#INTHEAIREVERYWHERE

Martina Vollbrecht

Karin Krestan

Carmen Taylor

Ingrid Sidiadinoto

     PIA, the only Pakistani flag airline operating cargo service to Europe from Karachi, Lahore, and Islamabad on its Boeing 777 and Airbus 310s, hopes to be back flying into Europe this week after flights were banned by EU edict on July 28.
     It’s high stakes poker to get the EU okay ASAP, as PA generates more than 2 billion rupees annually on its European cargo runs—revenue that is vital to the cash strapped airline.
     For its part, (PIA) Captain Salman Azhar, director Flight Safety and Quality Assurance, is looking for a little understanding to help drive resumed flights.
     “It was not our fault at all,” he told Express Tribune in Karachi.
     “This temporary restriction wouldn’t have been imposed in the first place if EU validation had been processed on time.
     “We’re hoping that the validation officials will visit at least one of the stations this week.”
     The airline found itself caught up as an operator violating ACC3, operating into EU from a Third Country that demanded carriers to take certain security screening measures by July 31, 2014.
     Pakistan is in the high-risk or “Red” ACC3 category since the recent armed attacks on Karachi Airport.
     In compliance PIA says it had installed dual view scanners and explosive trace detectors (ETDs), and deployed dogs trained in identifying explosives.
     “The validation is good for ten years.
     “We are now just trying to minimize the loss by getting the process done as quickly as possible,” said Azhar.
     “Interestingly, we are in compliance with the U.S. and Canadian regulations,” he said.
     Left out in all of this is heightened security awareness—maybe even the fear factor—on the heels of a deadly June 10 attack on Karachi's Jinnah International Airport that killed 28 people.
Geoffrey/Flossie

The institutional air cargo industry gathered in Los Angeles earlier this year for its annual IATA World Cargo Symposium with Hollywood serving as the backdrop—quite a propos given the various stunts, sets, and stars.
     To put things in context, California represents the 8th largest economy in the world (if it were a country) with 38 million people, or 13 percent of the U.S. population. The 2012 gross state product was 2 trillion dollars, or 12.9 percent of the U.S. GDP.
     Closer to air cargo, LAX ranks 14 on the ACI (Airports Council International) list of the world’s largest cargo airports, while Long Beach is the number one container port in the U.S.
     Given these statistics, what happens in California may well have general applicability industry wide. San Francisco-–Oakland, San Diego, San Jose, and Ontario round off LAX to rank in the top 16 airports in the U.S. for cargo [and top five in California].
     The data was gleaned from DOT records (Form 41 Traffic and T-100 segment tables), starting with Q1 of 2003, and aggregates freight and mail at airports with more than 100,000 pounds and up annually.
     It’s rather coincidental that in January 2014, the Institute of Transportation Studies at the University of California, Irvine, published a study titled “Determinants of Air Cargo Traffic in California.”

No Crystal Ball Results

     UCI is the 5th top transportation engineering research institute in the world.
     Rather than yet again hearing air cargo insiders make pronouncements from their respective crystal balls, let’s take a peek at what the academics are saying.
     While, admittedly, a study comprising the entire U.S. would have value, the authors concluded that because of its size and special blend of its economy, the “state-level analysis is also appropriate.”
     The “study aims to estimate the socioeconomic determinants of air cargo tonnage at airports in California [based on] a 7-year panel (2003-2009) using quarterly employment, population, and traffic data of metro areas in the state.”
     Furthermore, it also examines “how the total air cargo traffic at airports in California is affected by the characteristics of the corresponding metropolitan economies.”
     The authors, Ph.D. candidate Paulos Ashebir Lakew (left) and Andre Tok, Ph.D., (right) go on to say:
     “Our results confirm our expectation that the shares of manufacturing and government-related employment have a considerable impact on outbound air cargo traffic. Outbound cargo traffic is also found to be proportionate with city size while the corresponding inbound traffic increases less than proportionally to population. Income and service-related jobs are found to play a substantial role in determining both outbound and inbound air cargo movement.”

The Findings

     One insight isn’t a surprise—achieving balance in the bi-directionality of air cargo, which has been a long-standing challenge from the early days of the industry—is a critical factor in a successful operation.
     What the study aims to reveal is what drives inbound and outbound air cargo to a particular airport. Another finding, which may be surprising, given that most of the industry and media focus has been on what has been happening since 2008, is that while “…the expansion of air cargo transportation initiated numerous studies on the role of goods movement by air, current numbers show that the growth of air cargo traffic in California has slowed down markedly over the 2000-2009 period.” Lakew and Tok have sampled data for 22 airports across 15 metropolitan areas in California.
     Earlier research is cited, which points to spars literature dealing with how air freight impacts the California economy. A 1988 study mentioned that at the time, over 50 percent of its exports [in terms of value] were moved by air. To put it in perspective, total California exports equated 1.24 trillion dollars between 1998 and 2008, encompassing express, small packages, pharma, perishables, and special purpose equipment! This has been particularly important for exports to the Pacific Asia region.      For the 2003-2009 timeline, passenger and combi aircraft carried 11.8 percent of the cargo originating in California.

Air Cargo & Jobs

     The pair documents that there is a “direct relationship between metropolitan socioeconomic factors and air cargo traffic, with manufacturing and services industries employment having a strong impact… despite the sharp fall of statewide computer and technology manufacturing employment after the 2000 dot.com bubble.”
     The authors suggest that their conclusions could be used to determine how airport development policies affect decisions carriers make regarding hub and routing options. Naturally, the ranking of California airports matches the population of the respective metropolitan areas; however import air cargo increases are less dependent on city size, yet more pronounced as it relates to exports.
Interestingly, “white collar job concentration increases inbound traffic and both white collar and blue collar employment raise outbound air cargo traffic in California.” It also seems to suggest that large metropolitan areas are self-reliant.
     The equation used for the base model of the study looked at a number of factors, including age and average weekly wages, together with the percentage of unemployed population of the total labor force.
     Thus, for instance, a relationship exists between the numbers of workplaces near an airport—“increased cargo traffic can introduce more jobs within the vicinity of an airport and change the city’s employment shares.”
     Demographics aside, a seemingly seldom-considered influence is attributed to “…an unobserved variable or the high demand for children’s toys and gaming consoles.”
     “A 1 percent increase in average weekly wages raises total outbound cargo at a major metropolitan area by 2.7 percent while also raising inbound cargo tons by 3.5 percent.”
     San Francisco Bay area is a case in point, with average wages well above the California average and corresponding high volumes of cargo, based on Q4 2009 figures. It follows that high-tech companies rely heavily on importing components for their finished products.
     In contrast, manufacturers depend far less on air cargo for raw materials for their products, which are less time sensitive.
     Additionally, after 2000, “manufacturing employment in California fell by 27 percent over three years.”

The Integrators

     According to the study, the integrators/express carriers play a prominent role in serving the supply chain requirements for the California service industries because of the frequent next-day aspect of their businesses.

Other Voices

     The last metric examined deals with the fact that “small airports in the 100 mile vicinity of a city with a large airport will experience traffic diversion.”
     This is stronger for imports, which the authors conclude indicates “shippers and forwarders greatly prefer flying air cargo goods to an airport, even if the final destination of the goods being shipped is closer to a small airport.”
     The respective ratio is listed at 78 percent of outbound and 92 percent of inbound air cargo being diverted from small to large airports within the given range.

Summary & Conclusions

     •    While most variables exhibited the expected results, we were surprised to find that the cargo effect of the construction-employment share, an indicator of economic strength, is consistently negative.
     •    Along with the comparable results for the share of construction employment, the data suggests that a higher concentration of blue collar jobs lowers inbound air cargo traffic levels.
     •    Although income showed the expected strong and positive relationship with both outbound and inbound cargo traffic, we were surprised to find that higher cargo traffic levels are also positively associated with the unemployment rate.
     •    Considering the recent airport capacity concerns expressed by the aviation community in California, we hope to have identified some key determinants of air cargo traffic.
Ted Braun

   A runway, by definition, should be more or less horizontal. More or less, because some runways in remote areas such as the Andes had to be constructed over slopes, which makes approaching them a skills test for any modern-day pilot.
   An almost forgotten remnant of the Vietnam War is the “Vertical Runway” in Vientiane, Laos.
   The Laotian “Patuxay,” best translated to “Gate of Triumph” is a war monument erected in memory of the Laotian solders that gave their lives in the Indochinese wars against the colonial powers of France.
   Erected between 1957 and 1969 and also dubbed “Arc de Triomphe of Vientiane”—both for its resemblance to the French counterpart in Paris and its meaning for Laotian freedom from foreign oppression—it shows a multitude of mythological Laotian decorations, such as the “khinnary,” half bird, half woman.
   Its five towers represent the five Buddhist principles of honesty, flexibility, amiability, honorability, and prosperity.
   Its nickname “Horizontal Runway” stems from the fact that the concrete and steel used for its construction had been earmarked by the U.S. government for the reconstruction and expansion of the Vientiane Airport as a fighter airbase in the Vietnam War.
   The purchase agreement negotiated between the Royal Laotian Government and the U.S. at that time expressly stipulated its use for the airport expansion; however, since delivery of the materials took place before the contract was signed, it was subsequently never finalized, and the Laotian government didn’t feel bound to its stipulations.
   The Maoist Pathèt Lao overturned the monarchy in 1975. Although the “Anouh Savaley” (meaning “memory”) monument (that is how the monument used to be known in the Laotian language) was soon renamed to “Patuchay” or “Patuxay” and rededicated to the victory of the communist regime over the constitutional Laotian monarchy, it continues to be an architectural gem in the skyline of Vientiane, and a reminder to the U.S. government that “pacta sunt servanda” applies only where such contracts have actually been formally inked.