Discuss what air cargo carriers are doing to assist in the quest to find alternate fuel sources?
1) Discuss what air cargo carriers are doing to assist in the quest to find alternate fuel sources? The usual practice of air cargo carriers was to pass the high cost of aviation fuel to passengers via surcharges. Nevertheless, this industry is currently facing huge decline in profits due to the overnight doubling of fuel prices. According to the International Air Transport Association (IATA) profit forecast, airlines and air cargo carriers can incur a loss of as much as $5 billion at the prevailing fuel prices (Logistics Business Review, 2009).
To overcome the challenges posed by the rising fuel cost, air cargo carriers are exploring the option of finding alternative fuel sources. Towards this end, they are liaising with organizations like the Air Transport Association(ATA) and Commercial Aviation Alternative Fuel Initiative (CAAFI) who, according to ATA, are currently “coordinating work on the research and development of alternative jet fuels, including technical specifications, environmental aspects, production and distribution”(ATA, 2009; para. ). By liaising with these organizations, air cargo carriers are actively participating in meeting the objective of ensuring constant supply of affordable aviation fuel.
This is because these organizations are involved in educating “potential fuel suppliers on the aviation fuel supply process – including airline operations as well as distribution and logistics considerations – to further ensure the reliable delivery of alternative jet fuel(Air Transport Association, 2009; para. 0), as well as in working with “potential suppliers to identify commercial terms and strategies that individual suppliers and purchasers might adopt to accelerate deployment” (Air Transport Association, 2009; para 12). Another strategy adopted by air cargo carriers in their search for alternative fuel sources include is to add more fleets of fuel efficient planes in their stock of commercial jets (Logistics Business Review, 2009).
The point to note here is that it is expected that these strategies explained here will enable air cargo carriers to improve their deteriorating financial position, and to become more efficient, more competitive and more profitable. It is assumed that a healthy air cargo industry not only facilitates domestic and international trade but will equally provide the needed jobs to the populace. 2) Post a current air cargo article in the Bulletin Board Discussion forum and add your comments. Current Air Cargo Article
IATA: Air cargo drop may have found its floor Source: Retrieved March 29, 2009 from http://www. btimes. com. my/Current_News/BTIMES/articles/airo26f/Article/index_html GENEVA: International air cargo traffic fell 22. 1 per cent in February compared with the same month a year ago, but the decline in freight may have found its floor, the airline industry body IATA said yesterday. Freight demand is considered a key barometer for the health of global trade, which has weakened considerably in response to the world’s economic downturn and credit crisis.
The February decline was the third consecutive month with cross-border cargo volumes far below the previous year levels, following a 23. 2 per cent year-on-year drop in January and a 22. 6 per cent decline in December. “We may have found a bottom to the freight decline, but the magnitude of the drop means that it will take time to recover,” IATA director-general Giovanni Bisignani said in a statement. Freight demand in Asia, the region most affected by the decline in shipments, fell 24. 7 per cent year-on-year in February, the Geneva-based group said.
Japanese exports have almost halved from February 2008, it said. Air passenger traffic also declined last month, but less sharply than cross-border cargo. Overall passenger volumes fell 10. 1 per cent below February 2008 levels, following a 5. 6 per cent year-on-year fall in January, IATA said. Asia-Pacific carriers saw a 12. 8 per cent drop, North American airlines carried 12 per cent fewer passengers and Europe’s recorded traffic down 10. 1 per cent, matching the global average.
Latin American passenger traffic was slightly stronger, with only a 3. per cent drop, and in the Middle East it was up 0. 4 per cent. IATA, which represents 230 airlines including British Airways, Cathay Pacific, United Airlines and Emirates, said earlier this week that airlines would lose US$4. 7 billion (US$1 = RM3. 63) this year as a result of the economic downturn that has kept people and cargo from flying. Its traffic data excludes domestic flights. – Reuters Comments This article discussed the current issues facing the air cargo service industry – the decline in business and revenue as a result of decrease in customer patronage.
According to this article, IATA reported that, compared to the figures obtained for the month of February the previous year, the international cargo traffic fell by as much as 22. 1 per cent this current year (IATA, 2009). The article went ahead to identify four markets that were hard hit by this fall in cargo traffic and revenue. These markets included the Asian market, North American market, European market, and Latin American markets. In addressing the Asian market, the article noted that “Freight demand in Asia, the region most affected by the decline in shipments, fell 24. per cent year-on-year in February… Air passenger traffic also declined last month, but less sharply than cross-border cargo. ”(IATA, 2009; para. 5). For the other markets, the article reported that “Asia-Pacific carriers saw a 12. 8 per cent drop, North American airlines carried 12 per cent fewer passengers and Europe’s recorded traffic down 10. 1 per cent, matching the global average.
Latin American passenger traffic was slightly stronger, with only a 3. 8 per cent drop, and in the Middle East it was up 0. per cent” (IATA, 2009; para . 8). The article went ahead to explain that the current challenges facing the industry was precipitated by the global economic and credit crises which had tended to discourage people from patronizing both the air cargo service companies and passenger airlines. This article is thus an “eye opener because it exposed the financial troubles of the air cargo service industry – and industry that is considered by the less-informed to be immune to economic recession.