STRAIGHT SHOOTER Qantas chief Dixon defies critics as carrier bucks world trends - Orient Aviation
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MAGAZINE OF THE ASSOCIATION OF ASIA PACIFIC AIRLINES
VOL. 9 NO. 10 SEPTEMBER 2002
STRAIGHT
SHOOTER
Qantas chief Dixon defies
critics as carrier
bucks world trends
Cargo boom: Asia SriLankan Airlines Open skies
leads world recovery battling back split in Manila
A Wilson Press publication
Publisher
Wilson Press Ltd VOL. 9 NO. 10 SEPTEMBER 2002
GPO Box 11435 Hong Kong
Tel: Editorial (852) 2893 3676
Fax: Editorial (852) 2892 2846
E-mail: orientav@netvigator.com
Web Site: www.orientaviation.com
Chief Executive and Editor-in-Chief
Barry Grindrod
E-mail: orientav@netvigator.com
Publisher
Christine McGee
E-mail: cmcgee@netvigator.com
Chief Correspondent
Tom Ballantyne
COVER STORY
MAGAZINE OF THE ASSOCIATION OF ASIA PACIFIC AIRLINES
Tel: (612) 9638 6895 VOL. 9 NO. 10 SEPTEMBER 2002
Fax: (612) 9684 2776
E-mail: tomball@ozemail.com.au
STRAIGHT
Special Correspondent
Kitty McKinsey
Tel: (852) 2987 6116
E-mail: k.mckinsey@att.net
Hong Kong & China
Wellington Ng
Tel: (852) 2893 3676
SHOOTER Page 24
E-mail: orientav@netvigator.com
Japan
Daniel Baron No-nonsense chief executive STRAIGHT
Tel: (813) 3203 7106
E-mail: dbaron@gol.com Geoff Dixon defies critics SHOOTER
as Qantas Airways turns
Qantas chief Dixon defies
Philippines critics as carrier
Rene Mallari bucks world trends
Tel: (632) 413 8726
E-mail: renemallari@hotmail.com
world trends upside down
Photographers
Patrick Dunne (chief photographer),
Rob Finlayson, Andrew Hunt, Hiro Murai Cargo boom: Asia SriLankan Airlines Open skies
leads world recovery battling back split in Manila
Design & Production
ü Design + Production Cover photo:
Patrick Dunne A Wilson Press publication
Colour Separations
COVER PHOTO: PATRICK DUNNE
Twinstar Graphic Arts Co.
Printing
Hop Sze Printing Company Ltd
Advertising NEWS
South East Asia and Pacific
Tankayhui Media, Tan Kay Hui
Tel: (65) 9790 6090 Cathay Pacific applies to fly to mainland China 10
Fax: (65) 6280 2823
E-mail: tkhmedia@singnet.com.sg Thai Airways may delay share sale again 10
The Americas/Canada
Barnes Media Associates Malaysia Airlines re-invents itself as airline management entity 10
Ray Barnes
Tel: (1) 434 927 5122 China Eastern brings in private company for Wuhan purchase 10
Fax: (1) 434 927 5101
E-mail: rvbarnes@cablenet-va.com Air New Zealand, All Nippon order new aircraft 12
Europe
REM International Airlines bounce back to profit as recovery takes hold 14
Stephane de Remusat
Tel: (33 5) 34 27 01 30 Carriers jostle for position in Japan as JAL/JAS merger nears 23
Fax: (33 5) 34 27 01 31
E-mail: sremusat@aol.com Split views over Philippines open skies 26
New Media & Circulation Manager
Leona Wong Wing Lam Korean Air’s World Cup own goal 27
Tel: (852) 2865 3966
E-mail: leonawong@orientaviation.com SriLankan Airlines cashing in after year to forget 28
Association of Asia Pacific Airlines
Secretariat
Suite 9.01, 9/F,
Kompleks Antarabangsa, MAIN STORY
Jalan Sultan Ismail,
50250 Kuala Lumpur, Malaysia.
Director General: Richard Stirland Tonnes of optimism as Asia leads the world in cargo growth 16
Commercial Director: Carlos Chua
Technical Director: Leroy Keith The freighter of the future? Rivals state their case 22
Tel: (603) 2145 5600
Fax: (603) 2145 7500
E-mail: ushav@aapa.org.my
Published 10 times a year REGULAR FEATURES
February, March, April, May, June,
July/August, September, October,
November and December/January. Editor’s Letter 7
© All rights reserved
Wilson Press Ltd, Hong Kong, 2002. Perspective 8
The views expressed in this magazine are not necessarily
those of the Association of Asia Pacific Airlines. Business Digest 30
September 2002, Orient Aviation 
FROM THE EDITOR’S DESK
NOW FOR THE GOOD NEWS
I
t is said often enough that only bad news makes news. with the highest quarterly profit in its 61-year history.
Well, we beg to differ. It is a fighting spirit that typifies many of Asia’s carriers.
In this issue Orient Aviation is the carrier of good Our lead story, Tonnes of Optimism, outlines the cargo boom
news from beginning to end. Page after page cites evi- in Asia, an aviation business that has exceeded all expectations
dence that the Asia-Pacific is indeed leading the world in the region’s industry. Just about all of the Association of Asia
recovery after a recession and the unparalleled turmoil caused Pacific Airlines member carriers have seen freight volumes rise,
by the September 11 terrorist attacks. The facts and figures in some cases dramatically, and double-digit growth is expected
in our stories support the forecasters’ views that this region for calendar year 2002 for most of them.
will be aviation’s most industrious growth engine in the next However, let’s not get too carried away. Yields for both
20 years. passenger and cargo traffic are still a major concern for air-
In our business round-up there is news of dramatic turna- lines. In many a public statement, the CEOs of the best carriers
rounds by Cathay Pacific Airways, Korean carriers, Korean Air have said they are now focusing their attention on simply that
and Asiana Airlines, Thai Airways International and Philippine – increasing yields.
Airlines (PAL). And then there is Qantas Airways, the subject of Looking back to the Asian economic crisis of 1997-1998,
our cover story. Last month no-nonsense chief executive, Geoff a number of the region’s airlines were on their knees. Even
Dixon, described the airline’s 2001-2002 profit – the second those who were better equipped financially and managerially
biggest in its history – as a “creditable result”. An understate- to handle the crisis needed some serious surgery to stay on
ment indeed. their profit tracks. Many Asian carriers learned fast and learned
And in answer to the critics who said Qantas was helped well. Those experiences of four years ago enabled them to cope
by the sad demise of Ansett Australia, particularly in the do- better than most with the emotional and fiscal horrors of the
mestic market, it should be remembered that Qantas relies on last 12 months and to come out winning.
international routes for 80% of its revenue.
And just for good measure, the Australian flag carrier is to
launch a low-cost subsidiary international carrier in October.
How’s that for confidence?
In the Philippines, PAL nearly went out of business in 1999,
but under rehabilitation and a new management it recorded two
consecutive years of profits and would have made it three in BARRY GRINDROD
a row except for September 11. Now PAL has kicked off 2002 Chief Executive and Editor-in-Chief
The Association of Asia Pacific Airlines members and contact list:
Air New Zealand Dragonair Philippine Airlines
Chief Executive, Mr Ralph Norris Chief Executive Officer, Mr Stanley Hui President, Mr Avelino Zapanta
General Manager Group Communications, Corporate Communication Manager, VP Corporate Communications,
Mr David Beatson Ms Laura Crampton Mr Rolando Estabilio
Tel: (632) 817 1234 Fax: (632) 817 8689
Tel: (64 9) 336 2770 Fax: (64 9) 336 2759 Tel: (852) 3193 3193 Fax: (852) 3193 3194
Qantas Airways
All Nippon Airways EVA Air Managing Director and CEO,
President and CEO, Mr Yoji Ohashi President, Ms Kitty Yen Mr Geoff Dixon
Senior VP, Public Relations, Mr Koji Ohno Deputy Senior Vice President, Group General Manager Public Affairs,
Tel: (81 3) 5756 5675 Fax: (81 3) 5756 5679 Mr K. W. Nieh Mr Michael Sharp
Tel: (8862) 8500 2585 Fax: (8862) 2501 7599 Tel: (612) 9691 3760 Fax: (612) 9691 4187
Asiana Airlines
President & Chief Executive, Garuda Indonesia Royal Brunei Airlines
Chairman, Pehin Dato Haji Yahya
Mr Park Chan-bup President, Mr Indra Setiawan
Executive Director, TBA
Managing Director, PR, VP Corporate Affairs, Mr Pujobroto Tel: (673 2) 229 799 Fax: (673 2) 221 230
Mr Hong Lae Kim Tel: (6221) 380 0592 Fax: (6221) 368 031
Tel: (822) 758 8161 Fax: (822) 758 8008 Singapore Airlines
Japan Airlines Deputy Chairman and CEO,
Cathay Pacific Airways President, Mr Isao Kaneko Dr Cheong Choong Kong
Chief Executive Officer, Mr David Turnbull Director, Public Relations, VP Public Affairs, Mr Rick Clements
Corporate Communications General Mr Geoffrey Tudor Tel: (65) 541 4030 Fax: (65) 545 6083
Manager, Mr Alan Wong Tel: (813) 5460 3109 Fax: (813) 5460 5910
Tel: (852) 2747 8868 Fax: (852) 2810 6563 Thai Airways International
President, Mr Kanok Abhiradee
Korean Air Director, PR,
China Airlines Chairman and CEO, Mr Yang Ho Cho Mrs Sunathee Isvarphornchai
President, Mr Philip Hsing-Hsiung Wei Managing VP, Corporate Communications, Tel: (662) 513 3364 Fax: (662) 545 3891
VP, Corp Comms, Mr Roger Han Mr Jun Jip Choi
Tel: (8862) 2514 5750 Fax: (8862) 2514 5754 Tel: (822) 656 7065 Fax: (822) 656 7288/89 Vietnam Airlines
President and CEO,
Malaysia Airlines Mr Nguyen Xuan Hien
Chairman, Tan Sri Azizan Zainul Abidin Dep Director, Corp Affairs,
Mr Nguyen Huy Hieu
Tel: (603) 2165 5154 Fax: (603) 2163 3178 Tel: (84-4) 873 0928 Fax: (84-4) 827 2291
September 2002, Orient Aviation 
DIARY
PERSPECTIVE
Air Nuigini’s board, chaired
Edited by by Michael Bromley, has
Christine McGee refused to confirm local media
reports that the airline lost 36
FIASCO? million kina (US$10 million)
An August statement is- in the last 12 months. Until
sued after private airport a permanent replacement
o p e r a t o r, F r a p o r t A G is appointed as chief execu-
Frankfurt Airport Serv- tive, the general manager of
ices Worldwide released its finance, Steve Wilks, and the
encouraging half-year results executive general manager
revealed the Philippine Gov- operations, Captain Dave
ernment “has signalled its Wiltshire, are running the
willingness to discuss in detail Port Moresby-based airline.
the option of re-transferring
the Manila Terminal project MAS, AIRASIA EQUITY DEAL? UNREST
S i n g a p o r e A i r lines
to the Philippine state”. The
N
Fraport executive board said ot so long ago, Tony Fernandez (pictured above) (SIA) and its flight crew
it “was optimistic about ne- was a businessman with a brave idea – setting up a avoided a possible falling out
gotiations with the Philippine low-cost carrier in an Asian country. He was not a last month after a row flared
Government” after receiving planespotter and he had never worked for an airline or a up over seats for crew rest
the letter. But the airport related industry. But he did have a good idea – cheap do- breaks on long-haul flights.
operator remained insistent mestic flights in Malaysia – a country where the flag carrier Until the recent past, flight
it would “continue to abstain has always lost money on its local network. Only 10 months crews took their breaks in
from providing further fund- into his launch of AirAsia, the Malaysian Government has business class. However, now
ing to Piatco (Philippine had to accept he knows what the public wants. In August, that SIA is fitting flat beds in
International Air Trans- the Malaysian transport minister, strongly hinted that young its business class cabins, the
port Company)”, its minority blade Fernandez and Malaysia Airlines (MAS) could be- number of business class seats
project partner in the new ter- come equity partners with MAS keeping long-haul services has to be reduced with the re-
minal at Manila’s International and AirAsia operating the nation’s domestic network. sulting loss of revenue. To al-
Airport, “until an acceptable leviate the revenue reduction,
solution has been achieved SIA wanted its flight crews
with both the government to rest in economy seats. The
and Fraport’s Philippine part- its gleaming and almost new vinced of the arguments for uproar from SIA’s collective
ners”. In 1999, disgraced and dedicated terminal to the new privatisation of vital national cockpits produced a com-
presently imprisoned former facility – scheduled to open infrastructure and it is be- promise in late August. SIA
Philippines president, Joseph in December. As well, duty lieved the government feared and the pilots’ union agreed
Estrada, negotiated a US$600 free operators, concerned at an electoral backlash if they the airline would reserve one
million deal with Fraport, a both high rental costs and allowed Qantas to increase business class seat and two
65% partner, and Chinese/ increased competition, have its offshore equity. Don’t, for economy class seats for pilot
Filipino business interests to demanded the terminal be a minute, think however that rest breaks. If additional seats
build an international terminal declared void. Over to you the issue is dead and buried. are available in business or
at Ninoy Aquino Interna- madam president. A single battle may have been first class on specific flights,
tional Airport. Unfortu- lost, but Qantas is determined SIA will upgrade the pilots
nately the deal gave major- BATTLE to win the war – at a time that from economy. If the premium
ity voting rights to the local UNFOLDING will suit the interests of all par- seats are not available and a
partners while Fraport only The Australian Govern- ties, political and otherwise. pilot has to take a rest break in
gets to vote on 30% of its ment decided last month to economy, SIA will pay US$115
equity in the project. It is now preserve the 49% cap on for- DISAPPEARED to each pilot who has to rest in
revealed that Estrada also eign ownership in the priva- In a game decision, sea- an economy seat.
agreed that the government tised national carrier, Qantas soned Australian airline ex- In July, SIA sacked the
would assume responsibility Airways. The decision, which ecutive, Peter Roberts, ac- pilot and co-pilot who were in-
of the consortium’s loans if it surprised some observers cepted an offer to run troubled volved in the crash of SQ006 in
defaults on payments. Present and participants in the lob- Air Nuigini, but the job Taiwan in October 2000. The
Philippines president Gloria bying process leading up to seems to have got the better of third member of the cockpit
Arroyo is now grappling with the decision in mid-August, him. In June, it was revealed crew, first officer Ng Kheng
this possibility after Fraport was taken in the context of an that Roberts had departed Leng, remains at SIA. The
decided it would cease funding intense national debate over from the airline for good. Ac- crash took the lives of 83
the project when it had spent the sale of a large portion of cording to sources, he resigned passengers and crew. The
US$350 million in interim the government’s former tel- after completing only one year announcement followed a de-
financing. In the meantime, ecommunications authority, of his three year contract amid cision by the Taiwan’s courts
Philippine Airlines has Telstra. A significant number reports the carrier was con- not to proceed with charges
also baulked at moving from of Australians remain uncon- tinuing to suffer major losses. against the two pilots.
Orient Aviation, September 2002
news
REGIONAL ROUND-UP
Cathay applies apply to the authorities for a
for rights waiver from the rule that it bid
to resume for the remainder of MAS’s
flights to China shares because it held major-
A
t press time, the re- ity equity in the carrier, the
gional aviation indus- MAS statement said.
try expected Hong Additionally, the airline
Kong-based Cathay Pacific is selling all its property to
Airways to unveil plans to another government created
resume services to the main- company, Global Network
land China after a 12-year Sdn Bhd, for 1.5 billion ring-
absence. In mid-August, it git, and would lease back
was confirmed the airline facilities required for the
had lodged an application airline’s operations. MAS
to fly to the mainland with already has sold its catering
Hong Kong’s Air Trans- subsidiary to LSG SkyChefs
port Licensing Authority for 175 million ringgit.
(ATLA). The application was Malaysia Airlines: major restructuring MAS managing director,
published in the government Mohamed Nor Yusuf, said
gazette in late August and a who are using Hong Kong as of arguments said THAI the re-structuring would al-
two-week consultation period their gateway to and from the should stick to its October low MAS to predict a profit of
has commenced to allow in- Chinese mainland”. Callers sale schedule as fears of 94.2 million ringgit by March
terested parties to comment to the hotline receive Cathay escalating conflicts in the 31, 2003, compared to a loss
on the Cathay application. Pacific flight details and in- Middle East are pushing of 835.6 million ringgit for
Regional carrier, Dragonair, formation about the carrier’s up crude oil prices, a price the fiscal year to March 31 in
is the only Hong Kong airline global network. hike that would be reflected 2002. MAS would continue
currently permitted to fly to in THAI’s earnings in the as operators of its interna-
mainland cities. ATLA ap- THAI considers first quarter of 2003. In July, tional passenger and cargo
proval to fly to China would delaying share president Kanok said THAI services with aircraft leased
only be the first step in the sale – again would sell 400 million shares from PMB, Yusuf said, but
process of re-entry into the Off again? At press time, – 300 million new shares and all revenues from domestic
mainland market for Cathay. Thai Airways Internation- 100 million shares from the flights would go to the new
It also would need Beijing’s al (THAI) was reported to be government holding – in Oc- government company.
agreement to win designation considering delaying its long- tober in a Stock Exchange of The new MAS structure
to fly routes to China’s cities. awaited share offering – set Thailand initial public offer- also marks a departure by
Cathay operated services down for this October – until ing. It was later reported the the Malaysian government of
to China until it invested in a next year. Recently appointed shares would only be sold to cross subsidising profitable
majority share of Dragonair, THAI president, Kanok Ab- local investors. international services with the
a purchase which prompted hiradee, said his carrier had loss-making MAS domestic
its decision to leave the China yet to decide if the sale of 23% MAS reveals networks.
market to its new “baby”. In of the airline would proceed survival
the mid-90s, Cathay decided next month or next February. strategy Private company
to sell its majority stake in Analysts and factions within Malaysia Airlines joins CEA in
Dragonair to the China Na- THAI differ on the right time (MAS) has announced plans Wuhan purchase
tional Aviation Corp. in a to conduct the sale, which will to sell off a majority of its In yet another industry
deal that neutered Chinese reduce the Thai government’s aircraft assets to a new state- first Shanghai-based China
aviation interests’ intention equity in the carrier to 70% owned company and re-cast Eastern Airlines (CEA)
to establish, in the then Brit- and, hopefully, raise 10 billion itself as an airline management confirmed in late August
ish colony, a rival carrier to baht (US$239 million) for the entity in a strategy aimed at that it will bring in a private
Cathay. In a recently negoti- nation’s public coffers. Some reducing debt and maintain- company as the third partner
ated air services agreement analysts said a February sale ing its operations as the coun- in its takeover of regional
between Hong Kong and Tai- made more sense as there are try’s proud flag carrier. carrier, Wuhan Airlines.
wan, Dragon-air was granted several other Thai enterprises In a statement delivered The two other main partners
rights, for the first time, to fly lined up for IPOs in coming to the Kuala Lumpur Stock with CEA (40% equity) in the
the Hong Kong-Taipei route, weeks. Exchange, MAS said Pen- deal, which is intended to re-
a decision which brought to This view is echoed by er-bagan Malaysia Bhd. launch the airline based in the
an end the de facto one airline the Thai Airways Employees (PMB) would buy 73 of its western heart of China, are
one-route policy that had op- Union, which also argues that aircraft for 5.1 billion ring- the Wuhan Municipal Gov-
erated in Hong Kong. THAI should not buy any new git (US$1.34 billion) as well ernment (40%) and charter
Last month Cathay launched airplanes as it will add more as take on MAS liabilities operator, Junyao Group of
a toll-free hotline on the Chi- debt to the already heavily of almost 7 billion ringgit in Shanghai (18%). The fourth
nese mainland “for the in- committed national carrier. exchange for equity in the investor, with a 2% equity is
creasing number of people A separate collection airline of 69.3%. PMB would Wuhan High Technology
10 Orient Aviation, September 2002
Holding Group Co. reported the Asian China Southern Airlines, the
Wall Street Journal. The joint venture, mainland’s largest carrier, took delivery
which will be known as China East- of the first of its next generation B737-
ern Airlines Wuhan, is expected to 800s in August. The airline, based in
profit from CEA’s merger with regional Guangzhou, has ordered 20 of the Boeing
carriers, Yunnan Airlnes and China airplanes.
Northwest Airlines, a consolidation Reuters news agency has reported
now in its final stages of negotiation Shanghai Airlines has added a B737-
with Chinese industry regulator, the 800 and a Hawker 800 XP bizjet (manu-
Civil Aviation Administration of factured by Raytheon) to its fleet and
China (CAAC). Meanwhile, in July, the said the Shanghai carrier had leased two
CAAC approved plans to offer 200 mil- other B737-800s and intended to sign for
lion A-shares in an initial public offering another of the Boeing mid-sized jets.
of Shanghai Airlines on the Shanghai In a press conference in France,
Stock Exchange. No date has been set Russian Prime Minister, Vladimir Pu-
for the IPO. tin, said Russian airline, Aeroflot, will
acquire 18 Airbus airplanes, at this stage
Briefly .... planned to be A320s, to upgrade the air-
FLEETS . . . In July, Air New Zea- line’s ageing fleet.
land said it would buy 15 new Airbus
A320s and had negotiated purchase INFORMATION TECHNOLOGY . .
rights for another 20 of the aircraft. De- . Air China and Sabre have signed a
liveries will begin in October next year, three-month consulting agreement to as-
in a reported US$400 million deal that sist the airline in developing a long-term
involved both purchase and leaseback IT strategy. Sabre will audit the Beijing-
arrangements for the new airplanes. A based carrier’s present IT systems and
few weeks later, the airline confirmed it offer options for new IT infrastructure
had added one more 66-seat ATR 72-500 and application requirements.
to the group’s fleet, bringing the total of Air New Zealand (Air NZ) has
ATR 72-500s now flying with the Air New renewed its contract with IBM Global
Zealand Group to nine. Services and extended the scope of the
In an order confirmed at England’s agreement. The IT company is now man-
Farnborough Air Show in the north- aging Air NZ’s mainframe, mid-range,
ern Summer, All Nippon Airways Web and Limux services. Additionally,
(ANA) announced plans to buy five the New Zealand carrier has signed up
B777-300 and nine B767-300ER aircraft, software provider, PeopleSoft, on
with deliveries due from fiscal years 2004 a two-month contract to upgrade its
to 2006. ANA will retire 25 Boeing airlin- finance, human resources and payroll
ers by 2006 as part of its plan to reduce IT systems; an infrastructure set-up de-
its aircraft types to four – B747-400s, scribed as ageing by Air NZ CEO, Ralph
B777-300s, B777-200s and B767-300s – in Norris.
the same period. China Airlines has bought SITA’s
Family-owned Bangkok Airways Access Module baggage tracking sys-
has ordered three more ATR 72-500s, tem to improve its service to passengers
bringing its ATR fleet to nine. with lost and missing luggage.
China Eastern Airlines: brought in private company for Wuhan Airlines takeover
September 2002, Orient Aviation 11
news
LEASING . . . Ansett in late September when the a waiver agreement with bling city, Las Vegas, in mid-
Worldwide has announced group will introduce the inter- EVA Air in July that allows August, with a three times a
that long-time customer, Vi- nal network’s new low-cost, Dragon-air passengers to week service from Singapore
etnam Airlines, has taken Air New Zealand Express fly with either airline out to the city via Hong Kong.
delivery of one of its B767- as its domestic operator. The of Taipei, without prior en- SilkAir, Singapore Air-
300ER freighters, which new network marks a shift dorsement of their tickets. lines’ regional leisure air-
brought the national carrier’s in the national carrier’s op- The agreement, in force from line subsidiary, started twice
fleet of B767s to six. At the erations to new and low-cost August, increases the number a week services to China’s
same time, the airline agreed leisure services. In July, The of flights available each week Chengdu, the capital of Si-
to extend its lease on a second Air New Zealand Group to Dragonair passengers from chuan province, after China
B767-300ER aircraft leased announced it had ordered 22 to 62. EVA Air, Taiwan’s and Singapore signed a new
by the Australian headquar- 15 Airbus A320s, as part of second international carrier, air services agreement.
tered lessor to the carrier in its new strategy of operating is now operating five daily Thai Airways Interna-
November 2000. Singapore as a low-cost carrier in the return trips on the Taipei- tional (THAI) will add Xia-
Aircraft Leasing Enter- Pacific. Hong Kong route – plus two men in China, Switzerland’s
prise (SALE) signed a leas- Cathay Pacific Airways MD-11 cargo flights, as a re- Geneva and Bahrain and Abu
ing agreement with Brazil will increase its flights from sult of the new, expanded air Dhabi in the Middle East to
carrier, TAM, for two Airbus Hong Kong to Auckland to services agreement signed by its network out of Bangkok
A320s, with one delivery double daily three times a Hong Kong and Taiwan two from October 27. The airline
made in August and the sec- week, on A340-300s, from months ago. also will add one flight a week
ond scheduled for November. November. From September, Japan Airlines (JAL) to London, Frankfurt, Mel-
The two airplanes, leased for bourne, Cheng-du, Tokyo (via
7.5 and five years respectively, Phuket) and Busan services,
have IAE V2500 engines. A increase its services to Beijing
month earlier, SALE com- from seven to 10 and double
pleted a sale and leaseback its flights to Hanoi to twice
deal with Asiana Airlines daily every day.
for a new B747-400 freighter.
SALE announced a pre-tax TRAINING. . . Air Macau
profit of US$47.5 million for has bought an Airbus A320
the year to March 31. Maintenance/Flight Training
device from Faros-Wicat.
MAINTENANCE . . . Listed Dragonair has installed an
SIA Engineering Company A330-340 flight simulator
Ltd (SIAEC) and Indonesia’s at its Flight Training Centre
PT JAS have signed a Memo- at Hong Kong International
randum of Understanding for Airport, to increase its capac-
a joint venture in aircraft line ity to offer third party flight
maintenance and technical Air New Zealand: ordered 15 Airbus A320s as part of its new training.
ramp handling services at strategy of operating as a low-cost carrier in the Pacific.
Indonesia’s airports. If the Clarification
venture proceeds, SIAEC will the Hong Kong-based car- and Shanghai-based China In the July/August issue
have 49% in the company and rier also will restore its five Eastern Airlines (CEA) of Orient Aviation we re-
PT JAS will have 51%. times daily flight schedule to are operating an intensified ported that China Airlines
Bangkok. code-share agreement from had requested a review of
ROUTES . . . Zhang Taiwan’s China Airlines the first of September that will the Hong Kong Civil Aviation
Hong Ying, chief executive (CAL) launched the first di- increase the services offered Department’s (CAD) findings
of Air Macau, an 11-plane rect Taiwan-Moscow service to their passengers on the into the August, 1999, crash
carrier majority owned by on August 24 with a charter Narita-Shanghai and Kansai- of an MD-11 at Hong Kong
China National Aviation flight to the Russian capital. A Qingdao routes. Additionally, International Airport.
Corp., said the airline would CAL spokesman said a regu- JAL and CEA operate four The CAD has pointed out
expand its network, includ- lar air link between Taipei and freighter flights weekly and the investigation report has
ing more flights to Chinese Moscow could be established, have a joint sales agreement not yet been made public.
mainland cities, as Macau but the decision depended on for air cargo. It had, they said, only been
progressed from a former demand and endorsement of Malaysia Airlines served on the relevant parties
Portuguese colony to a resort the service by the Taiwanese (MAS) inaugurated twice- for comment. Two parties had
city and conference centre. and Russian governments. weekly flights from Kuala requested the findings and
Air New Zealand said China Northwest Air- Lumpur to Colombo, with conclusions in the report be
its subsidiary, low-cost Free- lines is now flying non- a transit stop in Male in the reviewed by a board of re-
dom Air, will launch direct stop each Saturday between Maldives, from early August, view. The board, as yet, has
services from Auckland, Wel- Lanzhou in China to Hong using A330-300 aircraft. MAS not been appointed.
lington and Christchurch to Kong, using an Airbus A320. has code-shared the route The CAD also said that
Brisbane in Australia in Oc- Lanzhou is the capital of Gan- with Sri Lanka’s national car- the U.S. National Transporta-
tober as well as immediately su Province and an important rier, SriLankan Airlines, tion Safety Board and Boeing
expanding its services from city on the famed Silk Road. which operates five services Commercial Airplane Group,
New Zealand cities to the The carrier also flies between a week on the Malaysia-Sri who assisted in the investiga-
Australian resort destination, Xian, home of the Terracotta Lanka route. tion, had “confirmed to us that
the Queensland Gold Coast. Warriors, and Hong Kong. Singapore Airlines so far they have not made any
Freedom Air will cease flying Hong Kong Dragon Air- (SIA) launched the region’s statement as to the cause of
New Zealand domestic routes lines – Dragonair – signed first direct flights to U.S. gam- the accident”.
12 Orient Aviation, September 2002
news
BUSINESS ROUND-UP
Strong first (US$19.68 million) net profit
half for for the first quarter was more
Cathay Pacific than twice the 457.7 million
C
ATHAY PA C IFI C pesos net income PAL earned
AIRWAYS signalled it for the same period last year.
was well and truly on It also surpassed the airline’s
the road to recovery when it internal budget target nearly
announced a HK$1.412 billion nine times over.
(US$109 million) profit for the PAL lost 1.6 billion pesos in
first half of the financial year to the last fiscal year, mainly after
June 30. The figure was 7.1% the fallout from the September
up on the same period last 11 U.S. terror attacks.
year, but, more importantly, “I could not have asked for
was a dramatic reversal from Philippine Airlines: a record breaking first quarter a better start to the fiscal year,”
the HK$662 million loss in the said PAL president, Avelino L.
second half of 2001-2002, that bookings this year. Revenue China market, a growth in Zapanta. “The profit perform-
followed the events of Sep- up the front of the plane fell passenger travel in the third ance reflected PAL’s ability to
tember 11. 8%. Meanwhile, passenger quarter following the World adjust to the dynamics of the
Turnover of HK$15.51 yield fell to HK45.4 cents from Soccer Cup, when many peo- volatile post-September 11
billion was 2.1% down on HK47.3 cents a year earlier. ple stayed at home in June to marketplace.”
12 months earlier, but 6.3% Weaker cargo yields were watch the competition, and a The airline reduced its
higher than the second half of compensated by an increase in rebound in Japanese passen- operating expenditure in the
last year. tonnage. Cargo revenue grew ger travel. quarter by nearly one billion
“Subject to unforeseen by HK$253 million in the six Cargo is expected to show pesos to 8.67 billion pesos.
circumstances we anticipate months to June 30. a year-on-year average in- Although operating revenue
continued demand in the com- crease of 11% in the months remained flat, operating in-
ing months and an improved Korean Air ahead. come, at 2.73 billion pesos,
result in the traditionally back in was 45% higher than a year
stronger second half [of the the black ... and Asiana earlier. With an increased load
year],” said the airline’s chair- KOREAN AIR (KAL) follows suit factor of 78.9% systemwide
man, James Hughes-Hallett. also has achieved a major South Korea’s second in- (81.1% on international routes
“Orders for new aircraft (three reversal in its fortunes when it ternational carrier, ASIANA and 67.6% domestically), PAL
A330-300s and three B777- posted a profit of 195.39 billion AIRLINES, also swung back was “seriously studying” a
300s for regional service to be won (US$156.3 million) for the into profit this year after heavy case for adding capacity, said
delivered in 2003 and 2004 to first six months of the year, a losses in 2001. It recorded a Zapanta.
add to three long-haul A340- major improvement over last preliminary net profit of 91.1 The carrier was on the
600s ordered earlier) and our year’s first half loss of 345.92 billion won (US$72.9 million) brink of liquidation in 1999,
commitment to create about billion won. in the first half of the year, but under rehabilitation it
1,300 Hong Kong-based jobs Operating income was compared to a loss of 156.3 posted two straight years of
underline our confidence in 102.39 billion won compared billion won a year earlier. profit – 46 million pesos in
the future of the airline and to a loss of 149.37 billion won Preliminary revenue rose 13% 1999-2000 and 419 million
Hong Kong.” a year earlier. The airline said to 1.19 trillion won. Operating pesos in 2000-2001. It was well
Hughes-Hallett listed a the improvement was the profit leapt to 64.1 billion won on its way to a third profitable
number of reasons for Ca- result of steady growth in from 26.4 billion won in 2001. year when September 11 de-
thay’s change in fortunes in passenger and cargo traffic, Asiana’s second quarter railed its efforts.
the half year: prompt action restructuring in all airline divi- net profit was 66.9 billion won
in cutting costs following sions, the stabilising of the jet against a 53.8 billion loss a Hainan expanding
September 11, re-negotiat- fuel price and interest rates year earlier, a result gathered at a pace
ing terms with suppliers, the and the strengthening of the mainly through foreign ex- While the spotlight in Chi-
parking of aircraft following won against the US dollar. change gains and lower jet fuel na has been on the merging of
cutbacks in services and lower KAL’s operating revenue prices. Preliminary revenue for its top 10 carriers, HAINAN
fuel prices. rose 7% to 2.915 trillion won, the quarter rose 16% to 619.7 AIRLINES has been estab-
Load factors were up. Pas- while operating expenses fell billion won, a figure largely lishing itself in a position of
senger loads increased 6.2 1.4%, to 2.296 trillion won, attributed to improved cargo strength to handle the added
percentage points to 78.1% in over the first half of last year. business. competition. It has been ex-
the six months under review, Given the better-than-ex- panding its own portfolio by
while cargo rose 5.1 percent- pected results for the half year, First quarter buying carriers like Changan
age points to 70.2%. However, KAL said its full year operating record for PAL Airlines, Zhong-yuan Air-
business travel remained soft profit is expected to exceed the PHILIPPINE AIRLINES lines, Xinhua Airlines and
and Cathay’s chief executive, targeted 310 billion won. (PAL) posted the largest Shanxi Airlines.
David Turnbull, said he did In the second six months quarterly profit in its 61-year Now the carrier, in which
not expect to see any improve- KAL is expected to benefit history between April and international financier, George
ment in first or business class from a greater focus on the June. The 983.9 million pesos Soros, has a stake, says it is
14 Orient Aviation, September 2002
planning to buy a U.S. airline. compared to the same period yuan (US$3.1 million) com- cargo and mail, operating ex-
No details have been given. in 2001. Turnover for the pe- pared to the first six months penses proved to be the bogey
It also will be adding an- riod was 8.55 billion yuan, up in 2001. However, operating man for the carrier. Expenses
other 21 planes to its 50 air- 5.9% on the previous year. profit rose 29.8% to 491.17 rose 52.1% year-on-year com-
craft fleet. They will include Foreign exchange losses million yuan. CEA’s domestic pared to the 45.9% rise in
three B767-300ERs, six B737- - the airline has heavy yen bor- operations recorded a loss of operating revenue.
800s and 12 Dorniers. rowings - and the absence of 132.4 million yuan. Shandong was a pioneer
And Hainan is making asset sales were seen as major SHANDONG AIRLINES, of the commuter market in
money too. It posted a 9.4% contributors to the downturn, the smallest of China’s four China in the 1990s. Recently,
rise in first half net profit. although a fall in jet fuel prices listed carriers, posted a 43.5% it announced it would invest
Recently, AIR CHINA boosted CSA’s bottom line. drop in first half net profit to 100 million yuan to buy a stake
announced an unaudited 2.74 Meanwhile, CSA’s chair- 23.42 million yuan (US$2.86 in Jinan International Air-
million yuan (US$332,467) man, Yan Zhuqing, expressed million), compared to the same port in Shandong province.
profit for the first six months concern that Cathay’s entry six months in 2001. Turnover,
of the year, compared to a into the China market would however, was up 45.9% to THAI cashes in
631.7 million yuan loss a year put key routes under further 823.1 million yuan for the on forex gains
earlier. The airline said the pressure. He said the lucrative period. THAI AIRWAYS IN-
reversal was due to increased Hong Kong-Beijing route had The carrier said in a state- TERNATIONAL (THAI)
international passenger traffic, already shown some decline. ment to the Shenzhen Stock capitalised on a weakening
up 17.2% year-on-year to 4.72 Yan said he expected prof- Exchange that fierce price US dollar with a third quar-
million, and cargo growth, itability in the domestic market competition had led to the ter profit of 3.45 billion baht
a rise of 24.9% to 191,900 to improve in the second half reversal in earnings in the (US$82.8 million), up 366%
tonnes. of the year because of a crack- first three months of the year, on the same period to June
Other Chinese airlines have down on illegal ticket discount- while crashes at Air China and 30 a year earlier. For the nine-
not been as fortunate. The coun- ing by Beijing. Domestic traffic China Northern Airlines in the month period THAI posted
try’s largest carrier, CHINA accounted for 78.7% of CSA’s second quarter had softened a profit of 9.23 billion baht
SOUTHERN AIRLINES total passenger revenue. demand for tickets. compared to a 195 million baht
(CSA) reported a 38.8% drop At press time CHINA Although Shandong re- loss a year earlier.
in net profit to 123.2 million EASTERN AIRLINES (CEA) corded a 57.3% rise in pas- QANTAS bucks the world
yuan (US$15 million) for the reported a 63.7% drop in mid- sengers for the half over 2001, trend (see special report page
first six months of the year, year net profit to 25.5 million as well as a 61.6% increase in 24)
September 2002, Orient Aviation 15
MAIN Story
Air freight is performing remarkably strongly and prospects for the future are even
better. What is more Asia promises to be the powerhouse driving this prosperity.
It’s timely news as thousands of delegates from the cargo industry prepare to at-
tend the world’s biggest air cargo bi-annual forum and exhibition organised by the
International Air Cargo Association (TIACA) in Hong Kong, in September.
TONNES
By Tom Ballantyne
OF OPTIMISM
Asia’s air cargo market is exceeding all expectations,
although yields remain a concern
A
sian airlines’ air freight
business is making a dramatic
recovery with optimistic
projections of an early return
to pre-2001 growth levels.
Rising exports of high-value, high
technology goods from the Asia-Pacific
region’s major manufacturing centres
are fuelling the rebound, despite ongoing
nervousness about the U.S. economy and
global business confidence.
The region’s major cargo players told
Orient Aviation they believed the freight
increases are sustainable although, like
the air passenger business, there are
continuing concerns about yields.
But considering the depth of the
2001 downturn, the revival has been lit-
tle short of phenomenal. Last year was
the worst in three decades for the air
cargo industry, with a world-wide traffic
decline of 9.7% year on year. The Gulf
War provided the previous largest fall,
but at 2.5% was tiny when compared to
the recent crisis.
Now, big airlines are reporting
freight tonnage growth in excess of 10%
for the first half of 2002 against the same
period last year.
There is also growing excitement
about the acceleration of China’s econo-
my – currently being assisted by substan- Singapore Airlines: cargo alliance a quantum leap in the air freight business
tial rises in foreign investment.
China’s exports rose 14.1% in the The Manila-based multilateral institu- Long-term, cargo forecasts for the
first six months of 2002, according to tion said in a quarterly report a surge in next 20 years are good. The latest predic-
official figures. exports should help the gross domestic tions from global aerospace company,
The Asian Development Bank (ADB) product of ASEAN countries, China and Boeing, put expansion at 6.4% annually
has predicted East Asian economies will South Korea grow at an average of 5.8% until 2021.
grow more strongly this year than was this year, compared to an April forecast The International Air Transport As-
earlier forecast, despite concerns about of 5.2%. This is another good indicator sociation (IATA) projects 5% increases
the strength of the recovery in the U.S. of cargo prospects. over each of the next five years, although
16 Orient Aviation, September 2002many Asian airline cargo executives to have had an effect. IATA said increased
believe both these figures could prove rates would not be introduced until late
conservative. For example, Japan Air- this year or early in 2003, rather than in
lines (JAL) senior vice-president cargo, October, as was originally planned.
Juntaro Shimizu, is one who believes The airlines need the rate rises to
long-term demand could extend beyond consolidate gains they are making in
the present healthy projections. cargo volume. Almost all Asian carriers
Boeing has forecast the delivery of are making giant strides in making up
681 new freighters (349 large/260 me- last year’s losses.
dium/72 small) worth $116 billion, as Cargo traffic for the world’s third
well as more than 1,850 conversions by largest cargo carrier and the largest in
2021. This would mean a global freighter Asia, Korean Air (KAL), which earns
fleet of 3,078, compared with 1,775 at the about half its revenue from freight, rose
end of 2001. A number of Asian airlines 8.4% in the first six months over the
are looking at expanding their freighter same period last year. But in June (the
fleet. latest month figures were available for
Amid the optimism, the most critical most airlines at press time) cargo traffic
battle for all cargo operators remains was up 21%. “We’re expecting demand
yield improvement. Hwang Teng Aun, to steadily grow in the second half of this
president of Singapore Airlines Cargo, year,” said KAL spokesperson Crimson
told Orient Aviation the carrier remains Lee. The demand is led by the shipping
concerned about this issue, even though Japan Airlines’ senior vice-president cargo, of IT products, he said. KAL is one of
the decline in yields has stabilised, after Juntaro Shimizu: believes cargo growth the carriers planning to increase its 20-
falling significantly in recent months. could extend beyond healthy projections freighter fleet.
However, there is a lot of price Korea’s second international carrier,
pressure from what he called “passen- Asiana Airlines, saw freight grow 10%
ger-centric” airlines that carry cargo in A row is brewing between freight in the same period. “We continue to
belly space. forwarders and airlines about IATA’s ship more semi-conductors, monitors
The airlines that believe belly cargo is plans to increase cargo rates from Octo- and other IT products to the U.S. from
a marginal revenue product will always ber. Forwarders complain they have been Southeast Asian countries,” said Asiana
make it difficult for the major air cargo given too little time to prepare. The move, spokesman, Ahn Jae Hwan.
players who are investing in freighters, they said, will effectively raise rates on Estimates put Asiana’s freight sales
said Hwang. low-density cargo by 20% and hit their up 28% to around US$45 million in June.
“You really have to get a return on businesses by increasing their costs. “We’re expecting shipments to grow
your investment. Freighters are very The issue is to be discussed by IATA at a faster pace from September as the
asset intensive. There has to be some in September and by delegates at the worldwide economy is likely to show a
risk-sharing vis-à-vis our customers,” International Federation of Freight recovery.”
he said. Forwarders Association (FIATA) World Hong Kong’s Cathay Pacific Airways
He said it was unsustainable for the Congress. Both meetings will be held in saw cargo volume increase 20.4% in June
serious cargo carriers to set marginal Istanbul, Turkey. and cumulative figures for the first six
prices on their products. The forwarders’ protests already seem months of the year show traffic increased
September 2002, Orient Aviation 17MAIN Story
by 13.5% over 2001. Cargo load factor
for June was 73.9% – up 6.6 percentage
points on last year.
Said Cathay’s general manager
cargo, Kenny Tang: “Cargo traffic con-
tinues to surge, driven by strong demand
to and from North America. We’ve been
particularly encouraged by a recent
strengthening in cargo yields.”
Tang added cumulative figures year-
on-year to June show an approximate
12.1% increase in traffic. “Cargo has al-
ways been a good barometer for market
conditions, and the recent cargo figures
show positive signs,” he said.
In June, SIA Cargo reported a 14.3%
rise in cargo aboard freighters and in the
holds of its passenger aircraft, with load
factors up 6.5% to 71.2%.
Hwang said the Asia-Pacific would be
the critical area for the future of the air
cargo business. “If you look across the
whole region, from the Indian sub-Con-
tinent to Japan, we (Singapore) are in the
centre of this region. China could be the
engine [that drives the cargo business],
but the region, as a whole, will grow
reasonably well.”
Said JAL’s Shimizu: “In the first quar-
ter of the 2002 financial year the signs
of recovery are clear. Demand in Japan
has grown more than 10% over the same
period last year and is almost back at the
level of the 2000 financial year. The first
half of 2000 was running at peak levels
[before the slump]. To date, inbound
cargo has improved 2% over the 2001
financial year and has been increasing
further since July.”
Shimizu added shipments to and from
Asia are showing exceptional recovery.
“Movements from Asia to the U.S. and Korean Air: good results for Asia’s largest cargo carrier
from Japan to Asia have vastly improved
and we can put most of that down to in- June, after the delivery of the second With three new gateways in Beijing,
creased demand in the IT and electronics freighter. Shanghai and Shenzhen, DHL expects to
related commodities sectors.” New daily services to Taipei are sure raise its network coverage to 43 stations,
Malaysia Airlines’ (MAS) freight arm, to see the boom continue. covering 1,000 towns and cities in China
MASKargo, reflects the upturn. It finally The optimistic region-wide results by the end of the year. The expansion
made a small profit in the first quarter are backed by statistics from airport car- into China is intended to capitalise on
of 2002 after years of losses. Although go handlers. Singapore Airport Terminal the robust growth of China’s economy
the events of September 11 had been a Services (SATS), whose largest share- and the opportunities presented by Chi-
major worry to the industry, following holder is SIA, handled 13% more cargo na’s recent accession to the World Trade
on from the recession that started at the in June compared to the same month in Organisation.
beginning of 2001, MAS-Kargo was able 2001. A spokesman said the economic FedEx is also looking to strong
to concentrate “on putting things right” recovery in the U.S. and Asia boosted growth in the region with hub expan-
and making improvements to increase demand for cargo services. SATS handles sions in Taiwan and the Philippines and
cargo-handling efficiency on the ground, about 80% of cargo traffic at Singapore direct flights between Japan and China.
said MAS senior general manager Changi International Airport. FedEx’s Asia-Pacific president, David
(cargo) J.J. Ong. MASKargo put greater In Hong Kong, the Airport Authority Cunningham, said the company is posi-
efforts into tapping lucrative markets in reported June cargo volume soared by tioning itself to tap long-term growth in
Asia and Europe as well as Australia in 25% year-on-year, due to the improved the region through “very targeted invest-
the post-September 11 period. economic environment. Exports, or ments in the region based on existing and
Hong Kong’s Dragonair launched loaded cargo, to North America, Japan, projected customer demand”.
dedicated freighter operations in mid- Taiwan and Europe were strong and While reluctant to discuss specific
2000 and has never looked back. It has surged 34% in the same month. targets, Cunningham said North Asia is
two B747-300 freighters with a third join- Big all-freight operators are also the fastest growing sector of the Asian
ing the fleet before the end of the year. bullish. DHL Worldwide Express is using air freight industry with outbound
Its cargo volume grew more than 68% China as its major Asian gateway. It also growth forecasts averaging 6.5% a year
in July from a year earlier, with jumps has distribution hubs in Hong Kong and over the next 20 years and intra-Asian
of over 60% in March, April, May and Singapore. growth estimated to hit 8.5%.
18 Orient Aviation, September 2002MAIN Story
While Asia is leading the way in car-
go expansion there has been a recovery
in North America, too.
Data from the Air Transport Asso-
ciation (ATA), representing U.S. airlines,
showed U.S. air cargo traffic rose in June
for the third straight month after 14
months of decline. The 2% increase was
the largest this year and the biggest since
a rise of 2.1% in January, 2001.
But the main game is now in Asia and
many carriers are looking to spread their
networks or lift capacity. Cathay Pacific
launched a twice-weekly cargo service to
Milan, Italy, in August.
Italy is an important market for Hong
Kong. It is the Special Administrative
Region’s twelfth-largest trading partner
with business last year worth almost Cathay Pacific Airways: regional expansion in the pipeline. General manager cargo,
US$5 billion. Kenny Tang (inset) says the airline is evaluating medium-sized freighters
The carrier, which has five B747-400
and 6 B747-200 freighters in its 77-air- press time a signing ceremony was ex- on the Shenzhen-Chicago-Shanghai-
craft fleet, serves a freighter network of pected at the end of August. Shenzhen cargo route. A second is due
23 destinations in Asia, the Middle East, An official announcement on the to be delivered in September and will
Europe and North America. future of the Cathay-DHL joint venture be used to operate to Europe and the
Tang said consideration is being is expected in the near future, according Middle East.
given to the purchase of medium-sized to Cathay’s chief operating officer, Philip MAS’s MASKargo is positioning
freighters for use on regional routes, Chen, who declined to comment further itself for network expansion and is aim-
but no decision had yet been made. The on “rumour and speculation”. ing for new markets in Germany, Japan,
new aircraft, it is believed, would be DHL does not operate its own air- Thailand, Bangladesh and Taiwan. It
leased out to its wholly-owned subsidi- craft in Asia. It has a number of partner has a fleet of four B747-200 freighters,
ary, Air Hong Kong, which until recently airlines, including Cathay, which carry in addition to the belly space in its 82
operated three B747-200 freighters and cargo in their belly space. passenger aircraft.
a A300B4 converted passenger aircraft. SIA has 11 B747-400 freighters and Another significant development in
Two of the B747s have since returned firm orders for up to 17 more to be de- recent times has been a move by JAL to
to Cathay. livered in the next three to four years. join SIA, Lufthansa German Airlines and
It is believed that Cathay is to extend It also may convert some of its Airbus Scandinavia’s SAS in the WOW cargo
its present “Starlight Express” joint A380 orders into the freighter version, alliance.
venture with DHL Worldwide Express but the new very large aircraft will not The alliance now boasts a combined
when the current contract ends early be available for several years. fleet of 43 dedicated freighters, and a
next year. China Southern Airlines, China’s belly hold capacity of more than 760
DHL is to operate the franchise for largest carrier, took delivery of the coun- passenger aircraft, many of them wide-
the new express cargo terminal at the try’s first B747-400 freighter in June. bodied jets.
Hong Kong International Airport. At It was immediately placed in service “We believe by this strategic step we
are able to enhance the global approach
of JAL Cargo.
“By adding to WOW’s harmonised
product portfolio and worldwide air
cargo network we will keep pace with
our customers’ demands and the trends
of globalisation,” said Shimizu.
SIA’s Hwang said the development of
the cargo alliance was a quantum leap in
the business.
More and more customers want to
deal with fewer and fewer suppliers and
they need a system that will overwhelm-
ingly meet most of their requirements
globally, he said.
“Each of us, while we are strong in
certain regions, is clearly not global in
the sense that is required by the glo-
bal manufacturing chain and logistics
companies. The fundamental premise of
WOW is we want a loose consortium,
but a strong alliance to be able to offer
to our customers a network that is, by
far, much bigger than individually any
of us can offer.”
FedEx: has expanded its hubs in Taiwan and the Philippines Interlining is almost never done in the
20 Orient Aviation, September 2002cargo business. WOW aims to provide
interlining through IT interconnec-tivity.
“I need to be able to book cargo on any
flights of several airlines as easily as if I
was travelling myself as a passenger,”
said Hwang. “This kind of connectivity
requires a lot of project harmonisation
and much IT harmonisation. That’s where
a lot of time and effort has to be spent.”
While the news is generally good on
the cargo front, commentators are still
urging caution, well aware some of the
world’s major economies remain frail
and that more terror incidents could
happen.
Jim Edgar, head of Boeing’s cargo
interests in Asia, said an aspect of ‘9/11’,
particularly for Asia, was that a great
part of the decline in air cargo traffic in
the days soon after the U.S. terrorist at-
tacks came at the expense of belly cargo
on passenger jets. “While the freighter
traffic declined it was not as precipitous.
There were selective groundings of
freighter aircraft, but they were not of
the magnitude you saw on the passenger
side and most of those are back in service
now,” he said.
There is some concern about over-
capacity, as grounded planes are brought
back on line. Hwang pointed out a
number of airlines with aircraft in the
desert are putting them back into service,
providing the market with a capacity
injection. “We will have to see whether
or not that will hit the demand. It could
well do so, but at the same time, short
of an extraordinary event, the economy
seems to be growing in the U.S. and con-
sumption in Asia seems to be expanding.
Hopefully, the growth in demand will be
met by the increasing capacity that will
surely be coming on stream in the next
couple of months.”
Edgar, however, pointed out that fig-
ures are being compared with last year’s
low base. Boeing’s forecast is that by the
end of 2003 cargo traffic will be back to
the level it was at the end of 2000.
“I don’t think many industrial firms
yet realise the potential leverage they
can have using air cargo, inventory
management, quick to market, flexibility,
reducing costs. I am very bullish about
the future of air cargo,” said Edgar.
“Everything is happening in Asia in
air cargo. Europe-Asia or trans-Pacific,
these are the high growth areas and will
be for many years. At the end of 2000,
42% of all cargo touched somewhere in
Asia; it was either trans-Pacific, Europe-
Asia or intra-Asia. In 20 years, these
three markets will represent 52% of the
world’s total traffic. All the fundamentals
are still there: inexpensive labour, abun-
dant raw materials.
“I think the future of cargo in Asia is
very, very bright indeed.”
See cargo traffic on a charge. AAPA
statistics pages 30 to 38
September 2002, Orient Aviation 21You can also read
