THE political battle against pollution has taken another turn, with the unexpected pre-budget announcement that freighters will be hit with an environmental tax in the UK under a new scheme to eradicate Air Passenger Duty (APD) and pressure airlines to reduce carbon emissions.

This is a first for freighter operators, and the dirtier the aircraft the heavier the duty. The emissions tax will be levied according to aircraft type and distance travelled.

The move has refuelled the ‘scapegoat’ debate among air cargo industry members who have been fighting the political focus on imposing economic measures to reduce emissions. The tax has been hailed as yet another revenue stream for the British government, lining its pockets with the income from aviation emissions schemes, instead of injecting it into the environment.

As if this new tax wasn’t enough, trading for carbon emissions could also become a reality much sooner than expected, as Socialist Euro MPs fight to bring forward aviation’s inclusion in the European Emissions Trading Scheme (EU ETS) to 2010.

Can air cargo achieve the necessary environmental results in today’s political environment, or has it become a scapegoat for other more politically-sensitive polluting industries?

IS THE air cargo business a case of cannibals fighting over a shrinking cake? Over the past 18 months, evidence has piled up that shippers have been diverting traffic from air to ocean.

What is of particular concern is that not only commodities with tight margins, such as garments or some perishables, have been pushed to ocean by the high landed cost of airfreight; the trend is also showing in traditional high-value airfreight staples like mobile phones and flat screen TVs.

Coming on top of the loss of regional business to ground transportation, the diversion to ocean in the intercontinental segment, is threatening to undermine growth potential of air cargo. What’s more, some operators are worried that the industry seems unable to tap into new sources of business.

Further clouds loom from security, namely the spectre of supply chain disruptions and delays to the cost of security measures.

Will an ongoing blurring of the lines between the different transportation modes, stop the momentum of air cargo growth? Could the ocean be airfreight’s next big threat or will innovation and investment in end-to-end logistics chain co-ordination do the trick?

THE ongoing pounding of British Airways in the US courts has continued apace, with the naming of 10 executives that have been ‘carved out’ of the airline’s plea bargain deal, to settle passenger and cargo price-fixing charges. They could now be extradited to the US to face criminal charges.

The individuals concerned, who have yet to be charged officially for any offence, all deny any wrong-doing. Yet, the spectre of extradition and a jail sentence of up to 10 years for the six individuals involved in the cargo case, including former MD Gareth Kirkwood, remains.

Questions must be asked as to why British Airways has been hit so hard, while others seem, so far, to have got away scot-free.
Of the 14 airlines allegedly involved in the two price-fixing cartels, only British Airways and Korean Air ended up with fines and only the UK airline has had executives named for criminal prosecution.

What has happened to the other airlines involved?
Will they all ‘one-by-one’ be dragged before the courts, or has the US DoJ insufficient evidence to prosecute them?

The leniency accorded to whistleblowers Virgin and Lufthansa, and the lack of action against other airlines allegedly involved, leaves a sour taste in the mouth – as the scapegoating of BA continues.

SINGAPORE Airlines has signed for a stake in China Eastern. The move was hardly a matter of choice, if the carrier’s long-term interests are to be well served.

China will soon dominate Asian aviation and, within a decade or two, global aviation. As a hub Singapore is losing its edge, say market analysts at CAPA. In such a highly competitive global market, SIA needs to be involved in China, which is calling the shots.

The Chinese government hopes that this alliance will act as a catalyst for further mergers in the market i.e Air China and China Southern. But domestic airlines are more interested in attracting foreign investors to tap into the international market. Whatever the case it must be remembered that partnering in the Chinese market can be a challenging exercise, especially when buying a minority interest in a state-owned entity, especially in a highly regulated industry subject to regular strategic intervention by government.

Just how much control any investment will actually buy a foreign airline is a real concern. SIA does not need to read any management books to be aware of the risks involved in cross-border investment partnerships, in China or elsewhere. But is it biting off more than it can chew?

STORIES  abound about the ‘good old days’ of air cargo when deals were done in the bar or over the phone and a brown paper bag often lubricated the wheels of this industry. But times have changed right?

With airlines under investigation for illegal collusion and employees of forwarders accused of taking illegal backhanders, maybe not.

Allegations of customs bribery, Russian customs officials being murdered and even the heads of airline allegedly chucking bungs to UN officials, give the industry a reputation that it maybe does not deserve.

The air cargo industry is truly global and in many parts of the world business could not be done without some ‘incentives’ but are these isolated cases, or is financial lubrication still a major tool to secure business in the air cargo industry?