Air cargo’s fall from grace

WHERE did it all go wrong? A few short years ago cargo was the darling of airline boardrooms around the world. Volume growth was outstripping passenger departments, airlines were happy that the contributions were adding generously to the bottom line and Boeing, Airbus and others were predicting 20 years of healthy increasing demand (coincidentally necessitating the ordering of hundreds of new freighters!).Now such mighty operators as Japan Air Lines, Lufthansa Cargo and KLM, have lined up cargo as the scapegoat for the massive losses appearing on the balance sheets.Airlines have always regarded its cargo departments of secondary importance and this lack of focus, investment and long-term strategy has led to many of the problems now facing the airlines.JAL is looking to ditch its cargo division altogether, happily seeing it disappear into a new operation with NCA. KLM has hurriedly palmed its freighters off to group partner Martinair to help stem the flow of red ink onto its balance sheets and even Lufthansa has openly talked of the possibility of ditching its freighters altogether unless the performance improves.Respected freighter specialists such as Cargolux have also suffered horrendous losses and have had to re-capitalise to ensure the cashflow remains sufficient for future operations.Cargo was hit by punch after punch in 2009, yet the effects could have been prevented or mitigated if the industry developed the level of professionalism and leadership it badly needs.Antitrust enforcers at the US Department of Justice recently celebrated collecting a whopping US$1 billion in criminal fines in fiscal year 2009, much of it from cargo airlines. Although without doubt ludicrously excessive (and the jailing of middle managers hung out to dry by their own airlines is even worse), it highlights the outdated and poor practices still prevalent in the industry.For the full story read the latest issue of Air Cargo News, dated 15 January. To subscribe, click on ‘Subscribe’ above.