IT S TIME TO SET AIR CARGO FREE
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- Kerry Reeves
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1 IT S TIME TO SET AIR CARGO FREE Nancy S. Sparks, Managing Director Regulatory Affairs, FedEx Express Jack W. Boisen, Chairman The International Air Cargo Association
2 Industry Overview Every seven days 78,000 allcargo and passenger flights generate 4.3 million tons of cargo and drive 700,000 jobs Air cargo industry transports nearly 30% of world trade by value or $1.9 trillion of goods every single year
3 Air Cargo to Triple by RTKs, billions History Forecast Average annual growth, 2005 to 2025 High 6.9% Base 6.1% Low 5.3% High Base Low % growth per year Source: Boeing Forecast
4 Build It and Air Cargo Will Come Essential for fast cycle logistics and e-commerce Follows new manufacturing Enables nations to effectively compete in distant markets
5 Air Cargo Has a Macroeconomic Impact Example: 18.5% of EU Perishables By Air 18, , , , , , ,00 0 Source: YDL
6 Air Routes are Like Highways in the Sky Athens- a new economic highway for clothing made in Jordan Mumbai- channeling new pharma products to Texas Heathrow?
7 Recent Study Commissioned by TIACA Shows Strong Correlation Between Air Cargo Growth and GDP Growth 3/4 of the variance in a nation s economic performance (GDP and FDI) can be explained by the combination of a nation s level of aviation liberalization, quality of customs and degree of perceived corruption.
8 Liberal Aviation Policy Before
9 And After Dubai s Explosive Growth
10 Country B Country A ` Country C FIFTH FREEDOM OF THE AIR
11 Country A Country B ` SIXTH FREEDOM OF THE AIR Country C
12 ` Country A SEVENTH FREEDOM OF THE AIR Country B
13 The Need for Liberalization the Route Optimizing Impact of 5th Freedom Traffic Challenge of the industry: Directional Imbalances Air Cargo Trade Flows in : : 1 1 : : : 1 1 : : : 1 1 : 2 8 : 1 1 : : : : : 1 1 : : 1 1 : 1.7 Source: YDL 4.2 : 1 In a cargo airline s network; 5th freedom traffic is key in a viable triangular route structure
14 Liberalization of Air Freight Services the Real Barriers No operation is possible without explicit approval by governments A lengthy process Not necessarily compatible with economic requirements of trading countries Not necessarily compatible with carriers business flows Often influenced by national carriers This approval is mainly driven by passenger traffic considerations Limits on cabotage Limits on wet lease Nationality clauses Ownership restrictions
15 Open Skies- Partly Cloudy for Cargo? Impact New flying creates opportunity but will cargo gateway structures change? Profitability?
16 Need for Action Supported by a Clear Vision Rapid change must come by separating cargo from the bilateral agreements initially designed for passenger traffic Regional trading blocks must encourage multilateral agreements between their members This momentum must be seized by governments and trade organizations; full liberalization is not a wish, it is a must!
17 TIACA Has Been an Effective Advocate of Liberalization of Air Cargo International Civil Aviation Organization (ICAO) World Trade Organization (WTO) Cooperation with Other Trade Organizations
18 In Summary Air freight has a vital macroeconomic impact and is an enabler of globalization In this flattening world, air freight is a facilitator of economic growth and a job creator, key for the economic viability of developing nations Air freight is gaining in importance but is currently too restricted by an inadequate bilateral system designed for passenger traffic demands
19 THANK YOU!
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