Among their clients are the likes of AirAsia, AirAsia X, Britannia Airways, Jet X, Etihad Crystal Cargo and El Al, which are handled by Pacific Empire International, while OA Cargo operates as the GSA for Austrian Airlines, Coyne Airways and Air Moldova.
Growth forecast
This respectable list of airlines has resulted in Pacific Empire and OA Cargo experiencing strong growth this year due to the capacity increases of these carriers. “In 2010, we foresee we will have a 7 per cent increase in our business. As most airlines cut their routes and flights due to the financial crisis, we expect they may return to the market in 2010, so this may affect our tonnage growth,†he says.
Asked about the latest GSA business trends, he says most airlines have cuttheir budgets and manpower due to the financial crisis, and some have appointedGSAs to sell their capacity instead ofhandling the sales themselves. “We canforesee that more traditional airlines mayappoint GSAs to sell their capacity forthem,†he adds.
Looking back 5-10 years ago, there were fewer airlines and less cargo space, so exporters and shippers did not have much choice. Times have changed as more new airlines emerged from China and the low cost carrier concept is nowadays widely accepted by the public. In addition, more competition has also emerged and there is now more surplus space.
No mini recovery
Asked whether Pacific Empire and OA Cargo had seen a mini recovery of the air cargo market in the last few months, Law says it was the traditional peak season period and he does not think it constitutes a recovery as there are still a substantial number of aircraft parked in the desert. He says there is still cargo demand, but not the levels seen previously.
However, the situation is expected to improve next year, as both exporters and shippers look forward to a 6-10 per cent growth in 2010.
As the world economy continues to recover and return to its growth track, Law notes that companies should emerge from the crisis with better crisis management tools which should help them avoid, or at least lessen the impact of a similar crisis happening again.
GSA expands network
The benefit of a GSA, he says, is that airlines can only sell their own product. “As a GSA, we can link up two to three airlines together and expand the network. A GSA can provide wide products range to clients in order to strive for more revenue,†he adds.
Asked about the trend of imposing surcharges, Law says in Hong Kong, there is only fuel and security surcharges, which is better than other countries where other surcharges are implemented such as war risk surcharges and X-ray screening charges. “Surcharges have now become a trend,†he says.
There are lots of methods to increase the revenue, and it depends on individual policy. “Our policy is keep developing the market and to provide a wide range of services to clients in order to generate revenue,†Law says.
HK near perfect
With regards to Hong Kong’s aviation infrastructure, Law thinks it is nearly perfect. Not only has Hong Kong Airport a good reputation, it also has a well developed transportation system andautomatic warehousing system.
Asked whether Hong Kong needed a third air cargo terminal, he says no matter whether there was a third terminal or the existing terminals expanded, such facilities may help to handle more cargo in order to boost cargo revenue. “As a GSA, we welcome (any development) in this direction,†he adds.
Regarding problems in China’s air cargo industry, Law says the issue that GSAs are facing now is that in every Chinese province, the customs authorities use different systems giving rise to complexities and difficulties. “If these systems can be unified, we believe there will be more space for the economy to develop,†he notes.
Law added there are some second and third tier airports that still need to be improved, for example, their infrastructure, transportation systems and warehouse automation. “Meanwhile if they can attract some foreign airlines to land at their facility, we believe thiswill give them more room to have better growth.
