The opponents of further improvements and construction activities at Zurich airport faced a crushing defeat in a referendum held last Sunday.
     Exactly 58.8 percent of the electorate at Canton Zurich voted in favor of the future development of the airport, thus rejecting the initiative of neighboring communities and dwellers to freeze all expansion and modernization plans at ZRH at once.
     In total, 214,000 people supported ongoing or upcoming airport enhancements while 150,750 opted for stopping all activities entirely.
     In a release, Zurich’s airport management welcomed the outcome of the referendum, stating:
     “A blockade of future airport developments is obviously not wanted by a clear majority of Canton Zurich’s inhabitants.”
     Prior to the decision at a meeting in Hamburg, CEO Harry Hohmeister (left) of Swiss Airlines told members of the German Association of Aviation Journalists that a negative outcome of the plebiscite would lead to a standstill at Zurich airport.
     A stalemate, however, leads to regression, since other airports and competing carriers continue growing. Profits then diminish, leaving an airline with no real future.
     “If our hub should be crippled by a majority of voters, our intercontinental flights will have to shrink continuously from 2015 on.
     “Ten years from now, we will only be able to offer four, five or at most six intercontinental flights out of Zurich.”
     Currently the airport reports 280,000 movements annually. This number can be upped to 350,000 by optimizing the existing runway system, but only if the apron is enlarged to offer airlines additional parking positions for their aircraft. In addition, both runways would be moderately extended.
     The hurdle for getting improvements done was eliminated last Sunday due to the referendum by Zurich’s electorate.
Heiner Siegmund/Flossie

Hainan To Invest In Air Berlin?

     Germany’s second biggest airline (next to market giant Lufthansa) is reportedly looking for investors.
     According to sources, a number of talks have already been held with Arabian Etihad Airways and Chinese HNA Group, the owner of Hainan Airlines.
     Injecting additional cash into the carrier seems to have become inevitable due to a reported debt of roughly 600 million euros.
     Despite a valiant, major cost-saving program, plus various network and fleet adjustments initiated by AB management, latest numbers show a 134 million euro loss for the carrier reported for the first three quarters 2011.
     Current equity ratio is put at 14 percent with the shareholder’s capital quota at 368 million euros.
     Hartmut Mehdorn, (left) who replaced founder and long-time CEO Joachim Hunold to take command at Air Berlin just this past September, has warned of ongoing losses due to the European crisis, the weakening of markets and the continuous turmoil in Egypt and other Arabian states. Air Berlin has built sizeable revenue serving these locales.
     For the record, cash-rich Etihad and Air Berlin are two old acquaintances that had already discussed a possible merger back in 2008.
     The deal was called off last minute due to the global financial crises and the market uncertainties.
     Unfortunately (for AB), UAE state-owned Etihad has not done much else during its time in business but lose money.
     That simple fact raises some doubt that Abu Dhabi’s rulers will give the green light to liaise with another carrier.
     According to some people with whom we have spoken, a stronger potential suitor for Air Berlin is HNA Group—if both enterprises settle on terms.
     Hainan Airlines is China’s number four by size and is currently trying to bundle the different regional carriers belonging to the group under the name of Grand China Airways.
     Hainan also connects Beijing with Berlin and is, together with the French Vinci Group, a final bidder for an array of airport stakes up for sale right now by Hochtief Concessions, including Dusseldorf, Budapest, Hamburg and Athens.
     Stay tuned.
Heiner

EK Daily Service To Rio Launch January 2012

From left – Emirates—Nigel Page, Senior Vice President, Commercial Operations, The Americas; Richard Vaughan, Divisional Senior Vice President of Commercial Operations Worldwide; Pradeep Kumar, Senior Vice President, Cargo Revenue Optimization; and Ralf Aasmann, Area Manager Brazil are pictured in Rio by the Sea-oh as Emirates kicked off in grand style (what else?) its Rio de Janeiro countdown last Thursday (October 24) The airline is getting ready to launch daily services, starting January 3, 2012, to the 2014 FIFA World Cup city.
     “It is the new direct service to Rio de Janeiro, with an onward extension to Buenos Aires.
     “As Emirates’ second Brazilian gateway, our new Rio de Janeiro service will add extra impetus to the vibrant Brazilian economy, boosting tourism and underpinning the city’s status as a leading hub for business and trade, particularly within the oil and gas industries,” said Thierry Antinori, Executive Vice President, Passenger Sales Worldwide.
     “As a Partner of the 2014 World Cup, Emirates is proud that we have a role to play in making the tournament a success, and we look forward to bringing football fans from across our global network to this not-to-be-missed event.”

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leisure Cargo Looks Back At 2011

     Ralf Ausländer, managing director of leisure Cargo GmbH, a Düsseldorf company he created for LTU and continues to lead for Air Berlin that provides Total Cargo Management (TCM) services, has had what he deems an interesting and eventful year.
     By now it is no secret that leisure handles direct management of worldwide cargo handling contracts, road feeder services, cargo revenue accounting, interline relations, claims processing and settlement as well as supply of management information data for 19 carriers.
     What is perhaps even more interesting is that through financial crises and rebounds, mergers and acquisitions, and even the complex assimilation of expanded duties with new carriers into the leisure fold,      Mr. Ausländer has remained level, soft spoken and accessible while navigating through it all.
     Today, nearly a dozen years after he began leisure Cargo, Mr. Ausländer continues piloting the company to consistent growth and profits, although to hear him tell it, he had hoped to do better in 2011.
     “We thought coming out of 2010 that this year would be another banner year with increases of maybe ten-plus percent year on year, but now we realize that our performance figures will settle at about seven and a half percent above 2010, which is, I suppose, suitable considering the business climate and the financial crises going on right now in Europe.
     “Looking ahead to 2012, the outlook is a bit difficult to predict.
     “leisure Cargo has experienced an enormous expansion of capacity in 2011 while phasing in the carriers of the TUI Group.”
     It should be mentioned that TUI, in addition to serving its traditional markets via 143 aircraft and about 30 million passengers yearly, is also developing emerging markets by growing a portfolio of travel businesses, focusing on Russia and CIS, Brazil, India and China.
     TUI Travel is the first international tour operator to build a presence in Russia and CIS, which also means the leisure Cargo brand is spreading its wings and integrating a plethora of new destinations as well.
     “TUI Group is working very well all around.
     “In fact, for the first time in the history of leisure Cargo, we will achieve the 100,000-ton mark by the end of 2011, and, maybe even better, our revenue will increase to 100 million-plus Euros.
     “So I would say that management is looking at a good year in 2011—so far, so good.
     “But realistically, looking at 2012 without the aid of a crystal ball in front of me, we can only do our best amidst what has become an ever-changing situation.
     “Let’s see what happens.
     “In terms of growth markets, we look at Florida alone for 20 weekly frequencies in our winter schedules and 28 per week during the summer, so our connections there and into Latin America are quite important to us.
     “Carriers such as Air Berlin are sure to beef up frequencies into Miami and elsewhere, including JFK New York in 2012, when during Summer 2012 services will go double daily into Dusseldorf and the same into Berlin.
     “What that added capacity means is further opportunities for us to extend the leisure Cargo offering.
     “Our Air Berlin services during Summer 2012 will go into Europe’s newest airport and the big Air Berlin hub operation at Berlin Brandenburg International which, given the capabilities of the new gateway and market conditions including the current climate of night flight bans in Frankfurt, will be a welcome addition for both passengers and air cargo trying to reach European markets and beyond via leisure Cargo.
     “We are also looking at other carriers in the leisure Cargo family, such as ArkeFly (a Dutch charter airline headquartered in Schiphol-Rijk) to commence direct services from Europe to Las Vegas, Los Angeles and San Francisco in 2012.
     “Speaking of serving the Americas, in 2012 another member of leisure Cargo, Condor, will add summer services to fly even more frequently from Europe to North America, including Baltimore, Toronto, Mauritius and the Caribbean.
     “In the Americas, Condor also serves Cancun, Havana and Holguin in Cuba, Santo Domingo as well as Jamaica and Panama.
     “We are putting dots on the map in North and Central America, where leisure Cargo will have more happy landings.”
     In terms of product mix, Ralf Ausländer concedes that while he expects business as usual to continue, he knows that change will be in the new volumes of cargo moved.
     “Perishables has always been a substantial part of our business in the Americas, especially in Florida, and that will not change.
     “Our consignments differ in each gateway we serve, including in New York and Los Angeles, but we expect to remain fairly consistent—with the caveat of greater volume.”
     It’s worth noting that leisure Cargo specializes in turnkey cargo sales and service concepts as well as exclusive and truly 100 percent cargo management services.
     Now as it begins its 12th year in business in 2012, this total air cargo management company continues on its unique mission of providing all carriers represented with full logistical know-how, including sales, handling and road feeder service supported by a well positioned GSA network worldwide.
     Established in January 2000, leisure Cargo is the only “virtual cargo airline,” meaning it does not operate its own fleet but rather has complete access to the bellies of 19 carriers. The leisure Cargo network today includes about 300 destinations.
     By utilizing just one AWB and having access to one reservation system worldwide “leisure Cargo shippers can access and take advantage of a complete range of services with individual attention to detail and satisfaction guaranteed,” Ralf Ausländer assures.
Geoffrey/Flossie

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A Look Ahead At China 2012

(Here begins our annual look at the year ahead and the year that was. The series continues in December 2011 and January 2012.)

      China’s pivotal role in air cargo markets will evolve and grow, according to Won-Joon Lee, Managing Partner for Accenture’s APAC Products division.
      Despite the promise of business in China, there has been a big downturn in demand this year. Mr. Lee lays the blame solely on the economy, and not on China’s ability to generate business. “Demand for air cargo capacity out of China is driven heavily by business and consumer sentiment across the global economy, particularly the United States,” said Mr. Lee.
      “Unfortunately, confidence remains fragile around the world and looks likely to remain weak unless we see the US return to growth and European leaders release a credible plan to resolve the current debt crisis.
      “The market’s weakness is reflected in expectations that American consumers will again seek to minimize their spending over the coming Thanksgiving and Christmas holiday season.
      “Most worrying is that air cargo operators do not appear to be seeing the same uptick in activity that they saw in late 2010, despite the US being in the early stages of an economic recovery.
      “Europe is also very slow, with a recent article noting that the air freight rate from Hong Kong to Europe fell to HK$15 per kilogram (USD$1.93/kilo) in September 2011, compared to HK$18 to $20 in June.”
      But Mr. Lee assures us all is not lost, and we should not abandon all hope for a busy holiday season.
      “We may yet see a rush of demand for air cargo services if it turns out that retailers have been too pessimistic and failed to order enough stock for the Christmas period.
      “This occurred in the 2009 holiday period and drove a sudden surge in demand for air cargo as stores in the US, particularly, had to quickly restock their shelves.
      “The optimistic view is that even if this Christmas is quiet, as we move into next year, European leaders will resolve their current crisis and the US economy will finally recover.
      “We also believe there is much that Chinese air cargo firms—and international players with facilities in China—can be doing to increase the efficiency and competitiveness of their operations. The biggest danger is assuming that the current slowdown will last forever.
      “During the past year or two of global recession, many shippers have switched to freighting by sea instead of air, even for time-sensitive goods such as computers. A key trend to watch will be whether these shippers revert to using air. Another positive development would be the release of blockbuster consumer products that must be moved quickly, such as future Apple iPads,” said Mr. Lee.
      Despite the economy, China is finding the need to import more and more goods to satisfy China’s middle class. This is great news for the air cargo business; whether it continues is a matter for the sages. “If this trend is maintained as the Chinese middle class and the nation’s thirst for foreign goods grows, it will be good news for air cargo and other freight operators.
      “In turn, cargo operators should be able to command more comparable rates for freight into China as they charge for outbound capacity.
      “However, air cargo operators should look closely at the drivers behind these statistical changes. While the growth of the middle class in China appears to be driving greater demand for foreign-made goods, it is also vital to look at the exact composition of China’s exports and imports as well as the impact of currency fluctuations outside the tied US-dollar-Yuan relationship.
      “For example, China’s trade with Australia mainly involves China importing natural resources that travel by ship, not air. This trade rose 46.5 percent from 2009 to 2010 alone, despite the impact of a sharply higher Australian dollar.
      “While this growth increased the overall imports number, it would have done little to rebalance air cargos. Similarly, the fastest growing imports to China in that period were ores, slag and ash, and copper or related articles—not French champagne or European-made cars—according to the PRC’s General Administration of Customs,” said Mr. Lee.
      More balanced trade will surely benefit shippers, forwarders and airlines, and Mr. Lee is quick to inform us of how those benefits will play out. “Where more balanced trade can be achieved between China and international markets, it delivers a number of benefits to operators across the supply chain.
      “The first and most obvious is to allow cargo carriers to improve yields on their capacity investments by increasing the rates they can charge for shipping into China.
      “Greater balance would also allow for better human resourcing and facility-level efficiencies across the supply chain. These efficiencies would include the staff that shippers, forwarders and airlines have at each end of the supply chain and utilization of warehouse space,” Mr. Lee said.
      The disparity in price between importing and exporting in China will not have an effect on the success of China trade, however. “It still costs about twice as much to fly cargo out of China as it does to fly it in.
      “However, the good news is that cargo operators can now charge about US$1.50 per kilo for freight travelling from the US to China. That’s up from the below US$1.00 rates we have seen for years, but still well below the US$3.00 or more that can be gained flying freight from China to the US.
      The question for carriers is whether they should look at changing their long-term strategies to account for the greater balance—Mr. Lee assures us it goes deeper than that. “Growing imports will not provide a quick fix to the imbalance problems.
      “Instead, players should look for lateral solutions to gain the benefits of balance. “For instance, are there ways to better aggregate cargo destined for China at locations outside the country and to become the carrier of choice for the final leg? Are there unexplored niches where carriers can specialize and increase volumes of ideal types of cargo? Further, can companies move outside conventional and crowded hubs to find new opportunities? In particular, can they move beyond their traditional traffic flows and reliance on heavily contested routes such as the transpacific?
      There has been a recent trend of more shipment demand to and from interior China, but Mr. Lee does not see it conquering coastal imports/exports any time soon. “The coastal cities still dominate demand for air cargo.
      “Hong Kong and Shanghai Pudong airports are among the world’s top 10 cargo hubs by freight volume, while Beijing is one of aircraft manufacturer Airbus’s 32 designated ‘global hub cities,’ which have a high concentration of cargo and passenger traffic.
      “However, there is some evidence of growth away from the coast. For example, Sichuan province in China’s west is developing Chengdu airport as part of an effort to attract high-technology businesses to the region. Until recently, Chengdu’s airfreight needs were served by belly hold capacity in passenger flights, but in recent years the airport has begun receiving cargo-only aircraft.
     “Those airports away from the coast looking to expand their cargo capacity could look to the International Air Transport Association’s (IATA) air cargo supply chain agenda, which aims to improve customer service and competitiveness based on safety, security, quality, efficiency and the environment. “For example, replacing paper shipping documents with electronic messaging can save up to 24 hours per shipment, IATA says,” said Mr. Lee.
SkyKing

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