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Air cargo’s paper trail still a major problem says IATA chief

Willie Walsh, former chief executive of the International Airlines Group (IAG) and now director general and chief executive of the International Air Transport Association (IATA)

MORE progress in the removal of the airfreight industry scourge of paper-based processes still needed to create a global digital cargo business, Willie Walsh, former chief executive of the International Airlines Group (IAG) and now director general and chief executive of the International Air Transport Association (IATA), has urged.

“Clearly, we have made great progress on the passenger side of the business by removing a lot of the paperwork. But we are still inundated with paper on the cargo side of the business. I think there is a lot that we can do,” Walsh says.

“It means close working with governments and regulators to facilitate the digital cargo business that we need to get to because there is far too much paperwork still in that side of the industry that I think is unnecessary today.

“We have electronic airwaybills that have removed a lot of the paper but, in many cases, we’ve not been as successful on the cargo side as we have on the passenger side,” he admits.

Walsh’s comments during his first virtual press and media briefing came on the day that IATA released its February 2021 data for global air cargo markets, which shows airfreight demand has continued to outperform pre-COVID-19 levels. February’s figures showed strong month-on-month growth in comparison with January. “Volumes have now returned to 2018 levels seen prior to the US-China trade war,” outlines a statement from the association.

Global demand, measured in cargo-tonne-kilometres (CTKs), rose by nine per cent in comparison with February 2019 and was up 1.5 per cent on January. All regions except for Latin America — which reported a decline of 20.5 per cent in international cargo volumes — saw an improvement in airfreight demand compared with pre-pandemic levels.

North American carriers, which posted a 17.4 per cent increase in international demand, and African airlines, which enjoyed an immense 44.2 per cent hike, were the strongest performers in the period.

Despite this, the recovery in global capacity measured in available-cargo-tonne-kilometres (ACTKs), stalled because of new capacity cuts on the passenger business side as governments further tightened their travel restrictions in the third wave of COVID-19 cases. Capacity shrank by 14.9 per cent in the period.

“One of the main challenges for air cargo is finding sufficient capacity,” Walsh underscores. “This makes cargo yields a bright spot in an otherwise bleak industry situation.”

Nevertheless, Walsh expects the current situation will change. “We have a situation where demand is strong but supply is constrained which has led — as you would expect — to higher yields and higher charges for cargo. That will probably change. You would expect it to naturally change as more capacity becomes available,” he notes.

He thinks this is only a short-term benefit for cargo airlines and those passenger airlines which have added cargo operations, despite the “fantastic job” cargo airlines have done. “But the financial benefit that we are seeing on the cargo side is nowhere near enough to offset the [overall] financial challenge that we see on the passenger side. And we need to recognise that, for a lot of our members, the passenger side of the business is by far the most important,” Walsh adds.

“I think this is something that people have taken for granted, if you did not have airfreight operating the way it is and if you didn’t see cargo airlines responding by making additional freighters available and passenger airlines making more cargo capacity available by either putting larger aircraft on destinations where the passenger demand did not justify it but the cargo volumes did, or in many cases as we have seen carrying cargo in the passenger cabins, global supply chains would [now] be in a very difficult situation. “So, I think the cargo side of our business has done an incredible job keeping global trade going,” Walsh insists.

“I think we all have a debt of gratitude to both the cargo and passenger airlines who provided additional cargo capacity to ensure that economic activity has been able to continue and, in some cases recover in the way it has.”

Assessing the air transport industry overall, Walsh is quick and unequivocal to express his displeasure at the cost of some governments’ COVID-19 PCR tests. “Well, it’s a major cost,” he argues. “I think I [personally] have now had five, or maybe six [tests]. The cost of the test I am having tomorrow is a 155 Swiss Francs. I have had tests in the UK, Spain, Singapore and Switzerland, and they are all very expensive.” In the particular, it was the amount of VAT he paid for his test that in the UK that “really shocked” him.

“Here is the government saying you have to do a PCR and they are benefiting from me doing a PCR. I can understand why we need to have reassurance to facilitate travel at the moment. This is managing risk. But there are many other [types of] tests that are available at significantly lower prices that are just as efficient for the purpose of managing risk as the PCR. And these are much more convenient for the customer. If a family taking a holiday has to pay 155 Swiss Francs or £120 just to travel, that will be prohibitive [financial burden] for a lot of people.”

Willie Walsh, who does not believe having had a COVID-19 vaccine inoculation should be a requirement to fly, also emphasises that the airline body’s data released on 7 April “highlights the need for clarity on government plans for a safe industry restart. A robust testing system or vaccination, or a combination of both should be acceptable to people.

“Understanding how passenger demand could recover will indicate how much belly capacity will be available for air cargo. Being able to efficiently plan that into air cargo operations will be a key element for overall recovery,” he points out.

“We need to get back travelling again and I expect governments to continue to provide support where it is necessary,” he emphasises.

This story first appeared on aircargoeye.com on 7 April 2021

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Thelma Etim

Thelma Etim

I am the editor of air cargo industry news website aircargoeye.com, an alternative news and comment outlet for the global airfreight business.