” asks our readers to send some words and a picture about somebody that you know who is female and has made a difference in air cargo.
  This effort is not limited to just success or failure, it is meant to raise awareness about the legions of unique women who in most cases are unsung heroines in the air cargo industry.
  So write and we will share your story with our readers around the world.

Lisa Wilczek

Tulsi Mirchandaney

Lisa Schoppa


Air Cargo News FlyingTypers leads the way again as the world’s first air cargo publication to connect the industry to the broadly expanding and interactive base for social commentary—Twitter.
     Here are updates from Twitter so far this week. To be added to this 24/7/365 service at no-charge contact: acntwitter@aircargonews.com

September 30:   Mastercard Worldwide Insights says top Asia & M/E air cargo network impact cities by ranking are HKG, ICN, TYO, PVG, SIN & DXB, says networked cities in Asia Pacific, Middle East and Africa will see “increasing returns” phenomenon.

September 30:   Bucket have a hole? "There is stabilization but bookings are in what we call low buckets," Air France USA Chief Christine Ourmieres said.

September 30:   The Asian Highway since 1950’s is more than 141,000 km via 32 member States. BKK Hwy meeting this month still deciding standard road signs.

September 30:   U.S./EU Open Skies talks have hit wall as Stage Two languishes. EU opines LHR was all USA carriers wanted. EU states may revise landings ahead.

September 30:   "There will be no (cargo) peak season this year or next year & two or three years before we see a recovery," says Robert Frei, (left) Panalpina.

September 30:   "We do not expect to see the levels we saw in 2007 until 2013 at the earliest," Ulrich Ogiermann Cargolux CEO told Flight Global.

Contact! Talk To Geoffrey

RE: Tree Grows In Schiphol


     What a great story in today's issue of FT regarding Seaboard World and the California trees at Schiphol.
     Brings back many mostly very happy memories.
     Frank Volavsek hired me at Seaboard in Amsterdam in 1971, when I had just returned from 5 years working for Air Canada in the Bahamas.
     I worked with Frank and John, and my immediate boss, Bernie Sigler (station manager) for only two years but what years they were.
     Our one flight each night started in Frankfurt and would operate to JFK either via AMS or BRU - it all depended on who had the most cargo.
     Whoever had the best load would get the transit. If we failed we had to truck our cargo to Brussels.
     Of course we wanted to have the flight, so our estimates until the last minute were always on the high side.
     I recall Frank calling me one Saturday morning - and telling me to make sure and hide the Emery pallet which had not made the flight of the night before.
     Friday nights we often ended up in the bar of the freight building - and Frank used to tell me to keep my ears open for any interesting bits of news or new business.
     For a while we had a DC8F available for adhoc charters from Europe and we were often asked to go along as loadmasters. One of my favorite stories is my trip as loadmaster to Mogadishu -with 13 pallets of radio and telecoms equipment required for the airport there.
     I was assured the handling in Somalia was all arranged.
     We arrived in the early evening after a very long flight (fuel stop in Jeddah) - I recall sitting behind the Captain in the cockpit hearing some of the tense rt -or rather lack of any response from ATC in the region.
     There were Russian Migs parked on one side of the airport, which was right on the Ocean.
     It turned out the handling agent did not own an FMC (main deck loader), they only had one very small warehouse forklift. So the only option was to break the pallets on board. It took nearly 12 hours to offload the aircraft. Every piece had to be offloaded individually, and the load included some very large rolls of cable and heavy equipment. The loaders worked very hard- I got so tired, near the end I was shouting at them in Dutch which seemed to work like magic.
     The crew arrived at sunrise and they were so pleased to get out of there, the captain nearly kissed me. We went back to Schiphol after stopping off in Asmara to pick up a load of green beans. I sometimes miss those days working at the sharp end of the business but I don't miss the tension of the DC-8 nearly sitting on its tail.
     It got very close a few times. I was the only one skinny enough to get past the bulging igloos full of military mail from Frankfurt.
     I had to pull the pallets forward to stop the aircraft from tipping and I was very nearly squashed a few times in between the pallets.
     Fun days, even better in hindsight.
      Keep up the good work.

Peter Walter
Marketing Manager
CHAMP Cargosystems

Peter—You spin some great tales from the ramp yourself.
So thanks for that.
FYI Bernie Sigler is alive and well and living somewhere in the Netherlands where he pointed out some fond remembrances for Tante Emma, the sweet SWA C46 of the ramp at Schiphol in a picture taken by Jos, who authored our Tree Grows In Schiphol.