Posted March 15 by Liying Gu
There is growth down the road for the air cargo business and the new, tighter security rules may give a forward-thinking small airport an opportunity to land new business.
At the second day of the annual ACI-NA Air Cargo Conference, held last week in Seattle, Dave Brooks, American Airlines’ president of its cargo division, talked about state of the industry, the near-term outlook and his airlines’ long-term strategy.
Brooks sees a 5 to 7 percent growth down the road. IATA last week also issued an optimistic forecast. Growth in 2010 follows a 20 to 40 percent drop in cargo volume during 2009. Because of excess capacity in the market, cargo yields collapsed.
Facing the downturn in 2008 and 2009, Brooks said air freight carriers fell into two camps: those who panic would let the shipping rates drop to close to zero and put long-term strategy on ice; and those who do not panic choose to stay in the course on long-term strategy. Those who panicked are not the smaller player, but rather some substantial companies, he noted.
Brooks still sees too many planes chasing too few shipments.
To cut costs, cargo carriers have moved their cargo operation to off-airport in a number of airports. Brooks’ advice to airports is that airports should ensure visibility: “Don’t just show up at the lease meeting. Engage with various local cargo associations and communicate your priorities.”
Carriers and shippers are working to meet an August deadline to have 100 percent air cargo screened. Brooks sees some periodic delays and backups; however, he is confident that major players have done enough preparation to meet the mandate. He said airports should allow third-parties to set up screening facilities.
The approaching screening deadline can present an opportunity to smaller airports, Brooks said. If there are delays and backups at major gateway airports, Brooks said shippers may divert some cargo business to the smaller airports that are ready to step up to provide the security screening.
In the next few years, American Airlines intends to focus on business re-engineering and process improvement, and attracting market share by focusing on rewards program. The airline recently opened two cargo facilities, one in JFK and one in LAX. Brooks said they firmly believe that these investments will pay off in the next few years. Carriers will coordinate their network to compete.
In his message to airports, Brooks urged them make sure the legislators aware of the value of cargo to the local community and to emphasize the jobs created and maintained by the cargo operations.