Paper 8: Cargo Operations and Management Module-32: Leading Airline Cargo Players THE DEVELOPMENT TEAM Principal Investigator Co-Principal Investigator Paper Coordinator Paper Co-Coordinator Content Writer Content Reviewer Prof. S. P. Bansal, Vice Chancellor, Indira Gandhi University, Rewari Dr. Prashant K. Gautam, Director, UIHTM, Panjab University, Chandigarh Prof. S. P. Bansal, Vice Chancellor, Indira Gandhi University, Rewari Dr. Amit Katoch, Assistant Professor, UIHTM, Panjab University, Chandigarh Dr. Sandeep Guleria, Principal, ITFT College, Chandigarh. Prof. S. Kabia, Chairman, Institute of Tourism and Hotel Management, Bundelkhand University, Jhansi
ITEMS Subject Name Paper Name DESCRIPTION OF MODULE Tourism & Hospitality Cargo Operations and Management Module No. 32 Module Title Objectives Keywords Leading Airline Cargo Players To Know the Airfreight Industry and Leading Players of it Aircrafts, Boeing, Airbus, Air Freight, Cargo Airlines 1. Learning Objectives 2. Introduction 3. Aircrafts Used in Cargo Industry 4. Top 10 Air Freight Companies 4.1 FedEx Express 4.2 UPS Airlines 4.3 DHL Aviation 4.4 Cathay Pacific 4.5 Korean Air Cargo 4.6 Lufthansa Cargo 4.7 China Airline Cargo 4.8 Singapore Airline Cargo 4.9 Emirates Sky Cargo 4.10 Cargo lux 5. Worldwide Scenario of Cargo Industry 5.1 Asia Pacific Region 5.2 North American Region 5.3 European Region 5.4 Middle East Region 5.5 Latin American Region 5.6 African Region 6. Indian Scenario of Cargo Industry 7. Summary TABLE OF CONTENTS
QUADRANT- I 1. Learning Objectives After completing this module, one shall be able to understand: Airlines which are mainly in the business of Air Freight Aircrafts used for air freight by different airlines Global Scenario of Air freight industry Indian Market of Air Freight Top 10 Air Freight companies of the world http://cdn.prezly.com/93/96ed60eb6e11e591524b9eabc40056/cargo-loading-budapest.jpg 2. Introduction Entire world has witnessed the growth of Airline Industry after the World War II. Since then, the usage of Aircraft has not been confined to Defense forces but to the civil aviation also. The no. of air passengers in domestic as well as international market has grown exponentially. Nowadays besides passenger traffic, air transport has become the an integral component of international logistic network, which manages and controls the flow of goods, information, products, services, people from one market or production houses to another. Logistics through airways includes the
transfer of raw material, unfinished or finished goods, inventories as well as work in process geographically. In normal passenger aircraft there is a provision of cargo hold in which passengers can put their luggage and transfer from one place to another with them. These days there are many airlines which specifically deals in transporting only cargo from one place to another. These airlines are known as Cargo airlines. The cargo airlines which basically deals only in the transport of the cargo by air are known as Air Freight Carriers. It can be seen that most of the Air Freight Carriers are subsidiaries of well-known passenger airlines. https://i.pinimg.com/originals/32/30/1f/32301fa9f6561eb82cb24c205dc0d361.jpg 3. Aircrafts Used in Cargo Industry In Cargo Market both old as well as recently built aircrafts are being used for transportation. Due to emergence of new sector of air freight in aviation industry new aircrafts are plying in the market, these aircrafts are Boeing 707, Douglas DC-8, Boeing 727, Douglas DC-10, MD 11, Airbus A300 and Ilyushin II-76. Douglas DC-3 are still in use which are around 60 years old aircraft. These aircrafts are flying around the world for transporting passengers as well as cargo. Some old aircraft are modified as per the new standard requirements of air freight industry. Some
short range airliners like An-12, 26, Fokker Friendship and British Aerospace ATP are still in use. Glazed windows has been modified into opaque panels, a broad top hinged door has been inserted to one side of fuselage with strengthening of the cabin floor. A Ukrainian Cargo airline (Antonov Airlines) used An-225, world s largest aircraft. The world s Largest aircrafts are Antonov An-225 Mriya and Antonov An-124. Both the planes are used for the transportation of oversized cargos. Ukraine s Antonov Airline is pioneered using large military airplanes for commercial purposes. Some of the cargo airlines deemed to carry a few passengers on flight. UPS airlines also started passenger charter airline but became unsuccessful. US is known for main aviation market where cargo planes are forbidden from carrying nonemployee passengers. EAT (European Air Transport) Airbus A300B4F is a subsidiary of DHL Aviation. EAT is one of the largest cargo companies of the world. http://www.americanmachinist.com/sites/americanmachinist.com/files/uploads/2016/03/boeingc argoforecastinfographic-595.jpg 4. Top 10 Airfreight Companies There are more than 100 Companies deal in Airfreight business. Among them top 10 Airfreight Companies are as follow:
http://images.fedex.com/images/us/2011crimages/expressfreight/exp-freight-banner-plane.jpg 4.1.FedEx Express FedEx Express was founded by Fredrick W Smith with its headquarters at Memphis, Tenneesee, US. Its subsidiaries are Subsidiaries: TNT Express, FedEx Office, FedEx Ground, and GENCO. It commenced its operations in 1973. FedEx Express has 688 aircrafts in its fleet and covers more than 375 destinations worldwide. In terms of volume of air freight handled FedEx has built its name. It has its dedicated fleet who completed this task. In the fleet of FedEx they have 12 Boeing 777 Freighter. In addition to it they have ordered 15 additional aircrafts for the enhancement of its fleet. FedEx Express has the fourth largest fleet in the world. If some wants to see the diversity in the fleet of FedEx then he can witness it from light carrier like Cessna 208 to huge Airbus A300 at Memphis International Airport. The propeller driven aircraft fleet of FedEx help the carriers which handle larger goods under its Feeder program. FedEx Express is at the top of the world in the cargo market which is driven by the Middle Eastern and all other cargo airlines. As per the data revealed by World Air Transport Statistics (IATA), despite a 1.4 percent decrease in demand FedEx managed to maintain its place as the world s busiest cargo airline. Due to weakness in global economic conditions and capacity reductions, the weight of FedEx international priority and international airfreight shipments declined still package numbers increase during the year 2016.
https://upload.wikimedia.org/wikipedia/commons/4/41/ups_boeing_747-400_in_dubai_kvw.jpg 4.2.UPS Airlines UPS Airlines is one of the America s top class cargo airlines besides FedEx. The owner of UPS Airlines is United Parcel Service Incorporation. The headquarter of UPS Airlines is at Louisville, Kentucky. The international all point air hub, world port is at Louisville International Airport. The airline was started in 1982. The UPS Airlines has the fleet of 519 aircrafts including chartered planes, and covers more than 700 destinations worldwide. Its headquarters from where UPS Airlines operates is at Louisville International Airport. UPS have given the orders for Boeing 777 freighter. The inclusion of Boeing 777 would definitely add further capacity and functionality to its operations. The shipping and logistics of UPS Airlines functions for just every country of the world. http://goglobal.dhl-usa.com/blog/wp-content/uploads/2015/05/future-aviation.jpg
4.3. DHL Aviation One of the division of DHL Express is DHL Aviation. DHL Aviation is not a single airline. It is airline owned, co-owned or chartered by DHL Express. The Headquarter of DHL Aviation is at Derby, United Kingdom. It was founded in the year 1969. DHL Aviation has the Fleet Size of 75 aircrafts and covers around 150 destinations worldwide. The company comprised of main airlines like European Air Transport Leipzig, DHL Air UK, DHL Aero Expresso and SNAS/DHL. Together all these subsidiaries claim for carrying 12 percent of the total market worldwide and emerged as global leader in air freight. It is very difficult to match the breadth of its freight operations. http://images.indianexpress.com/2017/05/cathay-1.jpg 4.4.Cathay Pacific Cathay Pacific, is the flag carrier of Hong Kong. Its Headquarter is located at Hong Kong International Airport. Its main subsidiaries are Cathay Dragon, Asia Miles, HAECO, Air Hong Kong. The airline was founded in 24 th September 1946. The Fleet size of Cathay Pacific Cargo is 22 which covers 59 destinations world-wide. Cathay pacific Cargo is air cargo service of Hong Kong. Cathay Pacific Cargo has established the prominent position for growth in Chinese economy. In future Cathay Pacific is looking to add 10 Boeing 747-8F and 8 Boeing 777F Planes more in its fleet to meet the growing demand of region. https://upload.wikimedia.org/wikipedia/commons/e/e2/boeing_747-4b5f-scd%2c_korean_air_cargo_an1893203.jpg 4.5.Korean Air Cargo Korean Air Cargo has 24 aircrafts in fleet which covers total 116 destinations worldwide. Korean Air Cargo is the largest airline in South Korea. Korean Air Cargo is set to add seven Boeing 747-8F freighters and five Boeing 777F planes in its fleet. As per present scenario Korean Air Cargo is well positioned for any future venture of enhancement in
the freight industry. Its main subsidiaries are Jin Air, Czech Airlines, Korea Airport Service Co Ltd. https://lufthansa-cargo.com/documents/20184/38128/lcag_oag_rms_210716-xl- Slider_Bild3_10.jpg/04bc7b42-d541-40c3-8684-bf92794d87f2?t=1425507736000 4.6.Lufthansa Cargo Lufthansa Cargo AG is a German cargo airline. It is owned subsidiary of Lufthansa. It operates worldwide air freight and logistics services. The headquarter of Lufthansa Cargo is at Frankfurt Airport, the main hub of Lufthansa. Its main subsidiaries are Aerologic, Time: matters, Jettainer GmbH. It was founded in 1977. There are 19 aircrafts in the fleet size of Lufthansa Cargo. These 19 aircrafts cover the market of 57 destinations worldwide. Lufthansa Cargo is a German Based air freight company. Like other Cargo giants Lufthansa is also set to add five Boeing 777 aircrafts in its fleet. 18 McDonnell Douglas, MD-11F freighters are still the part of the fleet of Lufthansa Cargo. https://photos.smugmug.com/airlines-asia/airlines-china-taiwan/china-airlines/i- ssv6vcn/0/e30227f4/l/china%20airlines%20cargo%20747-400f%20b-18707%20%2895%29%28grd- 1%29%20MIA%20%28BD%29%2846%29-L.jpg 4.7.China Airlines Cargo It was founded in 1959. China Airlines Cargo has 21 aircrafts in its fleet which traverse in 38 destinations around the world. China Airlines Cargo constantly remains in the top 10 companies worldwide in terms of volume carried. In its fleet there are 19 Boeing 747-400F planes and plans to add Boeing 777 or Airbus A330 wide bodied freighters.
https://cdn.jetphotos.com/full/5/87927_1479481379.jpg 4.8.Singapore Airlines Cargo Singapore Airlines Cargo is a cargo airline based in Singapore. It is a subsidiary of Singapore Airlines.It was founded in 2001. With 13 Aircrafts in its fleet Singapore Airlines Cargo covers 72 destinations worldwide. One of the most reputed airlines of the region the cargo division of Singapore Airlines in no different to other reputed cargo companies. Besides Southeast Asia, Singapore Airlines Cargo has extended its service in Middle East, North America and Europe. All 13 aircrafts in Singapore Airlines Cargo are Boeing 747 and as of now there are no plans for new orders. https://i.ytimg.com/vi/r4n1ikvtwco/maxresdefault.jpg 4.9.Emirates Sky Cargo Emirates Sky Cargo is a cargo airline of Dubai, United Arab Emirates. Its parent organization is The Emirates Group. It started its operations in October 1985. Emirates Sky Cargo has 15 aircrafts in its fleet size. These 15 aircrafts cover 50 destinations in the world. Its headquarters are in Dubai. All 15 aircrafts are Boeing 747 8F planes and Emirates Sky Cargo has planned to buy 6 more Boeing 777Fs in future.
https://www.ch-aviation.com/portal/stock/454.jpg 4.10. Cargolux Cargolux is based in Luxembourg. It was founded in 1970. It has 22 aircraft in its fleet which covers 82 destinations worldwide. Its main area which they cover is Europe, still has their presence in other continents of the world. It has good number of wide-bodied freighter Boeing 747 aircrafts. Cargolux along with Japan s Nippon Cargo Airlines are launch customer for Boeing s 747-8F aircraft. Rank Country Airlines By freight tonnekilometres flown (millions) 2015 1 United States FedEx Express 16,020 2 United Arab Emirates Emirates Sky Cargo 11,240 3 United States UPS Airlines 10,936 4 Hong Kong Cathay Pacific Cargo 9,464 5 South Korea Korean Air Cargo 8,079 6 Germany Lufthansa Cargo 7,054 7 Singapore Singapore Airlines Cargo 6,019 8 Qatar Qatar Airways Cargo 5,997 9 Luxembourg Cargolux 5,753 10 Taiwan China Airlines Cargo 5,266
https://crucialperspective.com/wp-content/uploads/2017/05/global-container-shipping-and-air-cargo-growth.png 5. Worldwide Scenario of Cargo Industry IATA releases most of the data related to the aviation industry. In one of such data it is revealed that in 2016 the demand in Freight Tonnes Kilometers increased by 3.8 percent in comparison to the previous year. Over the last 5 years it has been seen that the growth rate has become double. Only the carriers of Europe accounted for more than half of the total annual increase in demand. In 2016, all regions of the world saw positive growth rate except the Latin America. The increase in export orders with the shipment of the silicon materials is one of the main factors which contributed to the increase in demand. It can be said that the year 2016 was observed as good year for air freight industry worldwide. As per the recommendation of IATA Director General and CEO, which emphasized all countries must not forget that trade is a powerful tool for the growth and prosperity. With the help of digital processes the air cargo industry has improved in its operations lead to customer satisfaction. e-cargo is the best solution to keep the pace of the growth in the market. DEC. 2016 (% YEAR-ON- YEAR) WORLD SHARE (1) FTK AFTK FLF (%- PT)2 FLF (LEVEL)3 Total Market 100.0% 9.8% 3.2% 2.8% 46.1% Africa 1.6% 13.6% 5.3% 2.2% 29.6% Asia Pacific 37.5% 9.8% 5.7% 2.1% 55.1%
DEC. 2016 (% YEAR-ON- WORLD SHARE YEAR) (1) FTK AFTK FLF (%- PT)2 FLF (LEVEL)3 Europe 23.5% 16.4% 5.9% 4.5% 49.7% Latin America 2.8% -1.0% -7.9% 2.6% 36.5% Middle East 13.9% 11.2% 5.9% 2.1% 44.9% North America 20.7% 3.7% -1.4% 1.8% 36.3% Source: IATA The International Freight Volume is expected to increase at CAGR of 4.1 percent as per the forecast of IATA for the year 2014-2018. The fastest growing markets would be the Middle East and Africa. Even the IATA Director General and CEO estimated that there would be the more than 4 percent growth for next five years. This would definitely leave the marks of improvement on performance of recent years. For the global economy Air Cargo Industry would remain vital. Throughout the world the goods of worth dollar 6.8 trillion would be transported by air. Therefore, the forecast of the industry is bright after seeing the several years of low business in cargo sector. 5.1.Asia Pacific Region The Asia Pacific Region saw the demand in volume of freight which grew to 9.8 percent and the capacity has risen by 5.7 percent. This rise contributed to the growth in freight demand of 2.1 percent in the year 2016. From different business surveys it is seen that increase in the demand left the positive wave for the increased capacity of 3.6 percent in the region during 2016. 5.2.North America Region The airlines of this region highlighted the demand of freight increased by 3.7 percent during the year 2016 and the capacity was decreased by 1.4 percent. Because of this, the annual growth of 2 percent has gone up which was 1.3 percent in the year 2015. The export market was under pressure due to the better strength of US Dollar which strengthened the inbound market. 5.3.European Region An increase of 16.4 percent on year on year basis in freight demand European Airlines has set a capacity rise of 5.9 percent. This scenario has increased the cargo volume by 7.6 percent for the year 2016. Among all regions this is a largest increase. This is almost equal to the half of the total global increase in the demand of freight industry. Weakness in the Euro and the seasonal
growth trend corresponds the increase in export orders in Germany. 6.7 percent increase in the capacity is witnessed in the year 2016. 5.4.Middle East Region The freight volume of the Middle Eastern carriers increased on year on year bases to 11.2 percent and the capacity was increased to 5.9 percent. With the increase in annual demand to 6.9 percent in 2016 this suggests the second fastest growth rate of all regions. Since 2009 this was the slowest growth of the region. Due to the weak freight volumes between the Europe & Middle East and Asia & Middle East this growth slowdown was witnessed. 5.5.Latin America Region A contraction in demand of 1 percent was observed in Latin American airlines in 2016 as well as decrease in capacity to 7.9 percent compared to previous year. A decrease in 4.2 percent freight volumes is reflection of drop in demand in the region for the year 2016. This demand has been fallen for second consecutive year. Growth levels are still in line in-spite of all odds. Due to the shattered economy and political condition in countries like Brazil, the capacity was decreased by 2 percent in 2016 than 2015. 5.6.African Region The freight volumes of African carriers had observed second fastest growth of 13.6 percent on year on year basis with an increase in capacity to 5.3 percent. With this data we can say that annual growth in freight demand of 31 percent in 2016 down from 4.5 percent in 2015. The main cause of fall in the Freight load Factor is Ethiopian Airlines. However the capacity pitched by 25.5 percent in the year 2016 was on the back of long haul expansion. 6. Indian Scenario of Cargo Industry IATA forecasts estimated that India shall occupy the second position among the fastest growing market with CAGR of 6.8 percent to add 622000 extra tonnes. Indian Aviation Industry caters to 2.2 billion passengers every year. For most of the airlines the Cargo generates more revenue for them than passenger traffic. The total values of the goods transported by air is 35 percent of all international trade. As the Asia Air Freight Industry is taking off, in coming days the emerging economies like India would do wonders. It is expected that Indian Market would expand by 8.5 percent per year for the next 5 years. Indian Market always served the platform for the world to gather here for setting up businesses. The export tax rebates, improved infrastructure, emphasis on public private partnerships and Foreign Direct Investment policies, these are some initiatives because of which the industry players are more optimistic with the increase of demand of airfreight market to 2.8 million tonnes by 2018. An air cargo industry is semi dynamic which means that whatever happens in the air cargo industry in present, normally it would be reflected about six months later in general economy. As far cargo industry is concerned India in under developed, it is now developing in pace so the opportunities here are bright. With the population of 1.28 billion it is part of the continent Asia that accounts for the 60 percent population of the world. Today in the domestic sector, more than 60 percent of the Freight is transported by
surface. In this 40 percent of the areas have no access to all weather roads. This is one of the reasons that the cargo firms looks India as a brighter side for the cargo industry. One of the subsidiary of Air India which dealt with Air cargo was Air India Cargo. Its headquarter was at Mumbai. It was operated as freighter aircraft services from 2006 to 2012. Blue Dart, First Flight, DTDC, Skypak, Overnight, Professional Couriers are the main service providers in the domestic market of India. Blue Dart Aviation act as one of the main service provider in Express Aviation Sector. There are three primary types of carriers in Indian Air Cargo Industry. 1. Combination Carrier: The passenger airlines which use a portion of their belly hold to carry cargo is known as Combination Carrier. Sometimes they may also operate as separate air cargo fleet. 2. Conventional Carriers: The airlines which operates both scheduled and charter services comes under conventional carrier. 3. Integrated Carriers: The airlines which operate their own fleet of aircraft and delivery vehicles and also provide overnight, door to door service comes under the Integrated Carriers. Trend in GDP Growth and Air Cargo Growth rates
Source: IATA Notes: (1) Additional notes regarding coverage; see IATA WATS report 7. Summary Growth of air cargo reached multi year high in 2016. Worldwide FTKs rose by 14 percent in March 2017. It has been observed that it is the fastest since October 2010. About two third of annual increase in freight volume was accounted for the airlines based in Europe and Asia Pacific. The remaining increase was distributed equally between North American and Middle Eastern Carriers. African Airlines was the strongest in last seven years and made positive contribution to the industry. Latin American Airlines could not do fair business in the last year also.