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NOVEMBER 2007 INTERNATIONAL EDITION

SeekingSeeking GreaterGreater GatewaysGateways

Better Booking • India • Forwarder Probe Project1 10/22/07 9:59 AM Page 1

SIROCCO IS A STAR, HE IS RACING IN DUBAI IN 2 DAYS. WITH SKYTEAM CARGO, HE WON’T EVEN REALIZE HE HAS BEEN IN THE AIR.

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INTERNATIONAL EDITION

November 2007 CONTENTS Volume 10, Number 9 COLUMNS Western 12 North America Airports Heavily supported by air Air freight operators are cargo carriers, the new ADS-B 22 finding life better in air traffic control technology California these days may finally get off the ground following years of benign • Protected Kitty neglect by airport authorities 16 Europe New player Cargoitalia gets a significant boost to management with the addition of air cargo veteran, and a strong growth plan • Lufthansa Up 20 Pacific Technology Qantas Cargo is finding Air cargo carriers are lucrative markets outside becoming believers in the Australia with the help of leased 30 earning potential of freighters and new freight technology investments

India India’s exports are raising the country’s profile, but greater growth will only come with improved infrastructure DEPARTMENTS 36 4 Edit Note 40 New 6 News Updates Freighters 44 People Plane makers are taking 46 Bottom Line the mid-sized widebody freighter market seriously 48 Events with cargo variants of successful passenger aircraft

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Air Cargo World (ISSN 0745-5100) is published monthly by Commonwealth Business Media. Editorial and production offices are at 1270 National Press Building, Washington, DC, 20045. Telephone: (202) 355-1172. Air Cargo World is a registered trademark of Commonwealth Business Media. ©2007. Periodicals postage paid at Newark, NJ and at additional mailing offices. Subscription rates: 1 year, $58; 2 year $92; outside USA surface mail/1 year $78; 2 year $132; outside US air mail/1 year $118; 2 year $212. Single copies $10. Express Delivery Guide, Carrier Guide, Freight Forwarder Directory and Airport Directory single copies $14.95 domestic; $21.95 overseas. Microfilm copies are available from University Microfilms, 300 North Zeeb Road, Ann Arbor, MI 48106. Opinions expressed by authors and contributors are not necessarily those of the editors or publisher. Articles may not be reproduced in whole or part without the express written permission of the publisher. Air Cargo World is not responsible for unsolicited manuscripts, photographs or artwork. Please enclose a self-addressed envelope to guarantee that materials will be returned. Authorization to photocopy items for internal or personal use is granted by Air Cargo World, provided the base fee of $3 per page is paid directly to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, and provided the number of copies is less than 100. For authorization, contact CCC at (508) 750-8400. The Transactional Reporting Service fee code is: 0745-5100/96/$3.00. For those seeking 100 or more copies, please contact the magazine directly. POSTMASTER and subscriber services: Call or write to Air Cargo World, Subscription Services Department, PO Box 5051, Brentwood TN 37024; telephone 888-215-6084.

November 2007 AirCargoWorld 1 Project1 10/25/07 1:59 PM Page 1 Project1 10/25/07 1:59 PM Page 2

The new 777F and the 747-8F make for an unbeatable

combination. Already the most capable and flexible

freighters in the industry, together they fulfill virtually

any large payload (from 100-135 tonnes), range and mar-

ket requirement. Add to that industry-leading efficiency

and you’ve got the biggest advantage of all—the highest

profit potential combination in the business. 04EditorialINT 10/26/07 12:33 PM Page 4

International Trends & Analysis Editor Editor’s Note Paul Page • [email protected] Managing Editor Robert Moorman • [email protected] Contributing Editors Roger Turney, Ian Putzger, Mike Seemuth Art & Production Director Jay Sevidal • [email protected] Editorial Offices 1270 National Press Bldg., Washington, DC 20045 (202) 355-1170 • Fax: (202) 355-1171

GROUP PUBLISHER Air Environment Noreen Murray • (973) 848-7082 • [email protected] he European Union must think the International Civil Avia- Publisher tion Organization is part of Europe. Perhaps this perception Steve Prince • (770) 642-9170 • [email protected] Tcomes from the Anglo-French charm of Montreal, site of Advertising/Business Office ICAO headquarters, or the occasional anti-American statements 1080 Holcomb Bridge Rd. • Roswell Summit Building 200, Suite 255 • Roswell, GA 30076 from Canadian politicians trying to curry favor with their con- (770) 642-9170 • Fax: (770) 642-9982 stituents. That’s the only explanation we can think of for the EU’s International Advertising Offices Europe, United Kingdom, Middle East unwarranted attack on the technically based ICAO for not openly David Collison • +44 192-381-7731 [email protected] supporting the European Emissions Trading Scheme. Hong Kong/Malaysia/Singapore Joseph Yap • +656 337 6996 The EU lashed out at ICAO last month at the end of its 10-day meeting for [email protected] Japan taking no action on Europe’s proposed emissions cap-and-trade plan requiring Masami Shimazaki • +81-3-5456-8230 [email protected] airlines who fly over its air space to trade carbon permits, and pay more if they Thailand Chower Narula • +66-2-641-26938 wanted to increase flights. [email protected] Taiwan ICAO officials and others say privately the biggest problem Ye Chang • +886 2-2378-2471 [email protected] with emissions trading is that it can’t be verified. Australia, New Zealand Fergus Maclagan • +61-2-9460-4560 ICAO did form a new Group on International Aviation and [email protected] Climate Change to be composed of senior government offi- Korea Mr. Jung-won Suh • +82-2-3275-5969 cials, who will form a framework to seek ways to reduce [email protected] Reprints, Classified Sales harmful aircraft emissions. ICAO’s solution did not sit well Laura Rickman • [email protected] with the EU ministers, who want all airlines flying in Euro- (770) 642-8036 Administrative Assistant pean airspace to participate in emissions trading by 2012. Susan Addy • [email protected] U.S. airlines and those from non-EU countries oppose uni- Display Advertising Traffic Coordinator Tracey Fiuza • [email protected] lateral imposition of emissions trading, saying it violates in- (973) 848-7106 ternational air service agreements. Electronic Rights and Syndication Barbara Ross • [email protected] European politicians insist they won’t back down on their proposal. So it (973) 848-7186

appears some kind of court action involving multiple parties is inevitable, but CUSTOMER SERVICE OR TO SUBSCRIBE: (888) 215-6084 not before other avenues for dispute resolution is explored. One path leads back to ICAO. Interested parties could take action through ICAO under Article 84 of the Chicago Convention, the treaty governing inter- national aviation. Article 84 was used successfully several years ago to resolve a dispute between the U.S. and the EU regarding an ICAO requirement allowing 400 Windsor Corporate Park huskitted aircraft to meet Stage III/Chapter III standards. The solution from 50 Millstone Rd., Suite 200 East Windsor, NJ 08520-1415 ICAO is known today as the four-part balanced approach to noise mitigation. (609) 371-7700 • (800) 221-5488 A compromise on emissions trading could be reached under relevant bilat- President and CEO Alan Glass eral agreements. Should these government-to-government talks not yield a so- Senior Vice President, CFO Dana Price Vice President, Magazine Group Peter Tirschwell lution, then lawyers on both sides of the Atlantic will make a lot of money, President, PIERS Brendan McCahill but also waste a lot of time. Vice President, Directory Databases Amy Middlebrook Vice President, Human Resources Kenneth P. Slivken In the interim, the EU environmental ministers should hold their tongues Vice President, and consider what is ICAO’s basic mission. Beyond establishing technical and Production & Manufacturing Meg Palladino Director of Circulation John Wengler operational standards and procedures, ICAO’s role is to bring the various coun- Director of Creative Services John White tries together so they can decide on policies to enhance air transportation. It President, BACK Aviation Steven G. Casley was never designed to be a political institution or serve as a proxy for the EU. POSTMASTER: Send address change to: Air Cargo World, Subscription Services Department, PO Box 5051, Brentwood TN 37024 — All Rights Reserved For more information visit our website at www.aircargoworld.com

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UpdatesNews

mission is investigating the Associa- tion of Swiss Forwarders and several forwarder, including Panalpina. U.S. antitrust authorities earlier conducted a similar investigation in the compa- ny’s headquarters in the U.S. Panalpina said it is “not aware of any violations of antitrust regula- tions” and is fully cooperating. Mean- time, Panalpina recently suspended services in Nigeria, including import services for oil and gas customers, as a result of an ongoing bribery probe by the U.S. Department of Justice. In New York, the FBI raided Schenker offices, ordering staff to turn over all records connected to fuel sur- charges, according to sources in the forwarding industry. Meanwhile, the European Commission is investigat- Antitrust Probe is Forwarded ing Schenker’s offices in Essen, Ger- ith the legal ramifications of an international cargo many. Similar investigations have pricing probe still coursing through the airline indus- been conducted at Schenker’s offices try, authorities in Europe and the United States are in South Africa and Switzerland. Wpressing new investigations into whether some of the “Free and unhampered competition world’s largest forwarders fixed fuel surcharges and other prices. is a top priority for Schenker,” the The investigations into potential antitrust violations expanded last month company said in a statement. “Conse- with the search of Panalpina offices in Basel, Switzerland, a raid on Schenker’s quently the company has assisted the facility near New York’s Kennedy International Airport and subpoenas deliv- representatives of the competition au- ered to various international forwarders. Authorities also have contacted thorities in all matters connected with Kuehne + Nagel, EGL and DHL Global Forwarding. these investigations. Schenker will The investigation appears to be a coordinated effort involving numerous continue to contribute to the clarifica- government agencies on both sides of the Atlantic. “The antitrust division is tion of the facts of the case. investigating the possibility of anti-competitive practices in the international Several forwarding companies have freight forwarding industry, and we’re coordinating with the EU and other rel- been targeted for investigation by evant foreign competition authorities,” said a spokeswoman at the U.S. De- competition authorities in Germany, partment of Justice. Switzerland, South Africa and the An official at the Swiss Federal Competition Commission told reporters a tip U.S., according to a statement issued from one of the companies involved in the investigation led to the raids. by the EU Commission. The new investigation comes as the probe of the air carriers over their sur- DHL confirmed it has received re- charges appeared to reach a crescendo. quests for information from Swiss, British Airways has paid more than $550 million in penalties and some of EU and U.S. authorities, but no DHL its cargo executives were outside a plea agreement and so potentially exposed premises have been searched. to prosecution. U.S. authorities fined Korean Air $300 million and Lufthansa Separately, Seattle-based Expeditors Cargo paid some $85 million in penalties and industry officials said the airline International of Washington and the was cooperating with authorities in the investigation. Houston offices of Kuehne + Nagel of In Basel, the Swiss Federal Competition Commission searched for evidence Houston received subpoenas from in an investigation into alleged collusion in transportation services. The com- the DOJ regarding the ongoing inves-

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tigation of businesses within the air time, was glowing on the delivery setting labor contract, giving the cargo industry. last month of its first A380 passenger world’s largest parcel carrier labor airliner to Singapore Airlines, nearly peace for several years and potentially Holding Pattern two years late. The plane’s first com- putting more pressure on its chief ri- mercial operation was between Sin- val, FedEx. oeing’s new 787 passenger gapore and Sydney but SIA says it Last month, UPS and the Interna- Bplane isn’t quite as efficient as will fly the three-deck plane on a tional Brotherhood of Teamsters the manufacturer had hoped, at least Hong Kong-San Francisco rotation. reached a tentative agreement that on the production line, but the air- Delay of the 787 Dreamliner pro- would provide hikes in salaries and craft maker is still moving at full gram prompted the replacement of benefit contributions for health and speed in the freighter market. the top officer Mike Bair with Pat pension plans. The contract would go Just days after Boeing acknowl- Shanahan, who comes from Boe- into affect after the current accord ex- edged initial 787 deliveries would be ing’s missile defense program. Bair pires Aug 1, 2008. delayed up to six months, Guggen- took a lateral move as vice president With far-reaching provisions that heim Aviation exercised options to of business strategy and marketing. will be felt across many parts of the add three 777 freighters to its previ- transport industry, the agreement ous orders for three of the aircraft. Down Growth serves as something of a capstone to The company also has ordered the career of UPS Chairman Mike Es- four 747-8 freighters and contracted he International Air Transport As- kew, who will step down at the end to have seven 747-400s modified Tsociation is offering a somewhat of the year as part of a leadership through the Boeing Converted subdued forecast for international changeover that has taken on a time- Freighter Program. freight growth over the next five years. ly pattern that’s nearly as predictable The 777 order appears to validate IATA said in its new projections for as air express deliveries. the growing popularity of the the airline industry that international Getting the deal done nearly a freighter. “The 777 freighter is in a air freight tonnage should growth at year before the old contract expires class by itself,” said Richard an average annual rate of 4.8 percent means UPS is preparing for the in- Aboulafia, vice president of analysis between 2006 and 2011. That’s not evitable 2008 rate hikes with its costs for the Teal Group. only well behind the 6.4 percent av- lined up. It also provides UPS what No doubt the 777 is needed to re- erage annual growth some experts the company has long wanted — an place MD-11 freighters, and “there forecast over the next 20 years, it’s far agreement to withdraw from the are only about 20 planes left for con- off the average 6.2 percent annual huge and financially troubled multi- version,” said Aboulafia. The A330 growth air carriers reported from employer Central State Pension freighter is now available, but the 2002 to 2006. Fund. The company will pay $6.1 bil- aircraft does not have the 777s full Released at the annual Arab Air lion to get out of the fund, and it capability, he said. Carriers Organization meeting in will have to set up a separate pension The popularity of the 777 freighter Damascus last month, the forecast plan jointly run by the Teamsters, is expected to grow in time because also takes a downbeat view of passen- but the company has long believed it of continued high fuel costs. Com- ger demand. subsidizes the pensions of other com- mon sense dictates it is better to fly IATA projects average 5.1 percent panies because of its large Teamster a twin if you don’t need the 747-400s annual growth in passenger traffic membership in the common fund. capacity, said Aboulafia. through 2011, down from the 7.4 “This plan has been under funded The 777 order came as Boeing percent yearly average between 2002 and problematic for a number of was taking something of a hit in the and 2006. years,” said Jerry Glass, president of passenger arena. F&H Solutions, a human resources The manufacturer said the launch UPS Accord and labor consulting firm. delivery of its much-trumpeted 787 If UPS raises its rates, “it won’t be to All Nippon Airways had slipped to PS workers are expected to over- because of the sizable pension plan early December 2008. Airbus, mean- Uwhelmingly ratify the precedent contribution,” said Glass. “UPS is a

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well managed company and is look- the airline-forwarder organization planned — a key measure of airline ing at what makes financial sense push more rapidly toward meeting service to forwarders — reached 87 over the long-term.” It is not fixat- its strategic goals. percent in August, up 2 percent from ing on the $6 billion contribution, Restructuring following the death the same month a year ago. And the said Glass. of its leader, Ron Cesana, the freight forwarder performance measure of The accord is bound to cause con- industry quality standards group waybill accuracy rose 1 percent to 91 cern at DHL and FedEx, particularly. says new Executive Director Lothar percent. Cargo 2000 also is pressing For years, FedEx has battled the Moehle will be joined by the end of what it calls its Qcargo Network ini- Teamsters and other unions about or- the year by a technical director and tiative aimed at drawing small and ganizing its workers. The FedEx three regional directors, new posi- mid-sized freight forwarders into the Ground division is embroiled in nu- tions the group says are focused on group, part of an effort to expand merous lawsuits with drivers who expanding Cargo 2000 services. membership that now includes claim they are fulltime employees, “Cargo 2000 is a continuous im- ground handlers. Smaller forwarders not independent contractors as man- provement organization and we are have complained that Cargo 2000 agement contends. A federal judge re- putting in place an organizxation has been been focused largely on cently approved class-action status structure that reflects and supports the world’s larger elite forwarders. for a lawsuit filed on behalf of around this,” said Mick Fountain, chairman 14,000 drivers. FedEx said it plans to of the International Air Transport As- ASTAR Talks appeal the decision. sociation-backed interest group. Eskew will cede the chairman and Formed back in the 1990s to fo- ilots at ASTAR Air Cargo, one of chief executive positions to Scott cus on implementing common tech- Pthe two main sub-service operators Davis, the company’s vice chairman nology platforms for international for DHL in the United States, may be and chief financial officer. Eskew be- freight transport, Cargo 2000 says headed closer to a strike after three gan his career with UPS, but Davis, 55, its certification of quality standards years of contract negotiations. joined UPS in 1986 when it acquired in cargo processes is expanding. The pilots have already conduct- the technology company II Morrow, The group counted 72,600 lane seg- ed informational picketing in Wilm- where he was CEO. Davis is the first ments in its performance measure- ington, Ohio and are preparing to UPS chairman in memory who had a ment system by the end of August, ask the National Mediation Board to career outside the company. up some 35 percent from the same release it from mediation, said a month a year ago. union spokesman. Adding 2000 Overall performance by its mem- The pilots will vote first on ber airlines and forwarders also is whether to authorize the local Air he Cargo 2000 group says a new improving, the group says. Reports Line Pilots Association unit to sanc- Tmanagement structure will help showing shipments flown as tion a strike in the event the sides are released from mediation. The NMB could release the parties from negotiations or order the sides back to the bargaining table. Granting of the request to be released will trigger a 30-day cooling off period, after which the ASTAR pilots could strike and the company could lock out the pilots from the property. An ALPA spokesman said a walkout would be a last resort, but the frustra- tion level was running high after four years without a raise. The pilots want pay raises similar to what ASTAR man-

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agement has provided itself, said an DHL also is beginning contract nego- ness that already is one of air car- ALPA statement. Pilots are also seeking tiations with the Teamsters union, go’s fastest growing airlines. job protection and retroactive pay. which represents some 10,000 com- For World, it’s a major contract Management downplayed the pos- pany drivers in the United States. following a troubled financial period sibility of a strike by its pilots. “Nego- that ended with World Air Holdings’ tiations between ASTAR and its pilots Road Backup sale in mid-August for $315 million are currently ongoing under the ex- to Global Aero Logistics, the compa- clusive control of the National Medi- orld Airways carried some ny that operates U.S. passenger ation Board,” said Doug McKeen, se- Wgood news to its new owner charter carrier ATA Airlines. nior vice president of employee rela- with a new agreement to operate a World Airways will provide inter- tions and communications. freighter for Etihad Airways. national air service with its fleet of Earl Smith, chairman of the local The one-year contract is for an MD-11 freighters, said Rob Binns, ALPA unit, said, “We’re giving it one MD-11 World will operate for Etihad chief marketing officer. more try to achieve a new contract.” between Frankfurt, Shanghai and Launched in 2004, Etihad operates But, he added, “Management seems Mumbai. a fleet of regional freighter aircraft unwilling to do anything other than For Abu Dhabi-based Etihad and plus two A300-600RFs. Etihad carries change some work rules that will re- its Crystal Cargo division, the opera- more than 130,000 tons of cargo in duce pay.” tion brings in immediate new lift as 2006, a 96 percent increase over The tension at ASTAR is growing as the airline looks to expand a busi- 2005. ■

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NORTH AMERICA Sky Eye It’s been called the backbone of air traffic control modernization, but is ADS-B worth the cost?

the aircraft, the pilots will still de- pend on air traffic controllers. Not so when “In” is in. The long- term benefits of ADS-B, the ones freighter operators in particular be- lieve will allow them to redraw their flight plans in a far more efficient manner, will be realized with the im- plementation of the second phase, in which all aircraft flying in controlled airspace will be required to have satellite-based avionics linked to ADS- B technology. Once that happens, the aircraft will, in effect, become independent ATC systems. The cost to implement the ADS-B avionics will range from $162,000 to $217,000, according to FAA’s pro- he technology has been around since the mid-1990s and it gram office. Future generations of on- will be several years before it is fully implemented. But the board ADS-B equipment will range Federal Aviation Administration’s recent notice that it from $210,750 to $670,000. Twould require all aircraft flying in U.S.-controlled airspace The accuracy of ADS-B is expected be equipped with Automatic Dependent Surveillance Broadcast to allow air traffic controllers to re- technology by 2020 took a technology heavily supported by cargo duce separation standards between airlines one step closer to reality. aircraft, substantially increasing the ADS-B, which is said to be 10 times more accurate than current technology, number of aircraft that can be man- will be implemented in two phases: ADS-B “Out” and “In.” aged in U.S. airspace. That is good The Out phase began in August when FAA awarded ITT the $1.8 billion news for much of the troubled U.S. contract to build and manage the ADS-B ground stations. Unlike previous nav- aviation industry, considering traffic igation-related contracts that were government controlled, is projected to grow By Robert Moorman ITT will own the equipment, and the FAA will pay subscrip- from 740 million pas- tion charges for ADS-B broadcasts to suitably equipped aircraft and air traffic sengers in 2006 to a billion by 2015. control facilities. The technology will have a cascad- Ground stations for the new system will be brought online across the coun- ing effect, aiding business and the en- try, starting on the East Coast. Nationwide coverage is expected by 2013. vironment. As the industry moves to- But even with the ground stations and a required ADS-B receiver onboard ward a more interactive ATC system,

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ADS-B-equipped aircraft will fly more Implementing ADS-B fully is ex- not in question, said ATA President direct routes, saving millions of dol- pected to cost upwards of $20 billion, James C. May, but the issue is the ap- lars in fuel costs and reducing harm- a significant portion of the $40 bil- parent inability of the U.S. Congress ful emissions. lion the FAA and industry expects to to find an equitable funding mecha- spend to build and equip NextGen, nism for NextGen. Freight Trailblazer the shorthand name for air traffic A U.S. House committee had a control modernization . hearing scheduled last month on the UPS, which led ADS-B develop- The technology “will cost the in- benefits to be derived from ADS-B, ac- ment, and has equipped much of its dustry a lot of money, but it will be cording to one staffer, as well as the fleet with the technology, certainly worth it in the long run,” said Alter- implications of letting a private com- believes the cost is worth it. man. pany own the infrastructure. UPS is working with Aviation UPS has original ADS-B technology Communication Surveillance Sys- on 75 757s, 32 767s. But the whole Domestic Woe tems, the government mandated fleet is equipped with the ADS-B sig- spin-off from the AlliedSignal and nal, which allows the aircraft to be itty Hawk Cargo is flying Honeywell merger six years ago. identified and located by ADS-B Kthrough all-too-familiar territory. SafeRoute is the suite of ADS-B appli- equipped ground stations and aircraft. Just a couple of years removed from cations that ACSS produces. UPS has equipped its entire 747-400 bankruptcy protection, the freighter What is ADS-B exactly? “It’s a ‘here fleet with the next generation ADS-B operator filed again for Chapter 11 re- I am’ system for the aircraft,” said as well as one 767 and one 757. organization as its bid to restructure its UPS Captain Karen Lee, a 747 pilot business was hit hard by changing de- and resident ADS-B expert. “It’s a Free Flight mands and a sagging U.S. economy. technology that allows the aircraft to The company said the filing is tell anyone where it is.” While much of the industry sup- meant to “address financial challenges ADS-B is expected to save UPS a ports ADS-B as a replacement for an and identify a strategic or financial in- million gallons of jet fuel per year, antiquated radar system, questions re- vestor.” Kitty Hawk said it plans to op- provide a 30 percent reduction in main on who pays what and from erate its entire network while reorga- noise and a 34 percent reduction in where the money will come. nizing and looks for interim financing. nitrous oxides emissions that con- In addition, there are several tech- The airline has been remaking air tribute to global warming. nical and regulatory challenges facing operations by working in younger, Operationally, ADS-B will allow the industry, including “internation- more fuel-efficient aircraft. But falter- UPS to begin to use continuous de- al interoperability, frequency band- ing demand for Kitty Hawk’s brand of scent approaches instead of the step- width and navigation source redun- expedited air transport has pressed the down approaches now practiced, al- dancy,” said an Air Transport Associa- company to slash rates over the past lowing the carrier to bunch aircraft tion issue brief. year to meet competition from truck- on arrivals. The end result: 10 percent In other words, some worry other ers, and its own startup trucking busi- to 15 percent increase in landing ca- countries may develop technology or ness hasn’t brought in cash fast pacity, Brown said. standards incompatible with ADS-B. enough to make up the difference. The company’s reason for pushing Lee said Eurocontrol and Mitre, a “Kitty Hawk is in a difficult area of this technology has little to do with not-for-profit research and standards the business, in which the integrators altruism. “Yes, UPS is helping to ad- organization in the United States, have taken most of that business,” said vance the air transportation and have worked to ensure that there is George Hamlin of Airline Capital Asso- help the environment,” said Steve one standard for the international ciates. “They’ve been trying to resurrect Alterman, president of the Cargo and the U.S communities. their domestic business, but it looks Airline Association. “But UPS is a “I don’t think we’re seeing any signs like this isn’t happening.” business and understands that the of any one group straying off to devel- Kitty Hawk lost $8.8 million on rev- benefits of implementing ADS-B out- op a different technology,” said Lee. enue of $44.4 million in its quarter weighs the costs.” The value of ADS-B to NextGen is ending June 30.

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… Briefly between the E.U. and the United Automatic Dependent Broadcasting States. … UPS is offering customers a avionics by 2020, seven years after the U.S. airlines’ cargo traffic edged up paperless international shipping op- $1.8 billion ground system developed 1.8 percent in August but domestic tion, UPS Paperless, as well as a pack- by a team led by ITT is expected to be business was up only 0.5 percent and age return capability, UPS Returns, to finished. … Cargo tonnage at Miami the domestic traffic measured in cargo 98 countries and territories. ... Freight International Airport grew 8 per- ton miles was barely above what the traffic at New York’s Kennedy In- cent in August despite a 3.3 percent U.S. carriers measured in 2000. For ternational Airport fell 4 percent drop in mail, and cargo at the gate- the first eight months of the year, in- in July from the same last year, the way was up 6.3 percent in the first ternational cargo traffic was up 1.2 fifth straight monthly decline at the eight months of 2007. … Priority percent while domestic business was airport. Freight was up overall 0.1 per- Solutions International opened a 0.3 percent behind last year, accord- cent at JFK in the first seven months full-service station in Minneapolis. … ing to the Air Transport Associa- of the year. … Pennsylvania-based Cargolux added a sixth weekly 747- tion. … Canada and the European forwarder Pilot Air Freight changed its 400 freighter frequency between Lux- Union were set to begin talks toward name to Pilot Freight Services to embourg and Mexico City. … Ali- a liberalized aviation agreement over reflect its broader array of services. … talia extended its Milan-Miami MD- the Atlantic and the Canadian Air- The Federal Aviation Adminis- 11 freighter service to Mexico City ports Council said it hoped for a tration issued a proposed rule to re- under an agreement with Centurion treaty similar to the pact negotiated quire all aircraft to be equipped with Air Cargo. ■

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cargo services 12RegionalsINT 10/25/07 1:38 PM Page 16

ReportsRegional

EUROPE Tabula Rasa Cargoitalia may be the new fighter in cargo, but it has an experienced corner man

break even marker in the first year has been challenging. Setting up Cargoitalia’s instant net- work led to the launch of North At- lantic service to New York, Chicago, Houston and Mexico City. The network also stretches east- bound to Hong Kong and Shanghai and Ho Chi Minh City in Vietnam. There is also service to Kuwait and Dubai and Cairo and Lagos, Nigeria. Intra-European feeder flights from Barcelona in Spain and Munich in Germany service its Milan Malpensa hub in Northern Italy. “These intra-European services are an important marker for us,” said Panagia. “It confirms that we are not just focused on the Italian market, he arrival of air cargo veteran Stan Wraight and two 747-200 but that we also want to engage with freighters is giving fresh impetus to Cargoitalia‘s efforts to the broader European market.” become a significant player in the global freighter market. T Not that the Italian cargo carrier has exactly tip-toed entry in the Old Friends business. Launched more than a year ago by ex-Alitalia Cargo boss, Massimo Panagia, the airline hit the ground running with the immediate launch of ser- The airlines growth is all the more vice to no less than 14 destinations out of Italy. remarkable given that it launched Said CEO Panagia: “We were determined from the start to provide our cus- services with a fleet of two leased DC- tomers with an extensive network of destinations and a well-devel- 10 freighters, one of By Roger Turney oped range of services. which has been replaced “We have been achieving 75 percent load factor on most of our flights, with by an MD-11 freighter. strong yields in many markets.” The carrier’s network may be ex- In markets in which Cargoitalia competes directly, the airline has secured a tensive, but to date it is one which 15 percent share of the Italian cargo market, said Panagia. Overall, that has been sparsely fed. equates to about a four percent share of the entire Italian market. Panagia recognized early on the That, he said, has been achieved by working the markets in which it oper- airline needed to consolidate its posi- ates as a capacity retailer and not a capacity wholesaler. ”We tend to shy tion, yet also look to the future. “It away from block space agreements,” said Panagia, although chasing the quickly became apparent that there

16 AirCargoWorld November 2007 12RegionalsINT 10/25/07 1:39 PM Page 17

ReportsRegional

was one major bottleneck hese intra-European the current network and one of holding up the airline’s devel- “T the ways of achieving that will opment — and that was me — services are an be to talk with various potential because I had to make all the important marker for us. strategic partners in the coming decisions,” said Panagia. It confirms that we are months to ensure we meet the He resolved that situation targets we have set ourselves,” by hiring an old friend, not just focused on the said Wraight. Wraight, to become chairman Italian market.” Cargoitalia has help propel of the privately owned cargo its growth by wet-leasing two carrier. “Stan and I have 747-200 freighters from U.S.- known each other for many years Moving Forward based Tradewinds Airlines. and he is fully aware of the business Wraight, the former chief execu- Wraight said both aircraft would model we want to create at Car- tive of AirBridge Cargo and former be put to work on trans-Atlantic goitalia,” said Panagia. senior executive at Atlas Air and routes serving the existing points of Wraight is equally ebullient in his KLM Cargo, is determined to build New York, Chicago, Houston and praise for Panagia. “I am very im- the business as well as make same Mexico City, along with Atlanta at pressed with how far Massimo has quick gains. One way is to reach out the start of the winter season. brought Cargoitalia, a truly customer to his old pals. The airline is also keen to resume focused company,” said Wraight. “We want to improve and expand service to Osaka in Japan. Service was

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ReportsRegional

initiated in the original network 146 Quiet Trader program is on freighter transport to Dubai and surge, but Cargoitalia found the route schedule and the first converted air- transfer to an IL-76 freighter to not viable with DC-10 freighter. It is craft, a Series 200, is slated for com- Tehran. … United Airlines started looking to return with MD-11 pletion in early-to-mid 2008, accord- nonstop 777 passenger flights be- freighter service. ing to BAE Systems Regional Aircraft. tween Los Angeles and Frankfurt. … Panagia said the airline wants to Twenty-nine -146QTs remain in ser- Continental Airlines named LUG eventually operate a fleet of five to vice after being converted in the aircargo handling its freight han- six 747-400 freighters, with at least mid-1980s. … Air France Cargo dler in Frankfurt for daily 777 pas- three of the aircraft in service by the went live on the Cargo Portal Sys- senger flights. … Menlo World- end of next year. Originally, the air- tem booking portal. … DHL bought wide moved into a larger facility line wanted to operate an all MD-11 Israeli international delivery compa- near Amsterdam Airport Schiphol, freighter fleet. ny Flying Cargo, which has repre- the multi-client 70,000-square-foot Capacity should follow growth and sented DHL’s forwarding business in facility at the AMB Douglassingel not the other way around. Said Pana- Israel. ... Forwarder BDP opened an Distribution Center that will be gia, “It is no good injecting over-ca- office in Milan at the Malpensa Menlo’s new European headquarters. pacity into a market and then hoping Avioport Logistik Park. … Cargo traf- … Lufthansa Cargo won approval that growth will somehow follow. fic at Air France/KLM grew 3.8 of its Customs-Trade Partnership This is a policy which simply intensi- percent in the first nine months of Against Terrorism security certifica- fies competition, forces rates down 2007, with a 6.2 percent expansion tion in the United States. … Traxon and ultimately destroys the equilibri- in Asia-Pacific trade offsetting a 1.2 Europe began providing monthly um of the marketplace.” percent decline over the Atlantic. … error logs, or message improvement British Airways cargo traffic fell program reports, as part of its freight … Briefly 1.1 percent in September, the 12th messaging system. … Freighter oper- time in the last 13 months BA has ator Cargo B Airlines received op- Lufthansa Cargo’s traffic grew lost ground in cargo. … China’s erating authority for twice-weekly 4.9 percent in August and the 4.1 Hainan Airlines, which flies three services between Brussels and Libre- percent expansion in traffic in the times weekly between Brussels and ville, Gabon, and Johannesburg and first eight months of 2007 left the Beijing, named European Cargo Nairobi, and the Belgian airline said airline’s average cargo load factor up Services its general sales agent it would later add service to South 1.5 percentage points over the same throughout Europe. … AirBridge America. … Olympic Airlines period last year. … Silk Way Air- Cargo added a weekly stop in Tel launched an express service, lines started 747-freighter service Aviv on its 747 freighter service be- Olympic Courier, from London to from Luxembourg to Kazahkstan's tween Amsterdam, and Moscow. … Athens. … Coyne Airways started Almaty International Airport. … U.S. AMB Property expanded into the twice-weekly 747 freighter service to forwarder IJS Global struck a deal United Kingdom with the purchase Almaty, Kazahkstan out of Hahn Air- with South Africa’s Value Clearing of a 320,000-square-foot facility at port in Germany. … Frankfurt and Forwarding to have the com- the East London Distribution Park, Airport moved 173,870 metric pany represent IJS in South Africa 10 miles from central London and tonnes in August, a 4.6 percent jump and the rest of sub-Saharan Africa. … closer to the site of the 2012 for the month and topping a previ- Ethiopian Airways placed an em- OIympic Games, which AMB be- ous record by 7,567 metric tonnes bargo on imported consolidated lieves will fuel strong logistics de- for August 2006. … Singapore Air- shipments moving through house air mand. … TAP Air Portugal start- lines will have Swissport resume waybills, telling cargo customers the ed weekly freighter service between its cargo handling for SIA at London practice without an approved bond- Lisbon and Brussels with an A310- Heathrow Airport effective Jan. 1. … ed warehouse at Addis Ababa’s air- 300 leased from Royal Jordanian Cargo traffic at Munich Interna- port was “causing unnecessary con- Airways. … Skyroute Logistics tional Airport increased 12.8 per- gestions and irregularities” at the air- began offering freight service to cent in the first nine month of 2007 port. … The re-launch of the BAe- Tehran from Luxembourg, with 747 over the same period last year. ■

18 AirCargoWorld November 2007 Project1 9/27/07 3:55 PM Page 1 12RegionalsINT 10/25/07 1:40 PM Page 20

ReportsRegional

PACIFIC Where’s Qantas? Newfound independence could boost the cargo division’s growing focus outside Australia

Singapore, Shanghai and Hong Kong. However, last year Qantas an- nounced the plan had been put back indefinitely, citing high fuel costs and lack of available aircraft. Hardly Home

This has not crimped manage- ment’s appetite for forays outside its home turf. In January, the airline announced ambitions to acquire a minority stake in an Asian airline, but noth- ing has emerged since on that front. Vietnamese carrier Pacific Airlines re- portedly was the primary target of those ambitions. At the end of August, Qantas ome market? What’s so great about a home market, any- bought Singapore-based express oper- way? Qantas may have shelved plans for a Thai-based cargo ator DPEX Worldwide for an undis- airline, but elsewhere it is operating freighters on routes closed sum. Grant Fen, executive Hthat do not touch Australia. The kangaroo airline has 747 general manager of Qantas Freight, cargo planes leased from Atlas Air and fly from the United States to called the acquisition an important Brazil and back and across the Atlantic to Frankfurt and Dubai. step to enter the Asian express mar- But aviation treaty terms require a visit to its home turf en route to the ket and expand Qantas’ footprint in world’s favorite air freight market. “When we go to China, we have to go the region. DPEX’s network coves 18 through Australia,” said Bruce McCaffrey, Qantas vice president of freight for countries in Asia. the Americas. While Qantas has been looking in- Besides its passenger service, the carrier runs five 747 freighter flights a week creasingly for opportunities outside to the United States, all routed through Shanghai. its home base, the cargo By Ian Putzger The Chinese city has become a key hub Qantas’ cargo network. division is on its own tra- Until last year, it had looked as though Bangkok would assume that mantle. jectory away from the parent. Back in 2004, Qantas and CTI Holding of Thailand agreed to set up a joint Following the failed $11 billion venture cargo airline to be based in Bangkok. Qantas was to hold a 49 percent takeover attempt of the Australian stake in the venture that was aiming to serve Asian markets within a range of flag carrier by a consortium led by five to six flying hours with MD-11 freighters. The initial targets were India, Macquarie Bank and Texas Pacific

20 AirCargoWorld November 2007 12RegionalsINT 10/25/07 1:40 PM Page 21

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Group this year, the airline has em- 2007/08 to be 30 percent higher than business in the first eight months of barked on a far-reaching restructuring in fiscal 2007, which reached $1.03 2007, according to the Association effort that seeks to establish four dif- billion, resulting in a net gain of of Asia-Pacific Airlines. … The ferent business units, including the $719.4 million, up 49 percent from World Cargo Alliance of regional core flying business. the previous year. and national forwarders will have its The other units would revolve According to McCaffrey, one com- annual meeting in Kuala Lumpur around the fleet, frequent fliers and pany that has expressed interest in next year under an agreement to “co- freight. Days after the agreement to the freight division was an Australia locate” the meeting with the bi-annu- buy DPEX, Qantas Chief Executive trucking firm. al International Air Cargo Forum. … Officer Geoff Dixon confirmed the Besides the question of future own- Korean Air’s cargo traffic grew 15.1 wheels had been set in motion to cre- ership, Qantas Freight will be facing a percent in its second quarter ending ate a separate cargo entity. He said he decision on its long-term fleet plan. June 30 and cargo revenue increased believed the freight unit could be suc- The route for the passenger side is 6.5 percent. Cargo yield fell, however, cessful as a standalone entity. sealed with the first A380 due to 6.5 percent compared to the same “We’ve taken steps to separate car- come on stream next year. The cargo quarter last year and was down 7.6 go from the airline. It will be a sepa- division is looking at the possibility percent in the first six months of the rate company with its own P&L, but of buying freighters, McCaffrey said, year. … Australia and the United part of the Qantas Group,” McCaffrey adding that the decision is still “a States agreed to hold talks toward lib- said. He said no target date has been couple of years away.” eralizing an aviation treaty that now set yet for the spin-off. Until then, it will be status quo for includes open skies provisions only Peter Burn, president of consolida- freighter operations. “We will contin- for cargo services. … Hong Kong- tor Swift International in New ue the wet-leases with Atlas until based World Courier expanded its Zealand and a former head of cargo we’ve made a decision what we want cold chain transport services to 36 for Air New Zealand in the United to do with our freighter plans,” Mc- cities in China, setting up a domestic States, said that the changes have Caffrey said. network in a country the company benefited cargo. Some forwarders would love to see says will be the fourth-largest phar- “It certainly gives them focus,” he an injection of maindeck capacity on maceutical market in the world by said, citing a big improvement in the the South Pacific. 2012. … DHL started offering freight carrier’s cargo revenues over the past Julian Keeling, president of whole- customers in Asia the ability to file all four years as well as more innovative saler Consolidators International, shipment electronically through a freighter routings. warned of a capacity crunch until service called DHL eMailShip. … “They have been given a real man- mid-November, due to high passenger Asiana Airlines chose a software date to up the cargo revenue and get loads and strong headwinds, which integration package from Maryland- value prior to selling it off,” he said. essentially rule out bellyhold space on based GXS to secure the electronic The ownership models under con- Qantas’ passenger flights between Los transfer of cargo information through sideration could leave the cargo divi- Angeles and its home market. the SITA communications channels. sion in the hands of another company “We‘re pretty full at the moment,” … Qantas will train up to 200 Nip- and management has suggested it has said McCaffrey. The strength of the pon Cargo Airlines pilots on 747- been approached by interested parties Australian dollar has boosted south- 400 operations under a five-year con- about a possible sale of the freight and bound traffic “much more than we tract between Qantas Group Flight the frequent flier program. A decision originally predicted”. Training and NCA. ... Menlo will not be made until the carrier’s re- Worldwide completed its acquisi- sults are released next spring. … Briefly tion of Singapore-based logistics oper- ator Cougar Holdings and acquired Headwinds Freight traffic for Asia’s air carriers Shanghai-based Chic Holdings, a grew 5.3 percent in August on a 5.2 logistics business with 130 stations in Qantas signaled in August that it percent gain in capacity, giving air- 78 cities in China serving interna- was expecting pre-tax profit for line 3.1 percent expansion in freight tional and domestic business. ■

November 2007 AirCargoWorld 21 22F1-GatewaysINT 10/25/07 1:57 PM Page 22

Region Focus: Western Airports

Don’t call it a Gold Rush

just yet, but air freight

operators are finding

life better in California

these days 22F1-GatewaysINT 10/25/07 1:42 PM Page 23

Region Focus: Western Airports

Finding the

California Passby Robert W. Moorman

or years, shippers, forwarders and air carri- want to serve India, according to one SFO official. ers complained loudly about the lack of ad- Next year, United Airlines will begin daily service be- equate cargo facilities at San Francisco In- tween San Francisco and Guangzhou in the busy industri- ternational Airport. Some went so far as to al region of Southern China. The award is part of an ac- label the 80-year-old airport anti-air cargo. The air- cord signed last July between the United States and China port passed on FedEx’s plans for a new hub there in that calls for doubling the number of daily flights be- F1988, so the carrier went across the bay to the more tween the two countries over the next five years. accommodating Oakland International Airport. But shippers and third-party developers remain guarded But there are new signs that the fog that’s stymied about whether the growing attention to passenger flights some air services at SFO is lifting. will find its way to the cargo side. They point to the 48- Earlier this year, passenger airline Southwest Airlines year old facilities that have yet be rebuilt or replaced, and announced it would return to San Francisco after pulling an ongoing lawsuit involving a third-party developer. out in March 2001 over high operating costs and delays In 2004, airport developer Airis SFO, a wholly owned that were affecting much of the Southwest operation. The subsidiary of Airis Holdings, filed a lawsuit against the air- airline will have 26 flights per day by this month – 12 port for preventing it from developing a $200 million car- more than it had when it left – and expects to carry in ex- go facility that Airis said could have rejuvenated the mori- cess of 10 million pounds of loose cargo in 2008, said bund cargo business there. The suit charged that SFO ex- Wally Devereaux, director of cargo sales. ecutive staff “deliberately derailed” plans to build the Although Southwest is not a big player in air cargo, the 633,000-square-foot cargo and office complex. news could represent a change in mindset for SFO leaders. The airport says it’s more flexible these days, but re- In addition to Southwest, SFO has welcomed Virgin mains short on available real estate. “Because of land con- America and combination carrier Aer Lingus. Cathay Pa- straints, we’re looking at developing a common use cargo cific Airways will soon add an additional Hong Kong facility run by a third party [common-use handler],” said flight. And the airport is negotiating with two interna- Gary Franzella, associate deputy airport director for San tional carriers with significant belly cargo capacity which Francisco International Airport.

November 2007 AirCargoWorld 23 22F1-GatewaysINT 10/25/07 1:42 PM Page 24

Region Focus: Western Airports

LAX Traffic Monthly year-over-year percent change in freight at Los Angeles International Airport over last 18 months. 12% 10% 8% 6% 4% 2% 0% –2% –4% –6% –8% –10% 1/06 2/06 3/06 4/06 5/06 6/06 7/06 8/06 9/0610/0611/0612/061/07 2/07 3/07 4/07 5/07 6/07 7/07 8/07 Source: Los Angeles World Airports

FO and other California air- and private developers have tried to was always crowded, inefficient and Sports are in the midst of a mas- push some of the economic growth expensive for shippers. But airline-op- sive contradiction. California would to alternative gateways, including erating costs are half today what they rank as the world’s eighth-largest former military bases, but only with were in 2001, according to South- economy if it were a country, and its limited success. west. A new runway system has made one of the world’s largest exporters of SFO may be constrained, but the the airport more efficient, and the agricultural products. situation is far better than it used new international terminal and other But for the state’s major air gate- to be. projects are complete, which is good ways, the one precious commodity “The capacity constraints facing news for forwarders. in short supply is space for expan- SFO in 2001 aren’t there right now,” Franzella expects SFO will handle sion. From the San Francisco Bay to said Daniel B. Muscatello, managing more agriculture products going to the Los Angeles Basin, California’s director for cargo and logistics at in- Asia in the future, although air car- most familiar airports are hemmed dustrial development specialists Lan- go’s share of California’s agricultural in by packed highways, mountains drum and Brown. exports remains relatively modest. and sprawling suburbs. State officials Before September 11, the airport Airborne shipments out of California airports have accounted for between LAX Skyline 4.5 percent and 6.4 percent of the food trade over the past ten years, Los Angeles International Airport annual air freight tons. said a revised report by California State University titled, California’s 2,250,000 Agricultural Export Trade: The Role of Air Cargo, a 2007 Update. 2,000,000 Yet San Francisco leads the region in value of cargo, importing nearly $9 billion and exporting $7.6 billion 1,750,000 worth of goods in the second quarter of 2007, according the World Insti- 1,500,000 tute of Economic Research, using U.S. Census state data. The airport’s im- 1,250,000 port/export business is heavy in elec- ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 tric and industrial machinery. Source: Los Angeles World Airports There could be practical reasons

24 AirCargoWorld November 2007 Project1 10/26/07 10:13 AM Page 1

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Region Focus: Western Airports

eveloping air cargo facilities at an airport takes significant why San Francisco appears friendlier capital. But it also requires enormous patience on the part of to cargo these days. the developer and shippers. Air freight and mail loads continue Environmental assessments, endless hearings and mounting to decline. For the first seven months concern over air cargo security delays projects for years. No- of 2007, total cargo and U.S. mail de- where is the process tougher than in green-striving California. clined 7.7 percent. It remains to be In early 2008, Aeroterm, an air cargo facilities develop- seen if cargo becomes a factor at San ment and management company is expected to break ground Francisco after a long hiatus. Don its massive Pacific Gateway Cargo Center at LA-Ontario Interna- tional Airport – six years after the Request for Proposal for this pro- akland International Airport ject was issued by the Los Angeles World Airports. Oproudly claims to be the “San Francisco Bay Area’s Air Cargo Center.” As the home of FedEx’s regional Holding Patterns hub, and site of a 24-hour, seven-day The regulatory and entitlement process, particularly in California, cargo operation, the claim appears to “is getting to be longer and much more complex,” said John Cam- be more than an act of hubris. mett, chief executive officer of Aeroterm, who has overseen the In 2006, OAK ranked No. 31 in the PGCC project from the beginning. world in cargo, with 679,179 tonnes Cammett said the more detailed the information the builder sup- handled, a 1 percent increase over plies the authorities regarding engineering, master plan and envi- the previous year. San Francisco was ronmental concerns could help expedite the construction and rede- rated No. 33, with 594,732 tonnes velopment of the facility. handled in 2006, a 0.7 percent in- The PGCC development – part greenfield, part of the old Lock- crease over 2005. heed campus – is the exception to the rule. Because of land con- The domestic air cargo business at straints, “what we’re seeing is a lot of redevelopment,” said Cam- Oakland has suffered lately due to the mett. That means being efficient by making the most out of what is growth of the air freight trucking in- already available. dustry, which is “taking a page right San Francisco, Oakland and LAX airports fall into this redevelop- out of the U.S. Postal Service play- ment category. Instead of taking a parcel of land on-site and giving it book,” said Ray Keiser, Keiser Phillips to an airline or integrator to develop, airport managers are looking to Associates, a consultant to the airport. increase throughput of cargo by building a cost effective and flexible Keiser said much of the freight to ■ structure with multiple tenants, said Cammett. be shipped within 1,500 miles from the Oakland area typically is trucked. Still, Oakland is predicting 3 per-

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26 AirCargoWorld November 2007 22F1-GatewaysINT 10/25/07 1:43 PM Page 27

Region Focus: Western Airports

cent annual growth for the Determining what for the first six months of domestic air cargo business 2007, but LA-Ontario Interna- for the next two years, and a constitutes pure tional Airport, 35 miles east of one-percentage point rise in international air freight downtown Los Angeles, in the third year, said Keiser. can be challenging. what California officials call International traffic is the Inland Empire, is steadily picking up as well, but deter- becoming a major force for mining what constitutes pure inter- But Keiser doesn’t anticipate the ar- freight in the region. national air freight can be challeng- rival of any new air cargo carriers at Ontario is the regional hub for ing, said Keiser. A lot of the interna- Oakland. FedEx, UPS and DHL now UPS Airlines and a center for truck- tional air cargo shipped to Oakland account for 95 percent of the air ing; it’s also a site of considerable ac- by FedEx, UPS and DHL is cleared freight handled there. tivity by FedEx Express. UPS and initially in Anchorage, and then de- Nor is there any expansion ex- FedEx carry 57 percent and 26 per- clared domestic freight upon arrival pected. The site between the moun- cent, respectively, of the air freight in Oakland. tains to the East and the city close at Ontario. Nevertheless, the airport predicts a by on the West leaves little room for In recent years, however, air freight 4 percent annual growth rate for the more facilities. growth at Ontario has been modest, next two years for international traf- Los Angeles International Airport although freight related employment fic at Oakland. handled 951, 502 tons of air freight has risen.

November 2007 AirCargoWorld 27 22F1-GatewaysINT 10/25/07 1:43 PM Page 28

Region Focus: Western Airports

“UPS is moving a tremendous vides cargo related analysis for Los “It’s been a steady growth location amount of freight, but not as much Angeles World Airports. LAWA man- for us,” said Bill Simpson, UPS vice of it by air,” said Michael Webber, a ages both Ontario and Los Angeles president for long range planning. development consultant who pro- International. “We’ve added capacity on lanes by Ontario serves two purposes for using larger aircraft. It is certainly our UPS, said one company official. key point for distributing our Asia It is an origin location for local LA origin and destination volume traffic with evening departures to the throughout the West coast.” East and morning arrivals to there. Simpson said UPS has no immedi- Ontario also serves as an overnight ate plans to add additional aircraft sorting center for the West Coast. for domestic and international long-

ntario, Calif., may get much of the attention, but the March Global Port about an hour’s drive from Los Angeles shouldn’t be overlooked. The 350-acre commercial cargo and distribution develop- ment at the south end of March U.S. Air Force Reserve Base near Riverside, Calif., has loads of potential in becoming a center for cargo, but faces a number of obstacles as well. MGP was put on the map in 2004 when DHL selected the siteO for its 303,000-square-foot West Coast distribution hub. But March might have been overlooked were it not for the efforts of Ray Brimble, founder of Lynxs Holdings, which still owns a sub- stantial share of the project but has no managerial role. In January 2007, Brimble formed a joint venture with GECAS, called the Lynxs Group, which is not involved with MPG. Marching In DHL was leaning toward the old Norton U.S. Air Force Base near San Bernardino as well as Ontario. “We’re in the process of entitling additional property, said Mark Yeager, general manager for MGP. “But it’s slow going with a joint use airport, so we’re taking baby steps.” It is no secret DHL wants to expand its MGP operation into an inter- national gateway within a year. But those plans have met with some stiff resistance from area citizen groups concerned about noise and nighttime flights. A planned direct Polar Air Cargo flight between China and March has been postponed for at least a year because of this concern, sources said. DHL, which has a 49 percent non-voting stake in Polar Air Car- go and a 25 percent voting share, declined to be interviewed for this article. Obstacles aside, there is no denying the cargo potential for MGP. “Right now, we’re trying to get the word out,” said Yeager. ■

28 AirCargoWorld November 2007 22F1-GatewaysINT 10/25/07 1:59 PM Page 29

Region Focus: Western Airports

ity management issues, said Webber. At LAX, there are tangible signs of change. In the last 10 years, LAWA replaced older cargo facilities with newer ones such as the Cargo Build- ing A on Century Boulevard in 2000. In the late 1990s, new facilities were built for FedEx, Mercury Air Cargo and Singapore Airlines. But there has- n’t been any new cargo facilities built recently because LAWA is focusing on the development of a Master Plan for LAX, which is passenger oriented, said LAWA Spokesman Tom Winfrey. Nevertheless, said Webber, there haul service from Ontario. But the for development on or near the On- appears to be better utilization of airline eventually will transition tario airport. Developing Ontario pro- available land at LAX to accommo- from using MD-11s for Asia service vides LAX the flexibility to develop a date the combination carriers, par- to a 747-400 freighter. UPS has or- “sensible approach” to its own capac- ticularly. ■ dered 13 747-400s; eight new freighters are from Boeing, and three will come from Cargolux and two more from EVA Air. Need a little bit more UPS said it’s also ordered 27 new 767-300 freighters and expects to place some at Ontario after deliveries RUN on your WAY ? begin in 2009. While space at LAX is limited, and At just over 3,800 m, our extended runway has enough focuses on finding the optimal use of room to guarantee your success. what’s there, Ontario doesn’t have adequate finished space. Which is why the one-million- square-foot Pacific Gateway Cargo Center is considered key to further development at Ontario. Several ship- pers have expressed interest in leasing space at PGCC, said Aeroterm, the center’s developer and manager. LAWA was to have decided in mid- October whether to grant Aeroterm’s I application to build the PGCC. With No slot restriction & no night curfew I a green light, Aeroterm expected it 24/7 airport operating licence I could break ground during the first 24/7 availability of all airport and supplier services half of 2008, and have tenants by www.hahn-airport.de January 2009, said Aeroterm Chief Operating Officer Louis Beauchemin. There are huge blocks of land un- der LAWA’s control that are available

November 2007 AirCargoWorld 29 30F2-TechINT 10/25/07 1:44 PM Page 30

Feature Focus: Technology

BookingBooking forfor Air cargo carriers are becoming believers

outhwest Airlines soon will deploy a new cargo reser- vation system allowing shippers to book shipments over the Internet instead of delivering their goods to a Southwest warehouse facility first. “In today’s environment, we only manifest ship- ments at the point of acceptance,” said Wally Dev- ereaux,S Southwest’s director of cargo sales. But starting next year, “you by Mike Seemuth will be able to go online; it will be an option.” The new online option and more will come courtesy of Lufthansa Sys- tems, a division of the Lufthansa Group focused on airline information technology. Its AdvancedCargo software package also is expected to make Southwest cargo routing more efficient. “Our current system today does- 30F2-TechINT 10/25/07 1:45 PM Page 31

s inProfit Profitthe earning potential of technology n’t necessarily look for the optimal routing considering the picture. The portals are finding keeping track of all the factors that are available like baggage loads and shipments beyond the booking and they’re offering current freight bookings,” Devereaux said. interactive tools that connect to carrier sites. It may Southwest’s investment in information technology is not exactly be the Web-based check-in of the passen- a dollar sign of the times in the cargo industry. ger world, but for freight shippers and forwarders, Most of the large international carriers are on one of technology and shipping increasingly are part of the three online booking portals – Cargo Portal System, same picture. the recently sold Global Freight Exchange or Asia-fo- cused EzyCargo – and many of those that aren’t are allas-based Southwest, for one, is adding an on- finding it necessary to offer tools online that include Dline cargo-service booking option as part of a online booking. broader upgrade its cargo point-of-sale system to improve For much of the industry, booking is only part of customer service and lower transaction costs.

November 2007 AirCargoWorld 31 30F2-TechINT 10/25/07 1:45 PM Page 32

Feature Focus: Technology

When fully operational next year, “You need to think about different chain, from the shipper to the receiv- the package of cargo software will portals for different clients,” he said. er,” Fox said. provide both a self-service option for “Air France decided they needed to cov- DHL has rolled out a self-service shippers who book online and also er their entire base, and that’s where Internet tool called Import Express faster on-site service for shippers at CPS works well.” Other carriers market- Online. Users can specify all instruc- Southwest cargo facilities. ing service on CPS portal include tions for their shipments including “Our point-of-sale system was be- American Airlines, Air Canada, Conti- terms of sale, pickup schedule and coming a little outdated, and I think ‘a nental, Northwest and United, each in amount of insurance desired. Ship- little outdated’ may be a kind way of a drive to improve operating margins. ment status can be accessed on de- saying it. … We had to make some sig- The self-service nature of online mand or retrieved from automatic nificant improvements from a tech- bookings can elevate carriers’ profit status notifications via email. nology standpoint,” Devereaux said. margins not only by streamlining the DHL rolled out the online import- Investments in online conve- process but also by minimizing any ing tool in the U.S. within the last two niences for shippers dominate much post-booking dispute that may arise. years, and, so far, the carrier has intro- of the IT spending by air cargo carri- “When a customer makes the duced Import Express Online in about ers and forwarders. choices, there’s less room for dispute 95 of the 220 countries it serves. “With air cargo, I think carriers about, oh, I didn’t say I wanted this “It was not outsourced. It was an want to drive up [customer] loyalty on the phone; I wanted that,” Shaw- internally generated tool,” said Fox, through their Web sites, build more don said. This is one way “getting who previously worked for America of a relationship,” said Christopher people to move to online services can Online as director of safety and secu- Shawdon, vice president of logistics drive up the profitability you get rity products. solutions at Unisys, which provides from a flight, and that’s very interest- “I know the risks in the online the technology behind CPS. “It’s a bit ing for carriers,” he said. world,” he said, “ and that’s the only like for you and me when Amazon e- real downside to all this convenience. mails us and says, hey, thank you for ecurity needs also motivate If you don’t take the right steps to se- buying this, and since you bought Scarriers and forwarders to in- cure the information, all the bad that, you might want to buy this.” vest in electronic alternatives to tra- things happen faster along with all Mergers also can influence airlines’ ditional modes of booking and track- the good things.” online technology choices. The cargo ing service. UPS, meanwhile, was preparing to side of Air France, for example, re- “The old way is a phone call to release an improved version of its cently joined CPS to book service generate a manual waybill, and then WorldShip 9.0 self-service customer from carriers and track shipments on- you would ship that over to the ship- software. Version 10.0 due out in Jan- line. KLM, the Dutch airline Air per and they would fill out the infor- uary 2008 will have a new feature al- France merged with in 2004, has sold mation,” said Steve Fox, vice presi- lowing users to order local less-than- service since 2003 through or CPS. dent of product marketing in the truckload shipping service. Air France cargo service will contin- Americas for DHL. Additional upgrades were made “to ue to be booked through rival Global By sending electronic bills instead, make it as easy as possible for a World- Freight Exchange, or GF-X, owned by “you’re not exposing the customer’s Ship user to switch between a ground Canada-based Descartes Systems account number and all the potential freight shipment and an air freight Group, because GF-X reaches forward- fraud that could come along with shipment,” said Joe Monteleone, UPS ers that CPS does not, Shawdon said. that to all the parts of the supply product manager for WorldShip.

32 AirCargoWorld November 2007 30F2-TechINT 10/25/07 1:58 PM Page 33

Feature Focus: Technology

nvestment in technology is showing up in spending on equip- ment as well as IT infrastructure. Integrating version 10.0 with users’ Consider, for example, how Continental Airlines is upgrading databases should be easier for small its ground-handling equipment for cargo. businesses that can’t afford to keep a Continental has been working with La Porte, Texas-based Re- systems analyst on staff. Monteleone frigerated Container Supply to develop temperature-controlled said the program’s new prompt-dri- cargo carts for ground handling. ven installation wizard asks “more “That’s a new product we’re going to have rolling out in general questions, not techie ques- 2008,” said Mark Mohr, Continental’s manager of cargo product de- tions: Do you want to import address- I velopment and specialty sales. es? Yes, I want to import addresses.” Atlanta-based UPS also is deploy- ing proven IT technology to markets Cool Investment abroad. The new carts are expected to help the airline tighten its tempera- In Central America, UPS recently ture-sensitive cargo handling chain. “The weakest link is the ramp began equipping drivers with hand- and within the warehouses,” Mohr said. held devices called DIADs, or Deliv- Refrigerated Container brings an impressive high-tech background ery Information Acquisition Devices, to the table. “They’ve actually been commissioned by NASA and Boe- to account for shipment activity. ing to develop containers that will store space station batteries in de- The DIAD deployment “improves fined temperature ranges,” Mohr said. customer information, improves track- Continental also signed long-term leases this year for an undis- ing, reduces errors, and reduces bad closed number of temperature-controlled containers from Sweden- sorts. It’s a tremendous benefit,” said based manufacturer Envirotainer. Tom O’Malley, vice president of UPS The Envirotainer products supplemented the airline’s existing sup- air cargo operations in Latin America. ply of containers and strengthened its door-to-door cool chain service for temperature-sensitive shipments including pharmaceuticals. ome air freight carriers and for- “Primarily, this is something that is being driven by the pharma- Swarders also are investing in ceutical industry,” Mohr said. The cool-chain service also attracts their ability to fulfill the delivery re- shippers of perishable fish, flowers, vegetables and fruits. ■ quirements of retail sales online.

November 2007 AirCargoWorld 33 30F2-TechINT 10/25/07 1:46 PM Page 34

Feature Focus: Technology

For example, Illinois-based freight with Web links to track the progress of ERP software often is sold as an IT forwarder SEKO has upgraded an in- truck drivers carrying their purchases. asset that facilitates intra-depart- ternally developed fulfillment soft- “Customers will be able to track ment data sharing and efficient re- ware system sold as a private-label that truck [driver] while he’s doing his source allocation. service to support the Web sites of daily deliveries, and they’ll be able to Most forwarders in the market for such retailers as Home Depot, JC Pen- see where they are the next stop that such software want tried-and-true fea- ney, Neiman Marcus, and Wal-Mart. day, and how far the truck is from tures, however, and not necessarily Domestic deployment of the up- their home,” said SEKO’s Chief Infor- the latest bells and whistles, said Cris graded SEKO system began in early mation Officer, Tom Madzy. Arens, president of Chicago-based October at the forwarder’s stations in “So much more of our business to- ERP software source CargoWise. Dallas, Los Angeles and Louisville, in day is home delivery,” Madzy said. “They’re looking for proven solu- time for the Christmas rush period. I think a lot of forwarders are going tions. They’re not looking for the lat- The forwarder has 47 U.S. stations. to home delivery of heavyweight prod- est trend anymore,” Arens said. The SEKO system integrates home ucts: big screen TV sets, couches, you “There are just so many examples of delivery scheduling and routing func- name it; more and more stuff is being wasted money spent in the logistics tions and provides drivers with mani- sold over the Internet,” said Madzy. space. I think at one point there were fests and optimized route maps that Enterprise resource planning, or something like 40 dot-coms that had maximize the number of right-hand ERP, software can help forwarders a (venture capital) bunny behind turns. It also provides retail customers optimize their internal operations. them, and they’re all gone.” ■

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34 AirCargoWorld November 2007 35F3-IndiaINT 10/26/07 11:30 AM Page 35

Region Focus: India Building for BangaloreBy Phillip Hastings

ith its growing export trade, a rapidly ex- panding domestic economy and an avia- Wtion regime that pro- vides open access to freighters, India should be poised to take a major role in the global air cargo industry. Most shipping experts believe the country could take a huge leap forward over the next five years or be restricted to just a few faltering steps, miss- ing out on much of its poten- tial future growth.

India’s exports are raising the country’s cargo profile, but larger growth will only come with improved infrastructure 35F3-IndiaINT 10/26/07 11:30 AM Page 36

Region Focus: India

The key has nothing to do with the structure would have to be substan- by a public private partnership called miles of technology companies in tially upgraded over the next few Delhi International Airports, or DIAL. Mumbai nor the textile businesses in years if the country was to fully ex- It is led by Indian infrastructure orga- Delhi. For shippers and carriers, the fu- ploit its growth potential. nization GMR Group, which has a ture of the country’s role in air trans- “If we miss that window of three to 50.1 percent stake to AAI’s with 26 port depends entirely on the country’s five years, then I think we could lose percent ownership. Other investors success in pushing through extensive a huge opportunity,” Paul said. include: German airport manage- infrastructure improvements. In many ways, the same is true of ment group Fraport, 10 percent; Certain East Asia gateways, such as India’s air cargo industry. “Infrastruc- Malaysian airport operator Eraman Delhi, have been hit by a downturn ture-wise, there are still a lot of weak- Malaysia, 10 percent; and India De- in outbound air cargo volume, result- nesses here in terms of airport han- velopment Fund, 3.9 percent. ing in substantial excess cargo capaci- dling performance, a general lack of DIAL has a mandate to modernize ty on key routes to Europe and North facilities, the need to further upgrade that gateway in time for Delhi to host America and putting severe pressure EDI links with customs,” said Paul. the Commonwealth Games athletics on rates. “So, yes, I would say the air cargo sec- event in 2010. The excess capacity situation looks tor, too, has five years to get its act DIAL recently reported several ma- unlikely to go away any time soon as together or risk missing out on a jor development projects at Delhi Indian carriers, including a newly- much bigger future.” were currently on schedule for com- merged Air India/Indian Airlines pletion by mid-2008. The projects in- group and fast-growing private opera- ne way the Indian govern- clude a third runway, which is ex- tor Jet Airways, as well as foreign air- Oment wants to upgrade the pected to be complete before the lines continue to add more belly-hold country’s overall air transport sector opening of a new international and and maindeck space. is to privatise the management of domestic terminal in 2010. Vikram Paul, Delhi-based vice pres- several leading airports previously op- Significant developments are ident Asia Pacific air freight for for- erated by Airports Authority of India. planned on the freight side of the warder UTi Worldwide , said it is gen- In Delhi, for example, Indira Gand- airport’s operations, where total an- erally accepted in India that all infra- hi International Airport is now run nual throughput is projected to in-

November36 2007 AirCargoWorld November 2007 36 35F3-IndiaINT 10/26/07 11:30 AM Page 37

Region Focus: India

crease from a current 420,000 tonnes to about 540,000 tonnes by 2010, and on up to 980,000 tonnes by 2017 and more than two million tonnes by 2026. At present, all international air freight at Delhi is handled by GMR Group through a 229,658-square-foot terminal. The Indian air transport in- dustry has been expecting an official invitation to offer space for an addi- tional freight handling operation. Sudhir Mathur, DIAL’s chief com- mercial officer, said the aim was to at- tract “another cargo handler, one with global experience, to run its nal for warehousing for forwarders and throughput of international traffic, own facility.” other logistics service providers. “We both at Delhi and other leading gate- There was space for a terminal hope to get the go-ahead to start work ways. This would allow export ship- building of between 65,216 square by the end of this year,” he said. ments to be delivered to airports in feet to 82,000 square feet, with more pre-loaded pallets, while import pal- land available on the other side of hile welcoming such de- lets could go directly to customs the road for processing activities. Wvelopments, Indian air car- warehouses or consignees. “It will be very basic but we would go industry executives argue that Rajendra Varma, regional opera- like it to be built as soon as possible,” other new innovations are also ur- tions and quality manager for Air said Mathur. gently needed. France Cargo-KLM Cargo, said there Mathur said DIAL was also planning In particular, the industry is push- have been some movements of ship- to develop a cargo village on land to ing for the development of off-airport per-built export pallets out of Delhi the south of the existing freight termi- handling services to speed up the on a “piecemeal basis.”

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November 2007 AirCargoWorld 37 35F3-IndiaINT 10/26/07 11:31 AM Page 38

Region Focus: India

Potentially more significant, how- and forwarders complain the system an unexpected problem with the ever, was the establishment in Chen- is often not working. country’s seemingly unassailable ex- nai earlier this year of the first, and to Jean-Pascal Cetran, Air France- port economy. date only, permanent off-airport sta- KLM’s cargo director for India, Nepal The Indian rupee has appreciated tion for handling air cargo import and Bhutan, said development of EDI about 10 percent against the U.S. dol- traffic. That, said Varma, had in- clearance was generally moving in lar since the middle of 2006, which volved allowing an inland sea freight the right direction “despite a few hic- has made some of India’s traditional station to additionally handle air cups from time to time,” but further flown exports, such as garments, less freight imports. enhancements were needed. competitive in U.S. and other world Now, said Varma, talks were con- Forwarders are less sanguine. “The markets. Predictably, this develop- tinuing between the Air Cargo Agents present system is suffering from a ment has led to substantial excess Association of India, the Board of Air- lack of updating over the last three cargo capacity out of some Indian lines Representatives and Indian cus- years,” said UTi’s Paul. “The quick gateways, pushing freight-hungry air- toms about the wider development of fixes are not going to cost that lines to push rates down. off-airport handling for both export much but it is a question of how “We are being offered rates as low and import air cargo at other major you approach the government and as 20 cents a kilo out of Delhi, which Indian gateways. customs to get the right responses is more than 30 percent down on Another key issue requiring atten- from them.” typical prices in 2005 when the mar- tion is the performance of the EDI ket was stronger,” said Sanjay Ver- system linking that sector with the eanwhile, forwarders and ma, the locally-based air freight di- country’s customs authority. Airlines Mairlines are dealing with rector for international forwarder ADVERTISEMENT Geodis Overseas. While airlines hope 2008 will see Martinair Cargo some recovery in Indian exports, Few carriers know the Latin American air cargo market as intimately as Martinair Car- any such boost could be largely go and Tampa Cargo. Together we operate 50 weekly flights out of Miami to destina- negated by a continuing increase in tions throughout Latin America. Our combined operations make us one of the largest air available capacity as both Indian cargo carriers in the region and among the top 15 in the world. In Miami, Martinair Car- and foreign airlines continue to ex- go is handled by Tampa Cargo from their 136,000 square feet warehouse, which in- pand their services. cludes a 50,000 square foot cooler to store and warehouse perishable cargo. National carrier Air India, which Our dedicated commitment and service ensures that perishable cargo arrives at its recently merged with domestic opera- destination in ideal conditions. We have invested in sound infrastructure at our Miami, tor Indian Airlines, publicly stated Bogota and Quito stations to manage the logistics cool chain throughout the handling this year it plans to become more ac- process from origin to destination. We also specialize in handling unusual, exotic or tive in international cargo. oversized cargo, such as: boats, jet engines, race cars, horses and many other types of The airline launched its first special cargo. freighter service to Europe at the end Martinair Cargo’s fleet is comprised of seven MD11s; four 747-200/400s and Tampa of June and now is using converted Cargo with four 767-200. All aircraft are in excellent shape and equipped with the latest A310 all-cargo aircraft to link the In- technical systems. We offer an extended network beyond the Americas, covering all the dian gateways of Bangalore and major continents: Europe, Africa and Asia/Pacific. Chennai with Frankfurt and Paris, via Martinair Cargo and Tampa Cargo are recognized leaders in perishables logistic ser- the Middle East Gulf, four times a vices, general and specialized cargo. We offer air cargo transportation and value added week. Air India plans to develop a services, giving wings to your business throughout the Americas and the rest of the world. substantial freighter fleet, initially comprising of converted A310s and 737s, but subsequently also including some longer-haul 747 freighters oper- ated under the name Air India Cargo. India’s largest private airline, Jet

38 AirCargoWorld November 2007 35F3-IndiaINT 10/26/07 11:31 AM Page 39

Region Focus: India

Airways, too is targeting cargo as a their Indian networks and capacity, on existing Indian routes and poten- key business growth sector and has with Middle East carriers particularly tially add up to eight more points in talked about soon acquiring freighter prominent in the build up. that country. equipment. Right now, the focus is Examples include Dubai-based All three Gulf regional carriers also on exploiting the belly capacity on its Emirates, which was due to add a already operate regular A300 or A310 fast-expanding international passen- ninth Indian point, Ahmedabad, to freighter services to and from various ger service network. its network last month with a six Indian sub-continent points. In early September, the airline in- times a week combination service us- Meanwhile, AF-KLM Cargo is due troduced a five- times- a-week A330- ing the A330-200s. Qatar Airways to replace the 747-200 freighter used 200 service between Delhi and boosted its Indian coverage to seven on services to Europe out of Delhi, Toronto, via Brussels. Other interna- cities at the end of September with Chennai and Bangalore with newer tional points already served by Jet, twice-weekly A320 flights to Nagpur 747-400 extended range freighters. which currently has a fleet of 66 air- from its home hub in Doha. Qatar “The main significance is that the craft including five 777-300 extend- plans to follow that up with new ser- 747-400ERFs will give us a steady ed range, include Newark, London vices to Ahmedabad in December. payload of 100 tonnes, whereas in Heathrow, Singapore, Kuala Lumpur, Abu-Dhabi-based Etihad Airways, the hot temperatures of the Indian Colombo in Sri Lanka, Bangkok and which flies to Mumbai, New Delhi, summer, the payload on the older Kathmandu, Nepal. Trivandrum and Cochin, recently re- aircraft could sometimes be 20 Foreign carriers, too, are enhancing vealed plans to increase frequencies tonnes less,” said Cetran. ■

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November 2007 AirCargoWorld 39 40F4-FreightersINT 10/26/07 11:31 AM Page 40

Feature Focus: Freighter Conversion

MediumMedium by Douglas W. Nelms GrowsGrows HotHot 40F4-FreightersINT 10/26/07 11:32 AM Page 41

The largest growth in the freighter market is coming in the mid-sized aircraft market

Airbus and Boeing are leaping with both feet into the “There is going to be a need to re- place the outsized aircraft such as the rapidly growing mid-sized widebody freighter market, but they are IL-76 and AN-124s,” said Brandon taking slightly different routes. Airbus is offering the new, pur- Fried, executive director of the U.S. pose-built A330-200 freighter while Boeing is offering a freighter Airforwarders Association. “The IL-76s can’t come into the U.S., and often edition of its somewhat older 767-300. Both are offering conver- time the cargo doesn’t require the sions at the same time. huge 124s. So we’ll need smaller air- craft with bigger doors. That’s a big is- But even though both also are offering conversions for two of sue. For the new freighters coming their older passenger widebodies, Airbus is using entirely in-house out, the 767s, 777s and A330s, the conversion for the A300 and A310 while Boeing out-sources con- version options for its older 767-200s and -300s us- ing a variety of programs.

bigger the door, the better. There is so much odd-sized freight out there.” Airbus says in its forecast, with the Some IL-76s are being upgraded into integrated express carriers making up the IL-76TD-90VD through the re- the largest part of the market. placement of the original Soloviev D- The expansion of freighter pro- Virtually all of these mid-sized 30KP turbofan engines rated at 26,500- grams is based on the expectation that freighters will be either Boeing deriv- pound thrust with Aviadvigatel PS-90A the air cargo market will triple over atives — the 767-300, 767-200 and engines, rated at 35,300-pound thrust. the next 20 years, with the biggest 767-300 converted freighter — or Air- The Volga-Dnepr Group announced at growth in the mid-sized freighter cate- bus A300-600, A310-300 and A330- the Paris Air Show in June it had gory. Freighters with payload of 200 freighters. signed a general agreement for three of roughly 50 to 70 tonnes These will replace the aging DC-8s the converted freighters. Delivery of will account for 1,603 and DC-10s that fill out freighter fleets the first aircraft will be within 15 out of the 3,580 new below the large widebody category. months of the final signing. aircraft required, The MD-11 freighter also is starting to Three IL-76 airframes at the Chkalov show its age, say aircraft experts, al- Tashkent Aircraft Production Compa- though the replacement aircraft for ny have been reserved for conversion. that larger and newer aircraft is more Options were also placed on 10 addi- likely to be Boeing’s 777 freighter. tional IL-76TD-90VDs for the future. To some extent, they will also be re- Volga-Dnepr said at the show their placing the Ilyushin IL-76, which is market research suggested a potential now prohibited from flying into many need for 15 to 20 additional 50-tonne airports. However, they probably will payload aircraft by 2015. However, not be able to replace the IL-76 special many in the cargo industry are con- outsized cargo capabilities, something cerned about whether there is a realis- freight forwarders would like to see. tic return on investment from putting

November 2007 AirCargoWorld 41 40F4-FreightersINT 10/26/07 11:32 AM Page 42

Feature Focus: Freighter Conversion

Boeing has been working in the cargo market for a long time. Airbus is young in the market, so we ‘‘are developing a family (of freighters) to catch up. expensive new engines on the IL-76’s the A330-200F so far, we are confident a mid-sized freighter, “It is a logical 35-year-old airframe. The IL-76 first that we can achieve that,” she said. complement to the industry’s only flew in 1971. Boeing says its aircraft account for complete freighter family and con- 80 to 90 percent of the global tributes significantly to the more f the mid-sized freighters that freighter market, and 25 to 35 per- than 90 percent of the world’s will be filling the air cargo need cent of those planes were built off the freighter capacity that is ’’provided by O for the next 20 years, only the Airbus assembly line as freighters. the Boeing freighter family,” he said. A330-200 and Boeing 767-300 will be Orders placed at the Paris Air Show Boeing also has conversion pro- built straight off the assembly line as brought the total order book for the grams for older passenger 767s, as cargo aircraft. A330-200 freighter to 66 aircraft — well as for turning the few remaining Airbus launched the A330-200 64 firm orders plus two options — MD-11s into what Boeing calls the freighter program in January and from seven customers, four of them MD-11BCF. However, with a 100-ton the plane is to enter service in late leasing companies. payload, the converted freighter is re- 2009. The 767-300 freighter The A330-200 freighter is truly a ally just outside the mid-sized catego- launched in 1993. new technology aircraft, requiring less ry. Boeing also noted as of the end of The only other Airbus aircraft in the maintenance with greater economy 2008, there will be only 22 out of 141 mid-sized category is the A300/A310 and a higher daily utilization from passenger MD-11s built that have not family; 813 of those were built and greater reliability, Dumoulin said. already been converted. 180 have been converted to freighters. The MD-11 freighter will be re- Conversion of the A300/310s is done oeing’s purpose-built mid-sized placed by the 115-ton payload 777 at the EADS Elbe Flugzeugwerke facil- B767-300 freighter is a derivative freighter, which was launched in May ity in Dresden. The line is set up to of the 767-300 extended-range pas- 2005 and should enter service late complete 20 conversions a year, with senger airliner. As such, the freighter next year. An announcement at the three slots for 2007 still available as is often referred to either as the 767- Paris Air Show for six additional 777 of the end of May. 300ERF or the -300F, although it is freighters for GE Commercial Avia- But Airbus ceased production of the the same aircraft. tion Services pushed the 777 freighter A300/A310 family this year to turn its The freighter was launched in Janu- order book to 78. attention to the newer plane. ary 1993 and entered service with UPS There is no conversion program for The A330-200 freighter is Airbus’s in October 1995. As of mid-June, Boe- the passenger 777 since the aircraft is attempt to catch up to Boeing in the ing had built a total of 668 767-300s, still too new to be considered a candi- freighter market, competing directly including 46 freighters. The order date for conversion. Typically, wide- against the 767-300 freighter, accord- book for the freighter stands at 83, in- body aircraft become likely conver- ing to Estelle Dumoulin, senior mar- cluding orders for 33 aircraft taken just sion candidates 15 to 20 years into keting analyst in the long-range mar- in the first half of 2007, Boeing says. passenger service. keting group of Airbus. Jim Edgar, Boeing’s regional direc- The 767-400 is the only other mid- “Boeing has been working in the tor of cargo marketing, says the versa- sized widebody candidate for conver- cargo market for a long time. Airbus is tility of the 767-300 freighter is “in- sion to freighters, although Boeing young in the market, so we are develop- valuable in successfully serving the said with only 38 produced, it isn’t vi- ing a family (of freighters) to catch up. diverse needs of the regional and able for a conversion program. With the good commercial results of thinner intercontinental markets.” As The 767-300 is one of Boeing’s

42 AirCargoWorld November 2007 40F4-FreightersINT 10/26/07 11:32 AM Page 43

Feature Focus: Freighter Conversion

newest conversion programs, launched “quite a number of firm orders and op- (newer) aircraft. I’ve heard that there in October 2005 with All Nippon Air- tions for the 767-200 conversion, (but) is a 25 percent efficiency of the newer ways as the first customer. The 767- because the passenger segment is aircraft over the planes that are out 300 converted freighter will have booming, customers currently have there now.” ■ virtually the same cargo capability as difficulties getting feed stock.” Conver- the 767-300 factory-built freighter, sion is done in Israel and Brazil. with about 52 tonnes of structural Paz also said Bedek has launched a payload at a range of approximately 767-300 conversion program under a 3,100 nautical miles at 412,000 50/50 partnership with Mitsui. These pounds maximum takeoff weight. will be converted through the estab- lishment of the M&B Conversion nder the Boeing Converted Company in Dublin. UFreighter program, Boeing is to- The first 767-200 freighter conver- tally responsible for all modification sion under the Boeing approved ser- designs, management, certification vice bulletin was nearing completion and after-delivery service. at Aeronavali’s Venice facility for flight Boeing also manages the modifica- this fall, according to Giuseppe Gambi- tion centers that actually perform the no, Aeronavali’s sales manager. Boeing touch labor. will perform all the certification test The 767-300 conversion modifica- flying, Gambino said. The company tion centers are Singapore Technolo- has firm orders for five conversions, in- gies Aerospace in Singapore and Alenia cluding the test aircraft once certifica- Aeronavali in Italy. It takes about 120 tion is completed. Options on another days to convert the plane to a freight- five conversions have also been placed, er, and the plane can carry 24 88-by- and Aeronavali “is in serious discus- 125 inch pallets on the main deck plus sions” with several other possible cus- 14 LD-2 containers and four 96-by-125 tomers, Gambino said. inch pallets on the lower deck. Cargo conversion of the 767-200 There are two 767-200 “special takes about four-and-a-half months freighter” programs available. and costs roughly $12.5 million, he Aeronavali has a license from Boe- said. However, Air Cargo Manage- ing to convert 767-200 planes to car- ment Group put the cost of the 767- go configuration. Israel Aircraft Indus- 200 converted freighter at $9 million tries’ Bedek Aviation Group began a to $10 million and conversion of the conversion program in late 2001, des- A300-600 or A310-300 at $8.5 million ignated the 767-200BDSF. It initially to $9.5 million. converted nine 767-200s for Airborne Total cost of conversion obviously Express without a main deck cargo depends on numerous factors, includ- door. It then obtained supplemental ing the cost of the airframe plus en- type certificates in the United States, gines and avionics. And while it used Europe and Israel for conversion with to be that a general rule of thumb a maindeck cargo door. was that the low initial cost could The company has converted 29 767- overcome the longer term higher cost 200s for ABX and GECAS, with the of maintenance and fuel, that rule GECAS aircraft flying for Tampa Air- could be changing. lines in Colombia and Star Air in Eu- Fried noted as jet fuel moves closer rope. Hadassah Paz, a spokesman for to $4 a gallon, “there is a compelling Bedek Group, said the company has argument to purchase one of those

November 2007 AirCargoWorld 43 44PeopleINT 10/26/07 11:32 AM Page 44

People

Airlines ing in a variety of positions in India Board. He replaces Scott Price, who and the United Arab Emirates. He was named CEO of DHL Express for Atlas Air Worldwide was the senior customer service exec- Europe earlier this year. McHugh, a Holdings: The parent of freighter utive and passenger traffic executive longtime senior executive at APL and operators Atlas Air and Polar Air Car- at Abu Dhabi airport. before that at Sea-Land, had been go appointed Jason Grant senior Emirates: The commercial senior vice president at vice president and chief financial offi- Dubai-based airline DHL Express Asia-Pacific since April cer. He succeeds Michael Barna, named Jassim Saif 2005. DHL Express also named who resigned to pursue other inter- cargo vice president Shoeib Reza Choudhury chief fi- ests. Grant, 35, had been senior vice for the United Arab nancial officer for DHL Express Singa- president for network planning and Emirates, a new posi- pore, succeeding Dennis Tan, who business development. He has held tion aimed at increas- took a position at DHL’s corporate various positions since joining AAWH ing customer service headquarters in Germany. Shoeib, in 2002 from American Airlines, Saif through the regional who joined DHL in 2000, was previ- where he was manager of financial Gulf Cooperation Council. Saif is a ously Asia Pacific vice president for planning and financial analysis. 20-year cargo industry veteran who business controlling and worked on Korean Air: The airline named had been Emirates’ cargo manager the design and implementation of James Jin-Ho Yoon regional gener- for the UAE. costing and yield management al manager for passenger and cargo AirNet Systems: The Ohio-based processes in DHL Asia Pacific. sales in Hong Kong and Macau. Yoon regional cargo airline named former FedEx: The board of FedEx Corp., started at Korean Air in 1989 as a American Airlines executive Thomas parent of FedEx Express, Memphis, freighter load controller. He later Kiernan and economist Robert elected Gary W. Loveman, chair- held several positions in cargo at the Milbourne to its board of directors. man, president and chief executive of Seoul headquarters. Kiernan, a management consultant Harrah’s Entertainment to its board Martinair: Martinair Cargo and since 2001, was with American and of directors. The FedEx board named Tampa Cargo named Daniel Baque- its parent AMR for 33 years and held the head of the casino business to its rizo general manager for the Miami positions including senior vice presi- audit committee and its information hub for both carriers. A 30-year cargo dent of corporate services and presi- technology committee. Loveman industry veteran was most recently re- dent of Sabre Computer Services. Mil- joined Harrah’s in 1998 from the gional cargo director for Florida West bourne is president and chief execu- Harvard University Graduate School International. He held positions be- tive officer of The Columbus Partner- of Business Administration, where he fore that with American Airlines, Mer- ship, a civic group. He was budget di- was an associate professor. cury Air Group, Diamond Air Freight, rector for the state of Wisconsin and UPS: The company named Bill Estafeta and Custom Air Transport. a vice president and economist for Hook vice president of healthcare lo- Martinair also named Tanny Kwok Kohler, the plumbing products man- gistics, a new position overseeing a sales manager for Northern China, ufacturer. new enterprise team focused on glob- based in Tianjin. He replaces Ming al healthcare logistics. A 20-year vet- Cheung, who retired. Kwok, 51, has Integrators eran of the healthcare industry, Hook been in forwarding for more than 30 was president of Livingston Health- years, starting with Kintetsu World DHL: The carrier care Services when UPS acquired the Express. He also held senior positions named Dan company in 2000. He earlier was with forwarders including ABX Logis- McHugh chief exec- president and chief operating officer tics and Scan Logistics. utive officer for the of Medigas. UPS named Angela L. British Airways: BA World Car- Asia-Pacific region, a Watson to succeed him as vice presi- go appointed Gurmeet Kalra com- position that includes dent of healthcare strategic accounts. mercial manager for Hong Kong, Tai- chairmanship of the DHL: DHL Express made several ap- wan and the Philippines. Kalra has DHL Express Asia-Pa- pointments in India as it organized a been with BAWC since 1992, work- cific Management McHugh South Asia division within its Asia-Pa-

44 AirCargoWorld November 2007 44PeopleINT 10/26/07 11:33 AM Page 45

People

cific operations. The carrier named De- promoted Raj Dias from regional di- Ground Handling vdip Purkayhasta vice president of rector for the Indian subcontinent to strategic planning and business devel- vice president for South Asia. Envirotainer: The opment for South Asia, Ryan Dsouza Lynden International: The for- Sweden-based manufac- national sales manager and Sandeep warder promoted Steve Tofts to di- turer of temperature-con- Juneja a national manager for India. rector of international services. Tofts trolled containers named has been with Lynden for three years Martin Peter vice presi- Third Parties as director of business development dent of sales, based in for the Americas division. Zurich. Peter had been Agility: The forwarder named TwoWay: The British forwarding director of business de- Chun Thomas J. Griffin president and division of Jordan-based Aramex velopment and market- chief executive officer of Agility Pro- named Joen Groenewoud sales di- ing at the company since 2002. He ject Logistics, the business unit fo- rector in Los Angeles. worked earlier at an international cused on project cargo and the oil and Trans Global Logistics: The consultancy specializing in product gas sectors. The 10-year company vet- Hong Kong-based forwarder named differentiation in transportation. eran replaces Gregory Rusovich, who Arun Seth regional director for the AAT: The Hong Kong Trade De- is leaving to focus on recovery efforts Indian sub-continent. Seth had been velopment Council named Stewart in New Orleans, his home town. Grif- country manager for India. Malik Chun of Asia Airfreight Terminals fin is a 35-year industry veteran who Nalir was named regional sales direc- its “young logistician of the year.” had been senior vice president of the tor for the Indian sub-continent from Chun has been with the airport han- Houston-based business unit. his post as general manager for TGL dler for 10 years, helping AAT Aeronet: The Califor- in Sri Lanka. achieve quality accreditation and nia-based logistics con- DGX: The forwarder named Julie working on development of indus- cern named Heather Choi regional director for the North- try-wide operating systems, proce- Barton regional vice east United States, based in New dures and service standards. ■ president for the U.S. York. The 25-year logistics veteran Western region, including started her career in Hong Kong at a Advertiser Index Seattle, Dallas, Las Vegas, major trading house. She later Phoenix and Nashville. worked for German forwarder Aeronautical Engineering...... 8 Barton Barton joined Aeronet in Rohlick & Co. in New York and ran Aeroport Lyon...... 15 2004 as vice president of strategic her own forwarding business, Total Air Cargo Media...... 19 Aviation Industry Group...... 39 business development. Aeronet also Service Overseas, before joining Boeing ...... 2,3 named Richard Izykowski manag- DHX-Dependable Hawaiian Express. Continental Airlines ...... CV4 er of ground services. The 25-year in- Dove Logistics: The Grapevine, Cologne/Bonn Airport ...... 17 dustry veteran joined Aeronet in 2003 Texas-based company named Chad Coyne Airways...... 26 and had been operations manager. Hughes manager of business devel- Dubai Cargo Village ...... 27 Phoenix International opment. Hughes is the former vice FedEx ...... 25 Freight: The Illinois-based forwarder president of sales for T.D. Rowe, a Flughafen Hahn...... 29 promoted Emil Ray Sanchez to supplier of coin operated games, and IATA ...... CV3, 34 chief financial officer. Sanchez, for- was district manager for ARAMARK IBS Software...... 33 merly vice president of finance, began Uniform Services in Nashville. Lufthansa Cargo...... 37 his career with Phoenix in 1989 as a Panalpina: The Switzerland-based Martinair...... 9, 38 messenger. The company also created forwarder named Alastair Robert- Qatar ...... 10 a regional management structure and son head of human resources. Robert- Skyteam Cargo ...... CV2 named Matt McInerney, formerly son, 46, had been with Swedish pack- Singapore Airlines...... 5 Phoenix’s New York/New Jersey gen- aging firm Tetra Pak for 10 years in Swiss WorldCargo...... 14 eral manager, to regional manager for posts around the world, most recently Volga Dnepr...... 28 the Northeastern region. Phoenix also with global responsibility. Volga/Antonov Airlines ...... 43

November 2007 AirCargoWorld 45 46BottomLineINT 10/25/07 1:46 PM Page 46

AirCargo theBottom Line

Sliced Apple Monthly year-over-year percent change in freight traffic at New York Kennedy International Airport. 10% 8% 6% 4% 2% 0% –2% –4% –6% –8% 4/06 5/06 6/06 7/06 8/06 9/06 10/06 11/06 12/06 1/07 2/07 3/07 4/07 5/07 6/07 7/07 8/07

Source: Port Authority of New York & New Jersey

Carrying Asia Monthly year-over-year percent change in capacity, in available tonne kilometers, and traffic, in freight tonne kilometers, of Asia-Pacific airlines. 10% 8% Traffic Capacity 6% 4% 2% 0% –2% –4% 1/06 2/06 3/06 4/06 5/06 6/06 7/06 8/06 9/06 10/06 11/06 12/06 1/07 2/07 3/07 4/07 5/07 6/07 7/07 8/07

Source: Association of Asia Pacific Airlines

Carrying International Monthly year-over-year percent change in total scheduled international freight traffic and capacity worldwide, in freight tonne-kilometers and available tonne-kilometers. 7% Traffic 6% Capacity

5%

4%

3%

2% 4/06 5/06 6/06 7/06 8/06 9/06 10/06 11/06 12/06 1/07 2/07 3/07 4/07 5/07 6/07 7/07 8/07

Source: International Air Transport Association

46 AirCargoWorld November 2007 46BottomLineINT 10/25/07 1:47 PM Page 47

Shared Express Annual market share for U.S. air express volume.

35

30

25 FedEx 20 UPS USPS 15 DHL 10 ’00 ’01 ’02 ’03 ’04 ’05 ’06

Source: Bear Stearns Equity Research

Pump Price Average monthly jet fuel prices in New York, Singapore and Rotterdam over past year. $2.50 New York $2.25 Singapore Rotterdam $2.00

$1.75

$1.50 10/06 11/06 12/06 1/07 2/07 3/07 4/07 5/07 6/07 7/07 8/07 *9/07 * through Sept. 21 Source: U,S. Energy Information Administration

Dutch Treat Monthly freight tonnage at Amsterdam Airport Schiphol over the past year. 150,000 2006 140,000 2007

130,000

120,000

110,000 Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec. Source: Schiphol Group

Luft Balloon Monthly year-over-year percent change in freight traffic at Lufthansa in the Americas and the Asia-Pacific 30% 25% Americas 20% Asia-Pacific 15% 10% 5% 0% –5% –10% 4/06 5/06 6/06 7/06 8/06 9/06 10/06 11/06 12/06 1/07 2/07 3/07 4/07 5/07 6/07 7/07 8/07 Source: Company reports

November 2007 AirCargoWorld 47 48EventsINT 10/25/07 1:47 PM Page 48

Events

Dec. 4-5 Exhibition Centre, the annual tab- Network Services meeting is a must mag event includes a conference and for the international air freight busi- Zurich: Managing Airline Op- exhibit hall. For information, call +44 ness in North America. For informa- erating Costs Conference, at the 1784 255000 or e-mail: p.cooper@air- tion, call (516) 747-3312 or visit: Renaissance Zurich, the fourth annu- cargonews.net. www.cnsc.net. al eAviation Industry Group event in- cludes fleet planning, financing air- Feb. 25-26 May 12-14 craft and leasing economics. For in- formation, call +44 207 828 4376 or Puerta Vallarta, Mexico: Copenhagen: International e-mail: [email protected] World Mail and Express Americ- Air Cargo Association Executive as, at the Sheraton Buganvillas, the Conference and Annual General Dec. 4-7 Triangle Management event hits the Meeting, a smaller, focused version beach. For information, call +44 870 of the larger TIACA Air Cargo Forum, Hanoi: Vietnam Aviation Con- 950 7900 or visit: www.triangle.eu.com. the event looks at environmental is- ference, taking place with the Viet- sues, express competition and ocean nam Logistics & Transport Conference March 2-6 inroads. For information, call (786) at the Hanoi’s Friendship Cultural Cen- 265-7011 or visit: www.tiaca.org. tre, an event focused on the shipping Rome: IATA World Air Cargo economy and cutting across modes. Symposium, at the Marriott Park June 17-19 For information, call +852 (2) 2511 Centre, the sprawling event is becom- 7427 or e-mail: [email protected]. ing the premiere annual event in the Shanghai: transport logistic air freight world, with speakers in- China, at the Shanghai New Interna- cluding DHL’s John Allen, Lufthansa’s tional Expo Centre, the Munich In- 2008 Carsten Spohr and others across near- ternational Trade Group event in- Jan. 23-25 ly a full week of industry immersion. cludes a discussion forum and a For information, call (514) 874-0202 sprawling exhibition. For informa- Mumbai: Air Cargo India or visit: www.iata.org/events. tion, call +49 89 949-20 245 or visit: 2008, organized by the Stat Trade www.transportlogistic-china.com Times, looking at one of the world’s March 16-18 fastest growing freight markets. For Sept. 23-26 information, call +91 22 2757 0550 Orlando, Fla.: AirCargo 2008, or visit: www.statetimes.com/aci2008. at the Omni ChampionsGate, the an- Vancouver, B.C.: FIATA World nual three-sided meeting of the U.S. Congress, at the Convention and Ex- Jan. 30-31 Air Forwarders Association, the Air hibition Centre, the annual meeting and Expedited Motor Carriers Associa- of regional freight forwarders. For in- London: Cargo Aircraft & Op- tion and the Express Delivery Associa- formation, call +41 22 33 99 586 or erations Conference, the sixth an- tion. For information, call (703) 361- visit: www.fiata20087.com. nual edition of the Aviation Industry 5208 or visit: www.airforwarders.org. Group event looks at conversions, en- Nov. 4-6 vironmental pressures, cargo airports May 4-6 and other freighter targets. For infor- Kuala Lumpur: International mation, call +44 207 828 4376 or e- Palm Beach Gardens, Fla., CNS Air Cargo Forum, with an exhibit mail: [email protected]. Partnership 2008, at the PGA Na- and conference, the bi-annual event tional Resort & Spa, the annual Cargo is the air cargo industry’s sprawling Feb. 12-14 global meeting and stops this time For more events, visit: in Malaysia. For information, For Bahrain: World Air Cargo www.aircargoworld. information, call +49 89 949-20 245 Event, at the Bahrain International com/dept/events.htm or visit: www.tiaca.org/2008. ■

48 AirCargoWorld November 2007 Project1 10/17/07 6:35 PM Page 1

Reserve a front-row seat

For a cargo production in 12 acts

This year’s focus is on the customer and on stimulating dialogue IATA to simplify the business of air cargo. 12 cargo forums take place Reserve your place now WORLD CARGO over three days: and save up to $300! SYMPOSIUM 2008 e-freight • Cargo 2000 • cargo security • dangerous goods by 03 March – 06 March, 2008 air • perishable goods • pharmaceuticals • live animals • air mail Rome, Italy management • ULD and asset management • cargo technology Rome Marriot Park Hotel Centre • cargo airport and terminal development • open skies

For more information, visit www.iata.org/events/wcs08 Project2 10/25/07 10:49 AM Page 1

© 2007 Continental Airlines, Inc.

Mumbai boosted to daily service Oct. 22.

The inauguration of 777 service between our New York area hub, Newark Liberty International Airport, and Mumbai in October links the world’s financial center with India’s commercial and entertainment capital. Mumbai is the 30th city in Continental’s transatlantic network. So does that mean your world is getting bigger or smaller? Maybe we should just say closer and call it even. For more information or to book a shipment, contact your Continental Airlines Cargo sales manager or visit cocargo.com.

*Some service operated by regional carriers d/b/a Continental Express and Continental Connection.

Work Hard.

Fly Right. ®