The Aeroplane Loses to the Boat

Air cargo has been a lucrative business for many years. But, the golden days are over, as it appears from the IATA World Cargo Symposium in Rome. The aeroplane is losing market share to the container sector. IATA chairman Giovanni Bisignani warns: “Fasten your seatbelts. It will be a rocky ride.

Giovanni Bisignani, Chairman, IATA

There is yet no acute panic but the airlines are worried about the loss of cargo to the much cheaper container traffic.

Giovani Bisignani, chairman of IATA, the international platform of the big airlines, is sharp in his analysis: “The container traffic has robbed us of our market share by introducing faster ships, lowering prices and by offering new, innovative solutions. We have stood still for the past 30 years and now they have caught up with us on all fronts.”

“Why do we lose market share?” he questions himself in half an hour of monologue. The answer to that question was answered loud and clear earlier in the day by transport users and dispatching agents – additional fuel levies make air cargo less and less attractive as a transport method. IATA refuses even to discuss this burning issue at a cargo symposium and this in spite of the promise that is included in the conference folder that the transport user is central. Witness the slogan, “Focus on the customer: dialogue to deliver simplicity”!

Nothing comes out of the dialogue on the subject of the additional levies. “The fuel additional levies are a bilateral issue between the airline companies and the transport users and IATA has no say in the matter,” says Aleks Popovich, Cargo Chief of IATA. The airline companies have, in view of the ongoing cartel investigation by the American and European competition authorities and of threatening fines, no desire to take part in difficult discussions. “We are not allowed to say anything about this. It is a very sensitive point for our members and dispatching agents,” apologises the Cargo Director later. And with this, the IATA congress avoids the burning issue, in spite of good intentions and with projects such as Cargo 2000 and E-Freight.

Frightened Director Archie DaSilva of Jet-Speed Air Cargo, cannot conceal a smile when as a member of the panel he nevertheless raises the issue of the fuel levy at a freight forum and observes the panic-stricken faces of the IATA officials with a measure of malicious delight. “The levies are a big problem for the airline companies, but apparently this symposium is not allowed to say anything about this. Why is everybody really so scared of lawyers and cartel authorities and fines? One has to address the problems of this industry and there is unfortunately only one organisation and one platform, which can offer a solution and that is IATA. You must take the lead. If you stick your head in the sand, what about us then? Show some guts.”

According to Bisignani the future will, with the threat of overcapacity, credit crisis in the US, low dollar-exchange, pilot shortages, lack of staff in logistic and congestion on the large airports and in airspace, deliver ‘winners and losers’. “Clients want quality, lower prices, faster and reliable service deliveries. This is no rocket science, but still it will not be easy. We will have to take difficult decisions.” And then the IATA chairman homes in on the fuel levy: “The air cargo tariffs are fair and have, over the years, decreased. The transport users concerns are the allowances, but the word itself is taboo.”

First published in Nieuwsblad Transport