Vol. 10 No. 102                                                                                                                           Monday October 17, 2011

The Week After FRA Night Ban

     It is the story of the year.
     The impending closure of Frankfurt International Airport at the end of this month means many things, depending on to whom you speak.
     But last week the FRA night flight ban swept attention away from a speech by Des Vertannes at FRA ACD, discussions about air cargo security, and even talk about the current state of the air cargo business.
     In perhaps the strangest twist of fate, starting October 21 a brand new runway at Frankfurt International Airport will stand ready to greet even more flights whilst easing operations at Germany’s major aerial gateway.
     But for air cargo, which lives operating at night, the new runway will stand empty and unused all night long, like a big Oktoberfest party with food and oompah band playing to an empty beer garden.
     Resident complaints of aircraft noise have led to night flights being banned at Frankfurt Airport (FRA) as ruled by a Hessen court. Although Germany’s Federal Administration Court will make a decision on night flights at FRA early next year, which may allow for some wiggle room, here are some thoughts in preparation for how the ban, ongoing between 11 p.m. and 5 a.m., will affect air cargo.
     Meantime Lufthansa has made the argument that opening the new Northeast runway scheduled for later this week on October 21 right now is a runway too far, and should be delayed.
     Germany’s largest airline and 10% owner of Fraport reasoned that the local court decision to close the airport from 11 to 5 am October 30 would not have to be executed since it is bound to the opening of the new runway.
     That request to Fraport went nowhere with the airport operator brushing aside the Lufthansa request saying:
     “We badly need the additional capacity because Frankfurt airport has operated at and often beyond its limits for years.”
     Most severely hit by the judge’s short-notice decision, Frankfurt-based Lufthansa Cargo will have to reschedule eleven night flights in the winter timetable commencing the end of this month, with some of them being threatened with total cancellation that will cost the carrier millions of euros and disrupt its supply chains completely.


     “I don't know how the night flight ban in Frankfurt will impact business; actually, nobody knows,” Oliver Evans, Chief Cargo Officer at Swiss WorldCargo, told FlyingTypers.
     “Now everyone is focused on the dramatic headlines, and indeed the decision is dramatic.
     “The possible implications are huge, not only for the industry or the wider economy of Germany, but for Europe and indeed beyond in countries that don't (yet?) know of such constraints.
     “At the same time, major players involved will be seeking redress or adjustments via other channels, such as ministerial ones.
     “And solutions or workarounds will be found.
     “Human ingenuity and adaptability will see to that.
     “No harm done?
     “Of course untold damage has been done, if only by forcing business into unplanned and less-than-ideal lanes, making our services more costly.
     “Should we then blame the court?
     “Or the politicians that make and break promises?
     “Or the public who vote for those same politicians or cry out for action without giving a thought to consequences?
     “Again, of course not.
     “We should look at ourselves, and acknowledge that our recent efforts to publicize the enormous, beneficial role we play in world trade have come far too late.
     “We need to redouble our efforts to reach the wider public through the Internet, blogs, direct dialogue through street action, and many other avenues.
     “Will air cargo need to change the way it does business?
     “Darn right it will, but not because of a tsunami, or this man-made shock-wave.
     “Because we are human, and have so much to learn.”
(Editors Note: Never at a loss for words, Oliver Evans Chief Cargo Officer at Swiss World Cargo regularly tackles some hot button issues at play in the air freight industry today.
Here is an Oliver interview created during Transport Logistik Europe.
Six months later we think the words still stand up.)

     “Whatever Frankfurt Airport loses will be someone else's gain. I hope they have done their homework and will provide alternatives,” says Issa Baluch.
     Best known as the founder of Dubai-based Swift Freight, a medium-sized multi-national eventually sold to Barloworld, Issa is the guy that launched sea-air in Dubai.
     These days, in some kind of “retirement” (as if he ever could be), Issa is now teaching logistics at Harvard in the USA.
     “Air cargo people should immediately explore usage: the use of other airports.
     “Right now we are watching to see the impact and the alternatives FRA Airport is going to provide and we are also studying other options that we can engage in, in the event that what FRA Airport may offer is not workable.
     “But looking ahead, the broader impact this ban will have on air cargo is immense and not easy to overcome.
     “Frankfurt without night flights creates a bottle-neck in one stroke.
     “Also to be noted and considered is that if this ban is actually applied in a couple of weeks – once FRA Airport loses out, it will take them a long time to replace it.
     “For those who may think that air cargo will have to change the way it does business and no longer be a ‘night animal’—well, saying it is much easier than any real change.
     “Once a night animal, always a night animal.
     “This is where the economic/flexibility benefits are derived.”

     If there is one thing that Wolfgang Korte, top officer of LUG, the air cargo handler located in Frankfurt International Airport’s Cargo City Sud, knows, it is that with the gateway’s newest and most advanced air cargo facility about to debut, housing his company and life long dream, right now is no time to be a shrinking violet when it comes to telling it like it is about the upcoming ban on night flights at mainland Europe’s premier air cargo gateway.
     “The FRA night curfew that the Hessian state court in Kassel instituted has been based on complaints from towns and citizens as related to the new runway.
     “Presently, LUG is not impacted because all our customers operate during the day.
     “We are operational around the clock and carry out our cargo handling activities during the night in preparation for next day's take offs.
     “In the interim, Hahn, Cologne and Leipzig offered to serve as alternatives.
     “Given that LCAG is already in cooperation with DLH/Aerologic at LEJ (Leipzig), it is conceivable that transports would be diverted there.
     “Another scenario is to squeeze the night flights into the daytime with the opening of the new runway, enabling about 1,300 flight movements per day; the 17 additional night flights wouldn't be an issue.
     “The problem is the destination airport(s) where existing slots cannot be added on short notice - e.g. PVG.
     “In any case, this court decision creates a huge and extremely expensive challenge to LCAG operations.
     “The customers have been informed but there's general dismay over this state court's decision in light of the pending federal court case in Leipzig, where a decision was due around the end of 2011 or early 2012.
     “Obviously, the forwarders are all waiting for alternative plans from the airlines impacted by the night flight ban.
     “Over the longer term, it should be possible to develop solutions that could limit the damage; however, in the immediate and short term the main impact is clearly borne by LCAG because of the extremely short term to the ban becoming effective on October 21.
     “Most likely, LCAG representatives are best positioned to offer more qualified information as it is safe to assume they have been up to their eye balls in various versions of ‘plan B.’
     “This indeed could be the beginning of the end for the ‘cargo night animals’ as there are other regions where efforts to institute a night flight ban are underway.
     “Ultimately, the final and compelling indication in this matter will come from the Federal Court in Leipzig.

     Last Thursday, Germany’s Federal Administrative Court rejected claims to extend the night flight curfew at new airport Berlin-Brandenburg, “Willy Brandt,” beginning at 10pm and ending at 6am.
     This operational constraint was demanded by a number of neighboring communities, together with residents, in a test case.
     They justified calling upon the High Court with evidence of intolerable noise emission exposures caused by departing and landing aircraft at the German capital’s future airport during late evening and early morning hours.
     By rejecting this claim, the judges at Leipzig’s Federal Court confirmed with their verdict both Berlin’s and neighboring Brandenburg State’s original assurance guaranteeing the airport to operate between 5:30am and 11:30pm. Hence, the facility will only be closed during the core night hours and not between 10pm and 6am as hoped and demanded by the critics.
     Berlin’s mayor, Klaus Wowereit, welcomed the Federal Court’s decision by saying that “the ruling is important for our future economic development.” Managing Director Ralph Beisel of the German Airport Council – ADV – spoke of a “highly important call by the judges that levels the way for the capital’s future gateway.” Wolfgang Krueger, Managing Director of the Chamber of Commerce and Industry in Cottbus pointed out that the court's reasoning explicitly emphasized the economic importance of late evening and early morning flights at Berlin-Brandenburg airport both for the city and the entire region. Said Krueger: “the airport can now operate as planned, which will surely stimulate further growth and encourage private capital to invest.”
     Spokesman Michael Goentgens of Lufthansa Cargo also reacted with relief after the shock his airline got earlier this week when a local court in Hesse State completely and unexpectedly imposed a night flight curfew on Rhein-Main airport, Germany’s by far busiest passenger and cargo hub.
     “We welcome the Leipzig Court’s decision and hope it will be a positive signal for the Federal Judge’s upcoming decision on night operations at Frankfurt,” exclaimed Michael.
Heiner Siegmund


How Air India Landed In The Dumps

     A recent report, tabled in the Indian Parliament from the Comptroller and Auditor General (CAG), has unleashed a flurry of accusations.
     The report takes a detailed look at Air India in the 2002-10 period – specifically the time when the national carrier started going downhill. Perhaps, what the report has made more important is the mention of liberal flying rights to foreign airlines—especially those from the Middle East—at the cost of loss of business for Air India.
     Though it did not mention anyone by name, fingers were pointed at the erstwhile Civil Aviation Minister Praful Patel—he was the Minister for six years—for opening the doors for private carriers to come to Indian destinations and take away cargo and passengers.
      In fact, when questioned about the CAG report, Patel lashed out to say that all these were conspiracy theories. “The hallmark of civil aviation (in the country) is opening up of the sky,” he told a TV news channel. “Earlier, people were ashamed of talking about Indian airports. Now, look at the change that has come about in the aviation sector,” he pointed out, questioning if Air India had indeed been stopped from flying on certain sectors to benefit private carriers.
     The CAG report mentioned specifically that the Middle Eastern airlines had hurt Indian airlines by winning market share on routes to Europe and the U.S. It goes on to suggest that Air India should take steps to have the number of flights by the ME carriers reduced to ensure that the Maharaja (Air India) gets a portion of the lost market share. Incidentally, Emirates had twice the number of seats than Indian carriers on the Dubai-India route. Obviously, the tonnage of cargo has also doubled.
     The report has coincidentally come at a time when Middle Eastern carriers are ramping up to cash in on the ‘India boom’ in cargo and passengers. Take the case of Qatar Airways. Calicut or Kozhikode (pronounced Koh-ree-code) in southern India’s Kerala state has been on the radar of Middle Eastern carriers and when Qatar started its dedicated freighter services to the city along with Bengaluru sometime ago, it did not come as a surprise.
     Qatar Airways CEO Akbar Al Baker emphasized the need for dedicated freighters to Indian stations: “In India, we’ve seen a big upward trend in cargo movements. By coupling Kozhikode with Bengaluru on this new cargo route from Doha, we ensure that we are utilizing the available space onboard our freighters to the maximum.” Add to that the recent acquisition of 35 percent in Cargolux and Qatar is all ready to get a firm grip on the global cargo business.
     Qatar Airways is one of the carriers from the Middle East that is taking India’s Tier-2 and -3 cities seriously for its growth plan. Along with Emirates, these carriers are keen to make the most of the India boom. The situation is such that well-established European carriers like Lufthansa, Air France and KLM and British Airways, which have been in India for quite a while, have started feeling the heat. And as for the Indian carriers, none have been able to compete with the Middle Eastern carriers.
     Like Qatar, Etihad too has gone into overdrive. The carrier announced that it would raise the number of flights on five European routes while boosting capacity on others. On the China and India sector, Etihad has enhanced the number of flights to Beijing and Bengaluru, which had four flights a week, now has a daily that began in January this year.
     Dubai-based Emirates is also keen to get into smaller Indian cities. Its cargo division, Emirates SkyCargo, began operations to the north Indian city of Lucknow in April this year, and as Keki Patel, Emirates SkyCargo Cargo Manager (India & Nepal), put it, it would not be the last. “We are looking to move into secondary markets like Jaipur, Coimbatore, Amritsar, Chandigarh, Lucknow, Kanpur, Varanasi, Indore and Visakhapatnam.”
      Emirates now offers interline cargo capacity on the thrice-weekly service to Lucknow and provides three metric tons per flight of direct cargo capacity on the Lucknow-Dubai-Lucknow route. This capacity complements the 500+ metric tons of weekly capacity on the Delhi-Dubai- Delhi route.
     As if that was not enough for the home-grown carriers – most floundering with large losses while the lone dedicated freight carrier Deccan 360 is virtually on the way out – the latest entrant in the ‘India sweepstake’ is FedEx, which recently announced the launch of FedEx Economy, an intra-India, door-to-door, day-definite express delivery service for ground consignments. Happy hunting grounds – that’s India!
Tirthankar Ghosh


Marina Marzani



China Christmas Demand Hopes Dashed

     Hopes that export demand out of China might pick up in the run-up to Christmas (reminiscent of the late restocking surge in Europe and the USA in 2009) will not, contrary to the expectations of some airlines and forwarders, come to pass.
     Leading air cargo executives have been telling FlyingTypers for months that exports from Asia are below par, both in terms of 2010 volumes and 2011 expectations.
     Indeed, figures from both leading export gateway airports in Asia and leading carriers and associations have been consistently bearish, in no small part due to unrelentingly glum economic news from both the U.S. and      Europe for much of 2011, dampening confidence among consumers already suffering real economic pain in many countries.
     But some carriers have pinned their hopes on a late season recovery, as consumers rediscover their collective mojo pre-Christmas a la 2009, when Fedex and UPS were among those who benefitted from emergency restocking by retailers, which significantly tightened air capacity.
     Could history repeat itself?
     Well, analysis from Credit Suisse suggests not, based on consumer demand forecasts for the U.S.
     While optimists argue that inventories are tight, and even a slight uptick in consumer demand later in the year could shore up excess airfreight capacity and in turn drive up pricing and profits, CS argues that although retail inventories are at historically low levels, there is little to suggest any major demand surge from consumers.
“We analyzed a series of key consumer indicators and compared current conditions to 2H09, when overall consumer demand was still in the recovery phase,” said CS. “We find that in nearly every case, conditions have deteriorated significantly.
“The threat of a recession is significantly greater; consumer confidence and expectations have plummeted; disposable income growth has turned negative; unemployment remains stubbornly high; and the stock market has taken a nose dive. This does not bode well for near-term consumer spending.”
However, CS said “very tight” inventories should “act as a buffer against a meaningful downtick in the freight environment” if the economic situation does not improve.
“At the same time, there is little to get excited about here if demand does not materialize.
Restocking activity will require some uptick in sentiment or confidence – neither of which is apparent at this time.”
The conclusion?
There is little chance of a robust air peak this year.
Sorry, guys.

Get On Board Air Cargo News FlyingTypers
For A Free Subscription
Click Here To Subscribe


If You Missed Any Of The Previous 3 Issues Of FlyingTypers
Click On Image Below To Access