Ask just about anyone in the industry what 2012 holds in store and the answer is at best, “flat”, or “flat with possibly some pickup late in the year”. It’s like everyone has become numb. The rollercoaster ride from the peaks of 2007 to the depths of 2008 and back up flying high again in late 2009 through mid-2010 only to slide back down through 2011 has clearly left many in the industry with stunned senses. The last two weeks have certainly not helped provide much of ‘pickme- up’ either. While many would simply point to the fact the downfall of state-owned carriers has been long overdue, the collapse of Hungary’s Malev and Spain’s Spanair is none-the-less a disturbing reminder that all is not well in either the airline industry, nor many European economies.
The cargo side of the business was also shaken, rattled and ultimately rolled with two maindeck players suffering ignoble defeats of varying degrees – Cargoitalia whose shareholders voted for liquidation and Jade Cargo which lies in limbo following the grounding of its fleet in December after Lufthansa failed to secure agreement with its Chinese partners for some capital injection. And then there is the struggling debt-ridden Air India whose very survival is looking more and more doubtful with each passing day and certainly its cargo division will take the first hit with the carrier saying recently it plans to sell off its freighter fleet. Questions too have been raised about the future of MASkargo after it was announced by Malaysia Airlines top executives that the airline would undergo a major restructuring and cost cutting exercise. You can almost see industry players looking left, looking right wondering who won’t be showing up at the next industry event. While surely the situation is not that bad, it will likely be a hard, cold year with still much uncertainty and many, many things that can still go wrong. And then there is the thorn in everyone’s side – well actually, it’s proving to be more of severe pain the backside to be honest – the European Union’s highly controversial Emissions Trading Scheme (ETS). It’s actually starting to appear that if the ETS just went on with no objections, the cost to carriers and consumers might even be less than a trade war that potentially could come out of the rising international hue and cry.
With industry groupings aligning themselves on one side of the field backed by no less than 26 governments – China, India, Russia and the US among them – who vehemently oppose what many see as a violation of aviation’s Chicago Convention, as well as some provisions under the World Trade Organisation, the EU is looking increasingly set for a pitched battle that could only serve to wreck more economic havoc on the fragile global economy. Clearly the only solution amenable to the majority is for an International Civil Aviation Organisation (ICAO) multilateral solution which ICAO committed itself to coming up with a proposal for by end of this year. Speaking in Washington, ICAO’s secretary general Raymond Benjamin said: “while there are clear differences among member states, we still have to come up to a global solution”.
Urging all parties to work within the auspices of ICAO for a truly multilateral agreement for a global sectoral framework, the Association of Asia Pacific Airlines’ Andrew Herdman hit the nail on the head when he said: “The EU has painted itself into a corner, by stubbornly refusing to recognise the legitimacy of the concerns repeatedly voiced by foreign governments on this issue, apparently in the mistaken belief that no one will call their bluff.” Without a doubt and despite the numbness from the global economic rollercoaster, this will be an interesting year. But then again, that’s pretty much ‘situation normal’ in the air cargo industry.