SURVEY Industry forecast
Ones to watch IN BRIEF
B
efore last year’s war,
which brought oil production to a halt, Libya produced about 1.7 million barrels of oil a day, representing about 2 percent of world output. Consequently, its loss rattled markets when production virtually ceased as foreign petroleum employees fled the country.
In the short term, the rush to get the country’s biggest revenue-earning stream back on line will generate a bonanza for the air charter heavy-lift and outsize providers.
Given a stable political situation, the longer term prospects for the country’s air freight industry – which will doubtless become the subject of hefty commercial wagers – depends heavily on the quick upgrade of the country’s airport infrastructure. In other war-torn lands Larry Coyne, CEO of Coyne Airways and a former president of The International Air Cargo Association (TIACA), observes: “I think at some stage Iraq will move from being a ‘conflict’ market to an oil and gas one. As for Afghanistan, I’m not sure what will happen. The country has a lot of potential in the mining sector, particularly precious metals, but it has never been at peace long enough for people to dig them out of the ground. I’d like to think that they will get it together, but frankly I’m not that optimistic.”
As an example, Tyler pointed out that
in Asia and the Middle East, governments are building aviation capacity as a crucial part of their economic strategy. That understanding is not repeated everywhere: in São Paulo capacity constraints threaten growth; in the UK it is a policy decision not to expand London Heathrow airport; and in Germany the opening of a fourth runway at Frankfurt came with a restriction on night flights. Tyler observed: “You might say that
the normal state of aviation is crisis and once in a while we have a few consecutive months of benign conditions – the danger of which is that everyone from suppliers to unions to governments thinks that airlines are fat cash cows ready for milking in one way or another.” He maintained that many cash-
strapped governments implementing austerity measures see aviation as a soft target for new or increased taxation. Using aviation as an economic catalyst can be a cash generator for governments – but not if you strangle the industry with taxes that cripple growth, Tyler cautioned. The EU Emissions Trading System,
which came into effect on 1 January, is being proclaimed as a cornerstone of the European Union’s policy to combat climate change. But already the US, China, India and
other countries have attacked the scheme. Some are warning of countermeasures, firing talk of the world’s first carbon trade war.
20 AIR LOGISTICS MANAGEMENT
Some long-haul carriers have already
cautioned that passengers should be prepared for higher ticket prices to follow suit. One fact is for sure – if passenger traffic gets hit by extra tax payments, so will cargo.
Finance fears On the up side, Boeing is sticking to its long-term forecast that air cargo traffic, measured in revenue tonne-km (the tonnage lifted multiplied by the distance travelled) is expected to grow at an average annual rate of 5.6 percent over the next 20 years and that the increasing demand for the transport of perishable and time-sensitive commodities will continue to accelerate. A recent order from FedEx for 27
B767-300 freighters and two additional B777Fs to support its growth in the international cargo market “constitutes a strong vote of confidence”, noted Boeing Commercial Airplanes president and CEO Jim Albaugh. In its current 20-year forecast,
European aircraft manufacturer Airbus forecasts demand for 27,800 newbuild passenger and freighter aircraft at a combined total list price of $3.5 trillion through 2030. Both of the manufacturing giants have
overflowing order books, but their immediate concern is the availability of financing for near-term deliveries and the prospect that the industry's long-term expansion, which is closely tied to economic growth, could be interrupted.
ALM
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