Home > Air > Air Freight is indispensable but too often ignored by airline managers | October 2020

Air Freight is indispensable but too often ignored by airline managers | October 2020

Air Freight is indispensable but too often ignored by airline managers

… claims Stanley Wraight. In his guest contribution, he also comments on the retirement of Glyn Hughes as Head of Cargo of the International Air Transport Organization (IATA) at the end of January 2021.

IATA allowing its global head of cargo, and now the head of the IATA Subsidiary CNS in the USA take “packages” to leave is incomprehensible.

IATA has such a lack of understanding re the world of air cargo and logistics that they would offer, or even contemplate offering  anyone on the cargo team take an exit package is astounding. Cargo is one of the few possibilities to keep existing fleets flying at least at break even, and is critically important as we battle this pandemic, there is no excuse for this.

Cargo up, pax down The economic survival of most major airlines will depend for the greatest part on maximizing revenue from whatever sources they can and have under their control, and it was obvious from the very beginning that air cargo was the most important one for airlines, and increasingly airports. Not only now, but until 2024 to 2025 at the earliest, passenger traffic will never resume to the level of 2019.

It must seem obvious that the Covid-19 vaccine is at least a year away, and complete worldwide immunization is at least 4 to 5 years away at best. It is also is obvious that the millions of people who suddenly found themselves either underemployed, or without any employment at all, will not be taking a vacation anytime soon if it involves overseas travel. Business conferences: not going to happen for years. Business trips are fraught  with the risk of staff contracting Covid. So many new possibilities have opened up with user friendly examples such as Zoom, Skype and Teams solutions instead available, why would any company or businessman or women risk that?

Re-evaluating supply chain logistics

Travel insurance companies will not cover Covid, so some airlines are now setting up offers and paying for it, how long will that last as they lose money? Wide body fleets that are grounded and parked cannot be reintroduced profitably with 100 or 150 passengers unless there is a significant contribution to the direct operating costs from cargo, and it can happen. You will be lucky to see anything more than 100 passengers on trans-border flights for years to come. Get used to flying in a narrow body aircraft on the North Atlantic unless cargo can keep wide bodies in the air.

This shock to a manufacturing world dependent on air cargo of lost passenger belly capacity, which accounted for 60% of the capacity before and the realization that it is not coming back soon, is making everyone revaluate supply chain logistics.

But is it all negative?

Is there a possibility to ensure a much better result than today?

ICAO as part of the U.N. has done extensive work to help, guide and advise, but the implementation requires a strong IATA, a strong ACI and government understanding and enforcement.

The new value proposition is clear, nothing is faster in logistics between distant points than air cargo, that is not disputable. Nothing is faster in the air for cargo than a point to point direct flight. Too many high-ranking airline managers are still ignorant of their cargo business potential if a new business model was adopted, one that offers a “product portfolio” of solutions for all in a transparent, time based, and quality driven industry.

‘Virtual Integrator’ as USP

Let’s use the example Hong Kong (HKG) to Frankfurt (FRA), both major airlines, say either LH or Cathay, using a B747 all passenger flight. It leaves late PM from HKG and arrives, with time zone benefit, next day at approximately 0600. Yet we give that highest quality space away for cheap prices, space that is faster airport to airport, city to city, than Fed Ex, UPS, DHL, Amazon, Alibaba or anyone else by at least one full day.

To capitalize on this USP what Cathay and LH have to do is introduce products and mandate services on the ground at both ends in airports and ground handling agents (GHA) that support and enable this speed advantage to achieve the highest yield possible, and the entire focus should be on 24 max 48 hours door to door.

That requires a collaboration between Airports, GHA or self-handling airlines, state-of-the-art modern Cargo Community Data Systems on airport that support all allowing airlines to offer products that consumers want and allow them to become “Virtual Integrators.”

Too many have no teeth

Should IATA be doing this? Should Airport Council International (ACI)? Or should ICAO, which is part of the UN mandate do it via local governments? Could they collaborate?

It seems to me that if for once they could collaborate and MANDATE e-freight in our industry we can assist all to start the air logistics for scheduled passenger airlines and their recovery from this crisis.

The reason we have the mess that cannot cope with a pandemic in air cargo today, is because those we trusted in the past have no teeth, and talk is cheap.

ICAO has issued clear guidelines but cannot enforce, that is what governments and the air logistics industry is supposed to do. Why are these entities that received that detailed and fundamental advice so ignorant of air cargo that they fall apart just when you need them most?

 

ABOUT THE AUTHOR

Stan Wraight

President and CEO
Strategic Aviation Solutions International (SASI)

Stanley Wraight is the Co-Founder of Strategic Aviation Solutions (SASI), which he established in 2005 with two partners with extensive backgrounds in Forwarding, Airlines, Integrators and express. SASI is engaged in global consulting and management services for airlines, airports, international trade organizations and financial institutions.

 

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