… 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.
Re Glyn, I cannot believe that IATA has such a lack of understanding re the world of air cargo and logistics that they would offer, or even contemplate offering Glyn and his team an exit package. They should have been in his office on bended knee begging him to stay and increasing his salary. Cargo is one of the few possibilities to keep existing fleets flying at least at break even or even better if things were changed.
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. 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 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: forget it! Business trips with the risk of Covid and so many new possibilities with user friendly Zoom and Teams solutions instead available, why would you 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 cannot come back profitably 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 the manufacturing world dependent on air of lost passenger belly capacity, which accounted for 60% of the volume before and the realization that it is not coming back soon, is making everyone reevaluate supply chain logistics. Who is there to speak for aviation which in the past was ICAO, IATA etc. now?
But is it all negative? Is there a possibility to ensure a much better result than today?
ICAO 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.
‘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 on their airports we can assist all to start the 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. Why are these entities that received that advice so ignorant of air cargo that they fall apart just when you need them most?
And why are C suite airline managements so ignorant of cargo today as a business because they never considered it core for the past 20 years? For some of them that will be their downfall.
Stan Wraight is President & CEO of Montreal, Canada-based consultancy Strategic Aviation Solutions International (SASI)