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Family Aid 2020
   Vol. 20 No. 36
Thursday September 23, 2021
Airline Problems Began Before COVID-19

William R. Boesch is an air cargo pioneer, and also an accomplished leader
across a distinguished and exemplary 50 years’ career. Bill served as President of American Airlines Cargo, which he prominently put on the world stage during the era of Robert Crandall, the inventor of the Frequent Flyer programme. Crandall and Cargo were sitting either side of the aviation chessboard, while Bill Boesch was trying his luck with the belly space.
     A key logistician for U.S. military forces, Bill Boesch later created methodologies in transportation that delivered the goods, while saving lives during the Iran and Iraq conflict. For his efforts Bill was awarded The Medal of Freedom at a ceremony on Ellis Island in New York harbour, in the shadow of the Statue of Liberty.
     Impossible to give a complete recount of the prestigious, decisive positions which Bill held in his long and inspiring career, suffice it to say that he is (or was, accordingly) a key player for Seaboard World Airlines, Pan Am, American Airlines, Emery, DHL Global Mail and the U.S. Dept of Defence, whereas he also founded and continues to lead today the Council for Logistics Research, Inc. We suspect he was also the mastermind behind the Flying Tigers’ feat.
      FlyingTypers did not pass the chance to exchange views with Bill and what follows is an abstract of their recent conversation. Speaking of abstracts, here is an interesting element to explain why we were so interested in exchanging views with Bill Boesch: this is part of the WIPO Patent for tracking and logistics management system that Marconi and Envirotainer obtained on Oct 11th 2001. The application was dated April 4th 2001, following U.S. documentation dated April 4th 2000.
WIPO Patent

Bill and Shari Boesch      We know from Bill Boesch that, in addition to Envirotainer, he also served on the Board of Directors of Air Cargo Incorporated, Air Cargo International, The International Air Cargo Association (TIACA), Deutsche Post Global Mail, Smart-mail, DHL Global Mail, and Al Seqir/Falcon.
      In this regard though, more importantly he was one of the four inventors of the patented system referenced in the above source. Today we are familiar with aviation security, the powerful engine which drives tracking and tracing and total logistics management. Reading the text of the abstract in 2021 is a no brainer, these concepts sound totally obvious to us. However, the inspiring personalities that could see the picture in 2000, so far as to imagine what was to become of air cargo, were not many before 9/11. Kudos to William R. Boesch for that.
      Both Bill and I have learned in our lives how unpredictable the future is, but it is nonetheless legitimate to try and figure out what is at stake, with a bit of imagination and, perhaps more importantly, 50 years’ experience on your shoulders.

GA:  Bill, I have always been fascinated by the way you went to the top of the aviation industry, even though you have been more involved in air cargo, not the first choice for many airline professionals I daresay. Can U.S. airlines make money with air cargo in your view?
WB:  The U.S. passenger carriers’ main strategy has been to be the biggest and have the highest market share. Their schedules and their frequent flyer games were based on that, their growth plans ensured they had resources, capacity and flights as needed on each route at different times, so their frequent flyer customers never had to use another airline. Cargo was considered a by-product in the end. This strategy only works when the economy is flourishing. With declining figures, carriers cannot shed their fixed costs and start suffering. New, lower cost carriers enter the market: a situation we have often seen over the past 50 years, roughly in 10-year cycles. With lower profit margins than other industries, airlines have never been a good long-term stock buy.
     Bob Crandall, the former chairman and president of AMR/American Airlines, had a sign on his desk which said: “If God meant people to fly, he would have made it profitable”. Bob Baker, who ran the successful operation at AA, felt that airlines had a hard time to show a good long-term profitability because of their unions, but I believe that the problem was not the unions, as much as the airlines just had the wrong long-term strategy at that time.

GA:  That is quite a statement, Bill. What would you suggest instead? Would you suggest a more balanced approach between passengers and cargo?
WB:  Well, let us first review the passenger side. Fortunately, some airlines are abandoning the old strategy and are now looking at different long-term profit schemes. The Coronavirus pandemic was the straw that broke the camel’s back I believe: it is impossible to predict the future with 100% certainty, no matter how good or accurate the data, but predicting the impact of a pandemic before you are right in the middle of it is next to impossible. Passenger airlines and aircraft manufactures got it wrong when the A380 and the B747-8 and B780 were introduced into the market, against all figures; we all know that now, but twenty years ago that seemed to make sense.
     On the passenger side there are just three types of long-term profit strategies. 1.   Utilizing more narrow body aircraft on domestic and international routes.
2.  Limiting widebody international aircraft to major hubs overseas and using international partnership agreements to move passengers to their final destination.
3.  Is a combination of the first two. Much, of course, depends on the strength of the partnerships.

GA:  Well, Bill, you say the pandemic and the A380 taught us a lesson, did they really?
WB:  U.S. business travel is expected to only recover to approximately 70%, at least initially, as virtual meetings are just too convenient for businesses. Hence U.S. airlines will try to increase their percentage of leisure travellers and improve their business class accommodations, targeting the reduced number of higher paying business travellers by flying more single aisle aircraft internationally. That is why Boeing is considering upgrading its 757 to compete in this emerging market. The result will be less belly space for cargo overall, as leisure travellers tend to check their bags, particularly if they fly far away.
     Over the past two decades the passenger carriers moved about 60% of the international air cargo and treated it as incremental on-demand business with “capture pricing”. The predicted result of less passenger aircraft belly space is good news for the air cargo freighter market, and the end result may be that only as much of 40% of the world’s international cargo business will travel as belly cargo in future.

GA:  This will push cargo prices upwards even higher, or is something else at play here?
WB:  Cargo rates are at an all-time high and are not expected to be lower until sufficient belly space returns on passenger aircraft. As noted previously belly space is just starting to rebound. The major freight forwarders, who are the prime users of belly space, are seeing this trend and are forming partnerships for either ACMI or CMI leases to ensure access to capacity and stable pricing. The results could mean a consolidation within the air forwarding companies, with bigger ones surviving and smaller ones being absorbed or finding a sustainable niche. It is a never ending story, as you well know.

GA:  We know only too well that air cargo cannot rely on freighters alone, so what do you see happening?
WB:  The air cargo industry has four primary business models for using freighters. They are scheduled service, e-commerce, integrator, and non-schedule charter operators.
     According to credible sources, the global air cargo services market is expected to grow from $56.48 billion in 2020 to $64.98 billion in 2021 at a compound annual growth rate (CAGR) of 15%. Most experts are predicting the market to reach $99.67 billion in 2025 at a CAGR of 11%. If these predictions are accurate, then air cargo will grow approximately $9B a year (or 14% per annum) through 2025 with at least 60% of the volumes moving on freighter aircraft.
     Markets supported by integrator carriers are expected to grow 20%, the e-commerce companies will grow 25 to 30%, the scheduled freighter operations may grow 10%, and ACMI contracts are becoming the vehicle of choice with the major airfreight forwarding companies.
     One major change affecting the cargo industry is that the ACMI/CMI lessors want to renegotiate their rates yearly, while most major ACMI lessors are insisting on five-year leases at a higher margin, with the present shortage of freighters. This, coupled with a possible slowdown in U.S. foreign trade and a continued strained U.S./China relationship during which China grows its own freighter fleets, could mean the U.S. cargo carriers will be at the bottom of the “totem pole” and in serious trouble, if their fleets are not covered by ACMI/CMI leases.
     Looking at the U.S. freighter and on order conversions and new freighters, most are going to the integrators and the e-commerce companies, which will dominate the air cargo freighter market in the near future.

Bill Boesch in Iraq and Afghanistan

     There are other elements at play in this day and age that we in the U.S. could once upon a time consider less important. China is rapidly becoming the largest market in the world in all segments and air cargo is probably next in line. Europe is probably less likely to grow at the same pace, but my take is that Africa will come next with exponential demand in cargo. Let us not forget that 13 out of the 20 largest cities in the world will be in Africa in 2100 and the other 7 in Asia, none of them in China. America and Europe are out of this picture. It is not happening overnight, but demographics rarely fail and this model in eighty years’ time is completely different from today’s model. We must wait and watch what this kind of future will bring.
     In the meantime, let me thank you for the insight you have given us, which will be extremely interesting for our readers. Let me wish you all the best in your current endeavours that are so important for our nation.

Chuckles For September 23, 2021

Time To Exit TSA-Mike White
Two-fisted presentation from Mike White in Los Angeles to a soldout luncheon of the Los Angeles Air Cargo Association (LAACA).
  Mike’s personal experience on air cargo security, prior to 9-11 and after 9-11 were on the menu.
  Mike also raised concerns that the TSA is not the agency that should be involved with air cargo security.
  “The attack on the President of United Airlines by the Unabomber, Ramzi Yousef's attempt to blow up passenger flights and the first bombing of the World Trade Center and how TWA 800 not being a cargo issue brought concerns to what needed to happen in cargo, including the known shipper and IAC programs,” Mike declared.
  The former President of CNS and current CEO & President of Trade Network Consultants LLC had this to say to the LAX Club:
  “My personal take as to what happened on 9-11 included being on the opposite side of the Pentagon when the American Airlines 757 was flown into the building.”
  Mike also shared that there were private meetings held in Washington then with airline officials in the boardroom of the Air Transport Association.
  These meetings attended by Mike included then DOT Secretary Norman Minetta, Postmaster General John Potter, Northwest Airlines CEO Richard Anderson, Air Transport Association President Carol Hallett and officials from the FBI and Secret Service. Many of the decisions that were made to get cargo back on planes were made in those meetings.
  Mike told the luncheon that the lack of progress by the TSA to understand how air cargo is changing and how new measures need to be instituted. The task of getting away from the antiquated paperwork required by TSA at airports and moving to air cargo electronic data for targeting is daunting.
  “It was also suggested that due to the stuck-in-the mud bureaucracy that maybe it is time that TSA not be the agency in charge of air cargo security and maybe taken over by CBP who has more capabilities and understanding of transportation logistics.
  “It is up to organizations like LAACA to build a ground roots movement to make the changes to meet the needs to keep the supply chain secure while keeping air transport safe,” Mike White declared.

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Airlines Had Issue Before COVID-19
Get TSA Out Of Air Cargo

Flossie ArendFlossie Arend
Managing Editor
Air Cargo News FlyingTypers

    I remember waking up on the morning of 9/11 and wishing I could go back to sleep. I was a junior in college and had chosen to have early morning classes on Tuesdays - a big mistake for me as I naturally kept night owl hours. My dorm apartment was relatively quiet when I got out of bed, but I could hear the television on in the living room; this was a normal occurrence as my actor student roommates were always up early and put the television on while they had breakfast and got ready for the day.
     I remember walking in to the living room and feeling as if I had walked into a museum. My roommates, coffees in hand, were sitting and standing as still as statues, their eyes focused on the television set. The first plane was hitting Tower 1 on a loop, like some nightmarish broken record. It was probably about 8:55 in the morning then.
     I don't remember what we said to each other, but they must have acknowledged my presence with something like, "A plane hit the World Trade Center." I was frozen. I think I had the opposite reaction from everyone else, at least from what I've read in editing together FlyingTyper's 9/11 responses: my brain immediately began buzzing with negative thoughts. A plane of that size would never fly so low, so close to the city. Some instinctual part of me knew it was terrible, and not an accident.
     I stood with my roommates, watching as the second plane hit Tower 2. I don't know what came over me then, but something in me clicked on, like an automatic coffee drip. I picked up my things and left my apartment to go to class. I don't know why I thought class would still be going on, but I guess when something like that happens - the kind of thing that attempts to tear through the fabric of a routine life - the brain and the body struggle to operate normally. Like when someone dies and we comb their hair just so, and fix their collar, and wipe something from their cheek.
     My morning class was all the way on the other side of campus, across a large field. I had to pass through several dorm apartments to get there. I remember that it was an absolutely gorgeous day. A robin egg sky, a warm, yolky sun and very few clouds. The only sound I could hear was the soft wind through the trees and the gossiping birds. No one was outside. I was the only person still on schedule, walking to a class that was surely canceled but walking anyway, I'm not sure why. I distinctly remember taking a path between dorm apartment buildings and seeing the blinds closed on all the windows, as if no one was willing to let this day in - as if they could somehow keep it out. Every window was flickering ghostly blue behind those blinds, the lit staccato coding of television sets humming in dark rooms. That image will stay with me always - the long, green path between buildings and those eerie, flashing blue windows - my campus as a ghost town.
     I reached the door of the building that my classroom was in and it was locked, of course. There was no sign - no time for signs, I guess. Looking back on it now, I suppose it is somewhat ironic how determined I was to get to my Tuesday morning class - Self Defense. Something unconscious was clearly at work there; I don't think I have to explain it.
     I got back to my dorm in time to see the towers fall. I can't describe the feeling of watching something like that happen in real time. We take for granted the landscape of life and the world so that when the topography changes, it is a grim reminder of impermanence - our own and our world's. Perhaps it was my youth, but I wasn't prepared to see a piece of New York City crumble to ashes; I naively thought of the buildings like bone in the body of the city, and a broken bone - a tooth falling out - was unfathomable.
     The days that followed were jumbled and confusing. I didn't feel in them so much as outside of them, peering in. My siblings were scattered all over the city, and I was only interested that they were ok. My parents were meant to be in the Towers delivering the Air Cargo News that day, and I am forever grateful that the stress of a family business left them too tired to go in.
     Everything changed that day. We became a nation that didn't just look on horror, but experienced it as well.
     For decades we had seen war come to others and had seen how it ravaged and destroyed, but it had never come to us like with the World Trade Center. Even Pearl Harbor had occurred within some kind of pretext, however awful it was. I feel as if this was like a shot to Achilles' heel - we were not some ambling God-nation that could remain impenetrable and immortal. There were arrows that could take us down. I only wish we had the foresight to see it earlier, to know that we were, in fact, capable of crumbling, and that just because we had wealth in our coffers did not mean we could be kept safely outside the realm of the horrible. Money won't protect or save you - it might just put a target on your back.
     The idealist in me wishes we could have gone in another direction somehow - one that didn't lead to fear, suspicion, hate, racism, greed, war. It's been 10 years and we only just recently took out Osama bin Laden.      What do we have to show for those ten years? How did we grow - not as a nation, but as people who share a planet? I know I'm probably 1,000 times safer getting on and off a plane now, but is life in general any safer? It seems we are treating symptoms and not illnesses. How can we heal ourselves at the source?
     Some would say the hate and anger at the root of all this is like the common cold - it can't be cured. They've given up hope.
     Why give away the one thing that can't be taken?

Flossie Arend wrote this in 2011 reflecting on the 10th anniversary of 911.

If You Missed Any Of The Previous 3 Issues Of FlyingTypers
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Vol. 20 No. 33
Questions for Willie Walsh
Chuckles for August 30, 2021
Pumping Traffic
CNS Partnership @ 30
Steve Prince a Gentle Giant

FT090721 Vol. 20 No. 34
Laurent Bernet—A Life Well-Lived
Nothing To Lose But The Wait
First From New CNS President
Brandon Fried & Willie Walsh
AA Cargo Lauds CNS
More From CNS
Chuckles for September 7, 2021
Airline Problems Before COVID
National Aviation Day

Vol. 20 No. 35
Escape From The World Trade Center

Publisher-Geoffrey Arend • Managing Editor-Flossie Arend • Editor Emeritus-Richard Malkin
Film Editor-Ralph Arend • Special Assignments-Sabiha Arend, Emily Arend

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