Air cargo, passenger airlines freefall together

Air cargo, passenger airlines freefall together       U.S. domestic air cargo and express carriers saw their revenues decline about 3 percent to $31.88 billion in 2008 from the previous record year, according to Seattle-based Air Cargo Management Group (ACMG).
      High fuel surcharges made up for a 9.7 percent drop in traffic volumes to 13.5 billion revenue ton-miles, the aviation consulting firm said. Express carrier volumes in the fourth quarter were 5.65 million per day, down 14.3 percent from the year-earlier period.
      Domestic air cargo volumes have been negatively impacted in recent years by post-9/11 security requirements, high fuel prices, airline industry woes that have led passenger airlines to cut back flights and air cargo service, and more capable expedited truck service.
      The upshot, according to ACMG, is the U.S. air cargo industry has stagnated, remaining at essentially the same level as in 1996-97 in terms of volume.
      Airlines face a heap of problems going into the second half of the year. Both passenger and cargo volumes declined further in the second quarter. International passenger traffic was off 9.3 percent in May. The global industry lost more than $3 billion in the first quarter and the International Air Transport Association predicts further losses for the rest of the year.
      Losses continue to mount despite extensive efforts to cut capacity to better match demand and to pare costs. Both freight and passenger demand has fallen faster than the reduction in available capacity, putting pressure on yields. Profit margins have been severely dented by the reduced traffic and passengers trading down from premium seats to coach class. The compressed revenues have overshadowed the decline in fuel costs from last year.
      More than 50 percent of airline executives, including those in hard hit Asia, expect an increase in cargo demand during the next 12 months, according to an IATA survey. The results indicate expectations that the freight bottom may have passed and that international trade will slowly pick up.
      ACMG said domestic U.S. ton-miles declined 18 percent for the first six months of the year, and express volumes are down about the same amount. Its annual industry report notes that DHL's pullout from the domestic express arena has benefited FedEx and UPS, which have collectively increased their express market share by 7 percent by picking up DHL customers. FedEx leads the way with 44.8 percent of the market, followed by UPS at 42.5 percent, and their shares will increase another 3 percent to 4 percent in 2009 as DHL's departure from the domestic market is finalized.
      The integrated express carriers generated $28.55 billion, or almost 90 percent of the industry's total revenue. Domestic freight handled by all-cargo and combination carriers through freight forwarders amounted to $3 billion, or 9.5 percent of revenues, and domestic mail ' exclusive of the U.S. Postal Service's air line haul contract with FedEx ' represented $300 million, or 0.9 percent of total revenues, according to ACMG.
      U.S. all-cargo carriers are under extreme pressure due to unusually weak demand and high fuel prices, ACMG noted.

Lufthansa outsources TSA cargo screening
      Lufthansa Cargo said it is partnering with Covenant Aviation Security, a private security firm, to screen cargo placed on passenger aircraft.
      The Transportation Security Administration has placed the onus for screening such cargo on airlines, with alternative upstream screening methods also available to certified shippers and freight forwarders who want to avoid potential security backlogs at the airport. As of Feb. 1, half of all cargo on passenger planes must be screened and the congressional mandate kicks up to all cargo by August 2010.
      The law applies to the piece level, meaning that each package in a pallet must be unpacked and screened unless a certified company has screened the shipment ahead of time.
      Covenant is doing the actual physical cargo screening and providing overall building security for Lufthansa's facilities at JFK Airport in New York and in Philadelphia, Covenant spokeswoman Janine Punt said. The German carrier also intends to outsource security to Covenant in other cities so it can focus on cargo transportation and customer service, she said.
   Under the teaming arrangement, Lufthansa provides all necessary equipment, such as X-ray or explosive detection machines, and Covenant provides the labor and expertise.
      Covenant also works under contract for the TSA in San Francisco and Sioux Falls, S.D., where it provides the agency with all levels of passenger security at the airport including baggage and passenger inspections, random screening, and behavior monitoring and document checking.

Immigration problem grounds Russian tanker
      A huge Russian-built tanker plane was detained July 17 at the Sawyer International Airport in Sault Ste. Marie, Mich., after U.S. authorities discovered that five of the nine crewmembers had expired visas.
      The five Ukrainian nationals were taken into custody by Immigration and Customs Enforcement and were charged with an administrative violation, a spokesman confirmed.
      According to local news reports, the arrests were made when the Ilyushin-78 landed to refuel and the local sheriff's office was alerted by Texas authorities that the plane and crew were involved in a civil dispute in that state.
      A little checking revealed that the plane belongs to North American Tactical Aviation, a small company based in Newark, Del.
The Ilyushin-78 is an aerial refueling tanker based on the Il-76 cargo plane, but several of the planes have been converted to pure transports.
      A man named Alex who answered the phone at the company's headquarters declined to say what type of air cargo business the company does, saying it was 'proprietary' information. He did indicate that the plane had no load because it was being repositioned for its next mission.
   Wikipedia and other Web posts indicate the private firm purchased two Il-78s for aerial refueling operations it conducts for the U.S. Navy, and possibly other Defense Department components.
      Alex said the stamps on the crewmembers' visas had expired by a few days and that he was making arrangements to fly them out of the country.
      The company could be without its plane for several weeks because the crew is the only one it has to operate the plane, he said.