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A R C H I V E S

E D I T O R I A L

History Alive—IATA Again?

     Some day soon all of us will need a comprehensive list of the alliances and partnerships and cooperations that have come into being during the past few years.
     This time is like none other in the history of air cargo, as more and more transportation companies combine services.
     New cargo alliances have taken on the aura of ‘flavor of the week.’
     Some place there must be a room full of people who studied finance and mergers, whose job it is to think these combinations up.
     It’s gotten so that you need a pocket rocket directory just to keep track of who is whose partner.
     What happens (god forbid) if these deals start to fall apart? Imagine looking for your great service combination, only to discover that it no longer exists.
     For example, there you are doing a Rip Van Winkle, and upon waking you discover that your medicines, which DHL, Danzas Air & Ocean and Lufthansa Cargo were shipping to you via a sensational new strategic partnership set up to serve the pharmaceutical business that was going great guns when you dozed off, has somehow been discontinued?
     That can’t happen?
     Ask the guy next to you waiting for his Pan Am flight to Berlin.
     But seriously, for now, in early October 2003 it’s the DHL, Danzas, Lufthansa pharm arrangement that is not only on, but in shipping terms, these new life sciences transport partners, are ready to rock.
     The aim of this cooperation, (the group acknowledges this deal can be seen as the initial stages of a joint venture), is to offer leading clients in the life-sciences industry integrated logistics solutions for temperature-controlled, door-to-door transportation.
     The way the partners have it configured, pharm customers will benefit considerably from a seamless (once all the wrinkles are out) standardized service to numerous destinations around the world.
     More transparency as well as a continuous temperature-controlled, door-to-door service adds up to added value and better fit, according to the partners.
     Well, good luck to them and in an increasingly complex world, to us as well.
     If anything changes, we hope that somebody remembers to leave a call.
     For a moment share the thoughts of an Air Cargo News reader from the UK who has been in this business since 1969 (and wishes that his name be withheld):
     “Once upon a time there was one big alliance known as the International Air Transport Association or IATA.
     This allowed an air cargo company to ship goods via any IATA airline from their local airport to anywhere else in the world, simply by utilizing any number of member airlines on one Air Waybill.
     Costs were detailed in the IATA Tariff, and the revenue split between the carrying airlines on something resembling pro-rata based on mileage.
     But the airlines complained about IATA controlling rates.
     Many broke ranks to follow their own marketing procedures.
     Now a company could take their shipments to their local airport and if they were lucky, have that cargo moved from the nearest gateway airport to another gateway and rarely further.
     Since then, there have been many failures, many take-overs, and now several high-level alliances of the major airlines.
     So what is the result?
     Now a company may be able to take their shipments to their local airport and have the cargo shipped from gateway to gateway to gateway and rarely further.
     Are we moving to a time when the airlines will form themselves into one big alliance?
     And what will they call it?
     IATA?”

Another Fine Mess

     If Stan Laurel and Oliver Hardy were to describe it, Ollie would say:
     “Here’s another fine mess you’ve gotten me into.”
     A new rule from the Financial Accounting Standards Board (FASB) wants U.S. airlines to add cost of airport bonds to their debt load.
     How great is that.
     In early August it was cascading blackouts, now the carriers are faced with cascading debt.
     Airports issue municipal bonds to build a passenger or cargo terminal, use lease payments from an airline to service the debt and have the airline guarantee the debt.
     That’s how Los Angeles World Airports and The Port Authority of New & New Jersey and AMR for example, raised $2 billion to create AA super passenger centers at Los Angeles International and New York’s John F. Kennedy International Airport.
     But if enacted, the scheme that AMR thought it had done and done, could add $2 billion to the company debt load that would adversely impact already anemic balance sheets.
     Is FASB nuts?
     Can’t these accountants with their green eye shades and garters on their sleeves, take some time to go to the beach, drink some Corona and mellow out?
     Maybe if they relax and smell the roses, the experience might also serve to reawaken their other senses too.
     What the airlines need now, is some world peace and quiet plus a reliable source of electricity, so that they can stay up some more all night, as they try and figure out how the hell to survive.
     Next they need to raise some money to tide them over until business normalizes.
     If the FASB is allowed to impact airline balance sheets with more debt, financial markets could turn tail and head elsewhere.
     If the FASB wants to do the right thing, how about cutting the posturing nonsense and assist the airlines in getting a couple bucks to help cover that blackout which impacted 50 million people and devastated airline schedules?
     Why should Home Depot be the only Blackout ’03 winner?
     In a Forbes article, UPS was quoted saying something like they see nothing wrong with everybody changing their balance sheets, since UPS already does it the FASB way.
     To that we say:
     Shut up already, UPS.