AirCargoNet

NEW freighter services to Europe, Africa and South East Asia are all under consideration at Saudi Airlines Cargo, as the newly independent cargo company continues to adopt a more commercial approach to its business.

Michael Meagher (right), its executive vice-president for the past year, describes it as a “sleeping giant”, and reckons it still has plenty of potential to make more use of its favourable geographical position.

The first innovations in the carrier’s freighter schedule came as a result of the downturn in the first half of 2009, when, like many operators, it saw a 30 per cent fall in cargo volumes. That spurred it to reduce freighter flights to China and seek new destinations. New routes to Istanbul, Lagos and Cochi in India were the result. All started as weekly, but Istanbul and Lagos have now been boosted to twice weekly.

SOUTH Korea’s Fair Trade Commission (FTC) has fined 19 airlines a total of 120 billion won (US$98 million) fine for cargo price-fixing, cautioning two others.

The FTC found the airlines guilty of conspiring to introduce fuel surcharges for freight cargoes or continued to raise them over the past seven years. This is estimated to have resulted in the loss if $5 billion worth of sales in the South Korean market.

Korean Air Lines took the brunt of the fine – $39 million – with Asiana Airlines next heavily fined with $16 million. However, Korean Air will actually only pay $18 million because it voluntarily admitted its wrong doing to the FTC.

Other airlines fined include Air France, Cathay Pacific Airways, Japan Airlines International, Lufthansa and Singapore Airlines, while the two companies warned were Air India and Scandinavian Airlines System.

AIRBUS’ chief executive officer, Tom Enders, has admitted that the A380 freighter version is on the “backburner”.

Speaking at the delivery of Lufthansa’s first A380 in Hamburg (Germany), Enders said that it was important for the aircraft manufacturer not to overstretch itself when market conditions are only just improving.

With the whole A380 programme looking like it may turn into an expensive white elephant due to delays and unfortunately timed market conditions, parent company EADS’ chief executive officer Hans Peter Ring, admitted the five-year target to break even on the model, “is not to be understood as guidance, just as an extrapolation of current trends”.

Reading between the lines of management speak, Ring seems to be suggesting the model won’t be breaking even within five years.

That leaves Airbus in the unenviable position of knowing that the A380 – while a dream to fly on – is a drain on resources, but needing to promote it so as to try and recoup as much of the initial investment as possible.

However, Richard Aboulafia, vice-president analysis at the Teal Group, said: “The A380 is best regarded as a US$25 billion write-off and an act of industrial irresponsibility.”

DUBAI International Airport (DIA) has reported a 19.6 per cent increase in cargo traffic for April.

Year-to-date, cargo grew by 24.6 per cent to 715,628 tonnes compared to April 2009.

“So far we are outpacing our projections for 13.6 per cent growth during 2010,” said Paul Griffiths (right), chief executive officer, Dubai Airports. “And with the addition of a number of new destinations and services in the months ahead we are cementing our status as a leading international hub.”

DIA said it managed the growth despite the disruption in North and Western Europe caused by Iceland’s erupting volcano, which had a knock-on effect around the world.

“The volcanic ash cloud that grounded flights around the world for six days last month had a minimal impact on growth at Dubai International in April,” the Middle Eastern airport said in a statement.

Iceland is located just outside the Arctic Circle.

US-based freight forwarder Givens Air Freight, operating under the name Superior Air, is being prosecuted for allegedly bribing Pentagon managers to win contracts.

Prosecutors say Daniel Whitehurst, national accounts manager, and Mark Lamb, vice-president and general manager, gave 402 ‘items of value’ totalling US$44,000 to primary contractors between 2000 to 2006. In return Givens/Superior won subcontracts worth $2 million. The items included “gifts, cash, entertainment, free accommodations in the Outer Banks of North Carolina and travel expenses”.

The government is looking for restitution of at least $88,000.

CHINA’S government has decreed that the country’s three main airlines – Air China, China Eastern and China Southern – have to merge their cargo operations.

The authoritarian move is an attempt to challenge foreign carrier’s dominance of the market. About 70 per cent of the international air cargo in China is carried by foreign airlines.

A task force made up of airline officials and state officials from the Assets Supervision and Administration Commission (Sasac) has been formed to work on the structure of the proposed joint venture.

An unnamed source told the Chinese media that the cargo airline would be based in Shanghai.

If the plan goes ahead (and with the Chinese government’s hand at the tiller why wouldn’t it?) the joint venture between Cathay Pacific and Air China, aiming to service China’s Yangtze River Delta region, is put at risk.

However, a Cathay spokesperson said: “Our target of having the joint venture carrier coming into operation this summer remains unchanged.”

SINGAPORE Airlines (SIA) has posted a six-fold increase in profits for the fourth quarter. Net profit from January to March was US$197 million, up from $29 million the year before.

Combined with the $286 million profit for the third quarter this reverses the $330 million loss made in the first two quarters of the financial year, in the middle of the industry low.

However, for the full year ending 31 March, the carrier’s net profit was still down 79 per cent from the previous year’s results, from $752 million down to $152 million

“Forward indicators suggest that the recent recovery in volumes of air cargo will hold up in the near term,” the airline said in a statement. “Yields for…cargo should keep pace with the growth in demand.”

SIA Cargo managed to make a gross profit of $8 million compared to a loss of $123 million the year before.

PLANS to develop Scotland’s Carlisle Airport into a freight storage and distribution centre have been scuppered by a local Irthington farmer, Thomas Brown.

Brown went to the Court of Appeal, which has now ruled that the authority should have conducted a full environmental-impact assessment before approving Stobart Air’s plans for the airport.

Stobart’s chief executive officer, Andrew Tinkler, said: “We intend to appeal as we feel the court has not given due regard to us as an airport operator. Despite this setback, we remain committed to finding a solution for our future logistics activities at the airport.”

However, he added: “If it’s not possible to do it in Carlisle we’ll have to look at other areas. Hopefully as time goes on we’ll be able to get the solution we need at Carlisle Airport.”

The leader of Carlisle City Council, Councillor Mike Mitchelson, said: ”The city council will continue to work with the developer to bring forward improvements to Carlisle Airport. We will also give detailed consideration to the terms of the judgment and any possible grounds for appeal.”

Aviation consultant Peter Elliott, who once worked for Tinkler and who acrimoniously left the company’s employ said with Schadenfreude glee: “I am thrilled for the people of Irthington. There will now be no airfreight aircraft flying low over their village.”

Elliot had tried to take Tinkler to court for alleged “criminal aviation activities” at Carlisle Airport. The case collapsed, leaving Elliott bankrupt.

AUSTRALIA’S International Air Services Commission has awarded Qantas unlimited cargo capacity and frequency on its Korean route for 10 years.

No other Australian carrier challenged the ruling.

Qantas plans to operate a 747-400 freighter wet leased from Atlas Air on the weekly routing that will take in Sydney-Seoul (Incheon)-Anchorage-Chicago.

Australian airfreight volume came in above expectations in December, an increase of 1.2 per cent to 773.6 million tonnes after falling 2.2 per cent in 2009.

BRITISH Airways World Cargo (BAWC) has posted revenues of £550.3 million for the financial year 2009/10, a fall of 18.2 per cent from the same period last year. In addition, commercial revenues were down 26.1 per cent.

Volumes were 2.2 per cent down to 4.5 million cargo tonne kilometres (CTKs). Cargo capacity for the same period was down 4.2 per cent. Overall yield fell 16.4 per cent, driven by lower levels of fuel surcharge and underlying market conditions. Excluding the impact of exchange rate movements, yield decreased by 24.5 per cent.

Revenues at BAWC’s parent company British Airways were down £1 billion, although it managed to cut costs by nearly £990 million, largely thanks to a £600 million saving from lower fuel costs over the year.

However, conditions improved in the fourth quarter where revenue increased 9.2 per cent and volumes by 5.8 per cent compared to the same quarter in the prior year. However, this must be measured against the very low figures of that time.

Steve Gunning, managing director, BA World Cargo comments: “In order for the recovery that has commenced in the second half to be sustained, we must continue to improve yields. In addition, a full recovery will be dependent on a rational and measured re-introduction of capacity.”

Rachel Izzard, financial controller, BA World Cargo, said: “Demand for cargo continued to improve in the fourth quarter, following the high unanticipated peak in the third quarter, led by demand for additional capacity out of China and South-East Asian markets. These markets continue to maintain a high level of demand for airfreight and our decision to maintain our freighter routes enabled us to build upon this recovery. Demand for our premium products has also remained strong with volumes maintained in spite of the ongoing global economic turbulence.

“While, we experienced some disruption to our schedule as a result of the heavy snow and ongoing industrial action, our response, in terms of scheduling solutions and the deployment of our comprehensive trucking network, meant that we were able to minimise the impact across the cargo business,” Izzard added.