Copyright © 2006 Howard Publications, Inc.
     

Back to contents

Transport/Air

IATA’S Jeanniot calls for industry restructuring
Pierre J. Jeanniot, director of the International Air Transport Association, said bilateral treaty provisions and "archaic" foreign ownership rules are preventing airlines from making profitable restructuring moves.

Jeanniot, speaking at the opening of the Airline Financial Summit 2001 in New York April 5, said these restrictive rules keep airlines from necessary consolidation.

"Only a profitable airline industry can deliver the type of price/quality ratio the consumer expects," he said.

Jeanniot noted the frail profitability of the air transport industry, caused by competitive pressure on yields, cost increases caused by higher fuel prices over the past two years and the slow impact electronic commerce has had on airlines’ marketing costs.

"The fundamental laws of economics have not changed — and our industry should better manage itself accordingly," he said."

Jeanniot also pointed out the inefficiencies that airlines face at airports. While airlines have privatized, many airports and air traffic control facilities "remain as government monopolies, with perennial inefficiencies and capacity shortages," he said. And those airports that have privatized "have been regarded as licenses to print money, in the absence of independent watchdog authorities."

Air freight carriers lobby against FedEx/USPS contract
Emery Worldwide, Evergreen International Aviation and Ryan International Airlines said they will step up their opposition to the recent major contract between the U.S. Postal Service and Federal Express.

In a joint statement, the three companies alleged that the deal will add to costs and give FedEx monopoly powers. The contract will replace the previous system of distributing USPS freight among several carriers.

"Mail users, taxpayers and our companies will pay a high price for the fatally flawed contract between the Postal Service and FedEx," they said. "The unprecedented contract is worth more than $6 billion over seven years. USPS prohibited competition in making FedEx the sole source carrier for the three types of mail most important to the general public," they added.

The joint statement was made by Jerry Trimarco, chief executive office of Emery Worldwide Airlines; Delford Smith, CEO of Evergreen International Aviation; and Ron Ryan, CEO of Ryan International Airlines.

The air freight carriers’ written testimony on the FedEx issue is being submitted to the U.S. House of Representatives’ Government Reform Committee, in relation to a committee hearing on Wednesday.

The carriers alleged that USPS "understated the expenses of the FedEx arrangement and ignored a proposal by a potential competitor that actually would have reduced costs."

The air freight carriers said that, along with several other companies, they are petitioning the Justice Department to open a formal inquiry into the antitrust aspects of the transaction. "By granting FedEx control over air transportation, USPS is further narrowing what is already a concentrated industry," they said.

Referring to national security, the air freight carriers alleged that the agreement threatens the existence of a number of the regional airlines that participate in the Civil Reserve Air Fleet, the partnership program between the air freight industry and the government that provides commercial aircraft to the military during an emergency.

Lufthansa Cargo to tighten network, expand alliances
Lufthansa Cargo’s goals are to establish a seamless global logistics network, and to expand its markets through the New Global Cargo alliance, and with increased partnerships.

International companies "require one-stop worldwide logistics systems that encompass every step in the entire transport chain," said Andreas Otto, a board member for marketing and sales. "Lufthansa Cargo’s aim is to have a worldwide, high-frequency route network serving global clients in place in a few years time."

Otto, speaking at a German Aviation Press Club meeting in Hamburg, said the New Global Cargo alliance, formed with SAS Cargo and Singapore Airlines, is a big step toward a worldwide network. The alliance comprises 618 aircraft, 10 major hubs and a network covering intra-Europe and Europe/Asia. The alliance, which is open to additional members will offer common express service later this year, he said.

Lufthansa Cargo plans to also expand its bilateral partnerships and its Business Partnership Program with international forwarders, Otto said. The partnership generates about 40 percent of the company’s revenues.

The company, which was the first to launch time-definite services, should continue to see growth in demand for express and time-definite services, Otto said.

Lufthansa Cargo’s sales efforts will shift to electronic channels, such as the company’s eBooking system, online marketplaces such as the GF-X online air cargo trading platform and call centers, Otto said. Later this month, his company will introduce a fourth version of its online eBooking system, which allows shipments to be booked direct on Lufthansa Cargo from forwarding systems through Traxon and EDI in Germany, he added.

Otto said a possible night flight ban at Frankfurt airport is one of the greatest risks facing his company. "The global logistics chain does not stand still at night. Frankfurt airport is the backbone of the German export industry. Not just Lufthansa Cargo, but the entire economy depends on round-the-clock operation."

UPS plans intra-Asia hub in the Philippines
United Parcel Service, the express carrier and package delivery giant, said April 5 it has reached agreement to establish an intra-Asia hub in the Philippines.

Atlanta-based UPS said it signed a joint letter of intent with the Philippine government, and also signed a memorandum of understanding with the Bases Conversion Development Authority and the Clark Development Corp. to examine basing its hub at the former Clark United States Air Force Base in Pampanga.

The base, now called Clark International Airport, was once the largest U.S. Air Force based outside of the United States, has been run by the Philippine government since U.S. forces vacated in 1992. The airport offers more than 267 acres, and includes a pair of two-mile-long runways, four parallel and nine connecting taxiways and a ramp that can accommodate large aircraft.

"The Philippines’ centralized location makes it possible for cargo aircraft to reach all major Asian cities in less than four hours," said Ron Wallace, president, UPS International.

Wallace also said the Philippine government offers an "expansive flight policy which will allow UPS to efficiently operate the hub. "This policy allows UPS to better use its own aircraft by limiting ground and air traffic delays and refueling problems."

UPS began its Asia Pacific operation in 1988, when it acquired Hong Kong-based Asian Courier System, and appointed Delbros Inc. as its service agent in the Philippines.