| Dedicated to the memory of Lawrence David Warf, newsletter editor |
January 17, 2008 News Letter
'This is not your grandfather’s shipping news’
Local Highlights:
The SFACA sends their deepest condolences to the family of Veronica Ruiz, Victor Antonio of Continental Airlines, and his daughter who
were close friends of Veronica.
The long search for her ended Monday when her body was discovered on the slopes of Mt. Tamalpais. Veronica had apparently taken her
own life.
“Laughter rises out of tragedy, when you need it the most, and rewards you for your courage."
--Erma Bombeck,
humorist and writer
Jet Blue Cargo SFO
Dear customers and friends,
I am proud to announce the cargo sales agent appointment by JetBlue Airways Cargo.
Effective January 15th, 2008, Pacific Cargo Management, Inc. will be promoting JetBlue Cargo as its exclusive sales agent in western
USA, and Mark Friedenthal of our LAX office will be spearheading this new program. JetBlue Airways (IATA code:B6, www.jetblue.
com/cargo) one of the leading low cost carriers in US, started their service almost 7 years ago, and currently operates more than 130
aircrafts, serving more than 50 markets in US, and the Caribbean.
Pacific Cargo Management, Inc. a cargo GSA company established in 1986, currently represents 9 international airlines, and 3 US
domestic airlines.
Please call us at 310-641-7510/LAX, and 650-589-4577/SFO for further information about JetBlue Cargo.
Thank you very much for your continued support.
Mike Miumi
President
Report: Northwest - Merger Talks Underway
THE ASSOCIATED PRESS
Published: January 16, 2008
Filed at 3:33 a.m. ET
'This is not your grandfather’s shipping news’
Local Highlights:
The SFACA sends their deepest condolences to the family of Veronica Ruiz, Victor Antonio of Continental Airlines, and his daughter who
were close friends of Veronica.
The long search for her ended Monday when her body was discovered on the slopes of Mt. Tamalpais. Veronica had apparently taken her
own life.
“Laughter rises out of tragedy, when you need it the most, and rewards you for your courage."
--Erma Bombeck,
humorist and writer
Jet Blue Cargo SFO
Dear customers and friends,
I am proud to announce the cargo sales agent appointment by JetBlue Airways Cargo.
Effective January 15th, 2008, Pacific Cargo Management, Inc. will be promoting JetBlue Cargo as its exclusive sales agent in western
USA, and Mark Friedenthal of our LAX office will be spearheading this new program. JetBlue Airways (IATA code:B6, www.jetblue.
com/cargo) one of the leading low cost carriers in US, started their service almost 7 years ago, and currently operates more than 130
aircrafts, serving more than 50 markets in US, and the Caribbean.
Pacific Cargo Management, Inc. a cargo GSA company established in 1986, currently represents 9 international airlines, and 3 US
domestic airlines.
Please call us at 310-641-7510/LAX, and 650-589-4577/SFO for further information about JetBlue Cargo.
Thank you very much for your continued support.
Mike Miumi
President
Report: Northwest - Merger Talks Underway
THE ASSOCIATED PRESS
Published: January 16, 2008
Filed at 3:33 a.m. ET
MINNEAPOLIS (AP) -- Northwest Airlines has entered into formal merger discussions with Delta Air Lines and will look for another partner if Delta tries to merge with United Airlines
instead, the chairman of the House Transportation and Infrastructure Committee said in a newspaper interview.
U.S. Rep. Jim Oberstar confirmed the talks in an interview with the Star Tribune, saying he met with two Northwest executives Tuesday in his Washington office.
The Minnesota Democrat said Ben Hirst, Northwest's senior vice president of corporate affairs and administration, and Andrea Fischer Newman, Northwest's senior vice president of
government affairs confirmed that Delta is considering both Northwest and United as options for a merger.
''Northwest sees a benefit to them of a merger with Delta,'' Oberstar told the newspaper in an interview posted on its Web site Tuesday.
During the meeting, Oberstar said the executives talked about how a merger would yield cost savings and that the two carriers' route networks are complementary, with Northwest strong
in the Pacific and with Delta with a major presence in the Atlantic.
Hirst and Newman said ''there is little route overlap and not a significant effect on competition, which I disagree with,'' Oberstar said.
Both Northwest spokeswoman Tammy Lee and Delta spokesman Anthony Black declined to comment Tuesday on whether merger talks were in progress.
Oberstar said the Northwest executives didn't reveal what deals Northwest might pursue if the Delta combination doesn't materialize.
Oberstar wants the Justice and Transportation departments to rigorously examine the effects that much larger carriers would have on U.S. consumers.
Kalitta Air Eyes Domestic Venture
Kalitta Air is considering the launch of a new domestic air freight charter airline to replace Kitty Hawk Airlines, which ceased scheduled service in early November after failing to
emerge from Chapter 11 bankruptcy.
On Jan. 9, officials of Kalitta Air briefed over 55 members of the Air Forwarders Association on a conference call on the proposed Aug. 15, 2008 launch of a nine aircraft charter airline
based at Kitty Hawk's former facility at Ft. Wayne, Ind.
The fleet will consist of 727-200s, A300s and the possibility of a 70 Series DC8. The airline will operate four nights per week and include road feeder service to major cities. The airline
will provide only overnight, first-come service.
Connie Kalitta, founder and CEO of Kalitta Air, will own and operate Kalitta Air Freight, but participating forwarders will be required to provide seed money upfront that will be returned
if the venture does not get off the ground. If, however, the airline is launched but fails after a short time, the seed money will not be returned.
Each forwarder will also be required to pay a fixed monthly fee based on the16 cities served initially. No more specific information on the fee arrangement was provided.
The cost to Mr. Kalitta "will be in the range of $15 million for acquisition of assets (aircraft) and the associated start up costs," said the proposal.
The forwarders will be asked to form a working committee to work with the principles on the new airline. "In addition, we are asking them to participate in a rebate system that will be
based on profit," said Bob Hunter, a Kalitta Air principal, who is spearheading the new venture, and will become president if the charter airline is launched. "If this business is profitable,
the participants will participate in some of the profit," Hunter said.
Hunter stressed that the new venture, "will be a completely separate entity that has nothing to do with any of the other Kalitta companies," he said.
Robert W. Moorman
UPS Freight Raises Rates
UPS Freight will raise its rates an average of 5.4 percent on non-contractual shipments in the United States and Canada. The increase goes into effect on Feb. 4 for minimum charge,
LTL and truckload rates.
The price hike comes as LTL pricing generally is rising. Bank of America Securities recently reported its index for LTL pricing grew 4.9 percent in November and a full percentage point
faster than rates grew in October. The investment house said it suggests truck pricing may be stabilizing, but added, "We think higher diesel fuel prices are the primary cause of recent
nominal yield gains."
Continental first to take delivery of Boeing 737-900ER
SEATTLE /PRNewswire-FirstCall/ -- Boeing (NYSE: BA) and Continental Airlines (NYSE: CAL) today (Jan 14) celebrated the delivery of the airline's first Next-Generation 737-900ER
(Extended Range) airplane. With this delivery, Continental becomes the first airline in the Americas to operate the 737-900ER, a higher-capacity, longer-range derivative and newest
member of the Next-Generation 737 airplane family.
Continental was the first airline in the Americas to order the 737-900ER and currently has 26 more on order. Continental this year expects to take delivery of an average of two-to-three
new Next-Generation 737s per month, which includes a mix of 737-900ERs and 737-800s. The airplanes are part of Continental's comprehensive fleet strategy, which focuses on
improving operational efficiency and customer comfort.
"Continental's new 737-900ER will have among the lowest operating costs in the industry and allows us to build upon our efficient Boeing Next-Generation 737 fleet," said Larry Kellner,
chairman and chief executive officer of Continental Airlines. "These aircraft are part of our continued focus on fleet modernization, fuel efficiency and delivering the best product in
the business."
"With more range, outstanding reliability and the best operating economics of any single-aisle jet in its class, the Boeing 737-900ER is an ideal fit for Continental's growth plans," said
John Wojick, vice president of Sales, Boeing Commercial Airplanes. "These state-of-the-art Boeing airplanes certainly will contribute to Continental's continued success."
Continental's 737-900ER is configured with 173 seats in a two-class layout, with 20 first-class and 153 economy-class seats. All of the airplanes are equipped with performance-
enhancing Blended Winglets, which improve fuel efficiency and reduce CO2 emissions by up to 4 percent. In the past 10 years, Continental has recorded a 35-percent improvement in
fuel efficiency, mainly as a result of fleet modernization.
Source: Continental Airlines
Posted by: just4airlines.com at 0440h UTC Jan 15, 2008
International Highlights:
For the Laptop Toters, a Roomier Flight to Europe
By JOE SHARKEY, New York Times
Published: January 15, 2008
BRITISH AIRWAYS announced its plans last week to join the new boutique premium-class airline game across the Atlantic. But it isn’t bringing a lot of money to the table.
In an interview, Dale Moss, a 30-year British Air veteran who is the managing director of the new subsidiary, OpenSkies, discussed the strategy behind a bid for the high-end market at a
time the American economy seems to be in for some turbulence.
First, the basics. As reported here previously, OpenSkies will start small, with a single Boeing 757 from British Airways’ fleet.
Starting in June, OpenSkies will fly the 757 (with another to be added late this year and four more by the end of 2009, when new routes are planned) configured with 82 seats. Business
class will have 24 flat-bed seats; behind that will be 28 “premium economy” seats with 52 inches of legroom; and — in a move that some competitors say they find confounding — there
will be 30 coach seats in five rows.
The initial route has not been set yet, partly because of uncertainty about whether Newark will have to be the fallback if a landing slot cannot be freed at Kennedy International Airport.
Nor has British Air yet announced whether the European city will be Paris or Brussels, but it will be one of the two, and the other will be added later.
The bet, which would have good odds in a growing economy, is that business travel between Europe and the United States is growing and that premium or mostly premium niche
carriers can take a chunk of that market with lower fares and attractive products.
MaxJet, one of two carriers that started up on the high-competition New York-to-London route two years ago, went out of business on Dec. 24, after what competitors said was an
overexpansion of its routes.
The other start-ups flying between New York/Newark and London — Eos and Silverjet — say they are in good shape and are developing loyal corporate travel bases. So does l’Avion, a
start-up airline that began flying between Paris and Newark early last year.
One marketing key, said Mr. Moss, is attracting business from the rapidly growing ranks of smaller companies and the self-employed in both Europe and the United States.
“We’re really gearing ourselves for the medium-size corporations, smaller companies and entrepreneurs,” Mr. Moss said. “I really believe that’s our customer base, those companies and
entrepreneurs who can’t get the really great deals” that big-volume corporations can negotiate with the major airlines.
“It’s amazing how many small businesses there are,” he said. “We have a little temporary office in Blue Bell, Pa., in a campus filed with hundreds of offices — all filled with businesses of
two to 10 people.”
Another bet is that the core customers for these airlines have been travelling more frequently to and from Europe, at least for now, and that the extra cost for a premium seat will
continue to be seen as justifiable.
“If you’re a road warrior doing 20 or 25 trans-Atlantics a year, let me tell you, you can’t do that from a coach seat without beating your body up,” Mr. Moss said. “Road warriors today go
from airplane to meeting, and go right back on an airplane. They take their laptops with them. They try to sleep. It’s hard to do that in a 3-by-3 configuration. What we want to try to do is
provide them a sense of a little more room, not luxury, but a little more product.”
Mr. Moss said that he could not discuss pricing yet, but he said that OpenSkies — whose later routes will include Amsterdam, Frankfurt, Milan and Madrid — would be “extraordinarily
competitive.”
Other people involved with the development of the airline told me that the decision to put in a token economy section was hotly debated, with the traditionalists insisting on including
coach seats, if only to lure budget-minded customers who could be persuaded to upgrade next time.
“This is a predominantly premium airline,” Mr. Moss said when asked about the coach seats. “And if we get a customer base that’s that strong, let me tell you it would be the easiest thing
in the world to take those 30 seats out and fill it with what is appropriate.”
Organic Growth
Fresh organic produce shipped by air could soon be the next target of the environmental campaigners
By Roger Turney
As if the debate over carbon emissions weren't enough, airlines could soon face a challenge over their organic footprint amid calls to virtually ban the
shipment of all air shipments of organic produce.
The startling move comes from the United Kingdom's Soil Association, the country's leading campaigner and certification organization for organic food and farming. It verifies the
organic credentials of 70 percent of the UK's $4 billion organic produce market, with most imported produce coming into the country from Africa and South America.
Less than 1 percent of organic imports into the UK come by air, but this market already valued at $84 million a year and growing rapidly.
But the association claims more than 80 percent of the volume is grown in low-income countries. Said Anna Bradley, chair of the Soil Association's standards board: "It is neither
sustainable nor responsible to encourage poorer farmers to be reliant on air freight; we need to seek alternative markets for these producers, so that they are no longer dependent on air
freight to get their produce to market."
The Soil Association is seeking to impose stringent standards on all organic produce flown into the UK, which would demand that all producers not only meet tougher ethical trade
standards, but that they agree to reduce any remaining reliance on air freight.
The association's ultimate goal, said Bradley, is to minimize the use of air freight for all imported produce.
Sans Airlines
In recent months, the association conducted a series of studies and meetings with input from more than 200 interested parties, including growers, suppliers and importers. Notably, no
airlines were consulted. Ken Hayes, standards research manager for the Soil Association, said the group is concerned about the long-term impact that shipping produce by air could
have on the environment.
"We recognize that a general ban could potentially inhibit growth in the organic market and focusing on the environmental impact of air freight could be considered disproportionate
and unfair when in the UK, for example, the majority of carbon dioxide emissions for food transport occurs on UK roads, not in the air," Hayes said.
A selective ban might work, he said, but that would be difficult, involving social and political judgments that would be extremely difficult for an organic certification body to make.
"But that would at least allow us to make the call allowing the shipment of organic produce by air in justifiable situations, such as guaranteeing year round supply," Hayes said.
One suggestion is to push the decision onto the end customer by labeling all organic produce shipped by air. Hayes said this labeling would "prick the conscious of the customer," but
does not help resolve the complex debate over the safest form of transportation.
The association could consider carbon offsetting as a way to balance its priorities with the business demands of the fast-growing UK organic produce market. "The only problem is that
no national standard for offsetting yet exists," said Hayes
After further consultation through 2008, the new standards are set to be applied from the start of 2009.
Over Top
But is some organic produce suppliers believe the Soil Association might be in danger of overreacting.
Anthony Pile is chairman of Blue Skies, an organic produce supplier, which imports fresh pineapple into the UK from Ghana in West Africa.
"We have always felt that focusing on air freight in the organic food audit trail grossly simplifies the issue and does not take into account the social and economic impact of organic
farming in somewhere like Africa."
He called for the UK Soil Association to commission a more detailed study into the environmental impact of organic food production.
"We need to get across the message that measuring environmental impact is not as simple as counting the, 'food miles' or targeting the airplanes," said Pile. "It is about looking at the
whole story from when it is grown to when it is eaten."
Environmental groups have targeted what has become known as food miles as one example of problems growing out of globalization, arguing that food shipped around the world has
had a troubling impact on the environment. One study showed food imports into the UK doubled in the 1990s and industries such as the strawberry and apple farms have been sharply
cut back while imports soared.
Pile insists Blue Skies only exports products from Ghana using passenger aircraft on existing scheduled services. "If we were to stop flying organic produce, the planes would still fly and
the extra space left in the belly holds would probably be filled by non-perishable goods, which do not necessarily need to be flown," Pile said.
Although not consulted, the airfreight industry also has a viewpoint.
"There is a great deal of noise surrounding the issues of organically produced and ethically sourced perishables," said Ed Searancke, general manager of customer delivery for British
Airways World Cargo. "But there is also a lack of industry data, which is needed to enable us to have an informed debate."
BAWC handled 115,000 tonnes of perishables through London Heathrow last year. With year on year growth rates of between 5 percent and 10 percent, perishables now represents a
fifth of the airline's cargo tonnage.
Don't expect the carriers to go all-organic any time soon.
Legal Corner:
Anti-trust Suit Filed Against Forwarders
A group of shippers is suing several of the world's forwarders in a class-action claim that they are violating anti-trust laws.
Precision Associates, James Barnes and Anything Goes, which does business as Mail Boxes Etc., filed a class-action lawsuit in the U.S. District Court for the Eastern District of New York.
Named in the suit were Panalpina, Kuehne + Nagel, Expeditors International of Washington, EGL, UTi Worldwide, Deutsche Post and its DHL Express subsidiary, Deutsche Bahn and its
Schenker subsidiary and the Association of Swiss Forwarders.
Authorities in Europe and the United States recently expanded their investigations of allegations of price-fixing in the air cargo industry to include some forwarders.
The forwarders have been maintaining since the international investigations became public that they have done nothing wrong and have been assisting the law enforcement agencies
involved.
Beginning at least as early as Jan. 1, 2002, to present, the lawsuit alleges, the forwarders violated the Sherman act by raising, fixing, stabilizing and maintaining prices at artificially
high and non-competitive levels.
The lawsuit says the forwarders met to discuss and agree upon future price increases, share "actual transactional prices."
DHL to Pay Contractors $25M
DHL will pay $25 million to settle a national class-action suit by some 1,400 contractors stemming from payment disputes dating back to 1994, according to company officials and one
of the lawyers representing one of the contractors.
The contractors alleged that glitches in the DHL computer system - a legacy from Airborne Express, which DHL bought in 2003 -- prevented certain types of shipments from being
processed correctly, said R. Anthony Rupp III, a lawyer with the Buffalo firm of Rupp Baase who represented contractors involved in the case.
While linking data from shipments from across the country with confirmation information, the DHL system also mistakenly prevented any payment for those jobs, the lawsuit alleged.
DHL denies any such glitches in its computer system. "There are none," said Josh Frank, DHL vice president of legal.
The company agreed to the settlement, Frank said, because such class action lawsuits can be distracting an expensive.
In an internal memo to DHL managers obtained by Traffic World, the company said it had settled "to avoid prolonged and expensive litigation" with a one-time payout that it hopes "as
many contractors as possible" will pursue.
instead, the chairman of the House Transportation and Infrastructure Committee said in a newspaper interview.
U.S. Rep. Jim Oberstar confirmed the talks in an interview with the Star Tribune, saying he met with two Northwest executives Tuesday in his Washington office.
The Minnesota Democrat said Ben Hirst, Northwest's senior vice president of corporate affairs and administration, and Andrea Fischer Newman, Northwest's senior vice president of
government affairs confirmed that Delta is considering both Northwest and United as options for a merger.
''Northwest sees a benefit to them of a merger with Delta,'' Oberstar told the newspaper in an interview posted on its Web site Tuesday.
During the meeting, Oberstar said the executives talked about how a merger would yield cost savings and that the two carriers' route networks are complementary, with Northwest strong
in the Pacific and with Delta with a major presence in the Atlantic.
Hirst and Newman said ''there is little route overlap and not a significant effect on competition, which I disagree with,'' Oberstar said.
Both Northwest spokeswoman Tammy Lee and Delta spokesman Anthony Black declined to comment Tuesday on whether merger talks were in progress.
Oberstar said the Northwest executives didn't reveal what deals Northwest might pursue if the Delta combination doesn't materialize.
Oberstar wants the Justice and Transportation departments to rigorously examine the effects that much larger carriers would have on U.S. consumers.
Kalitta Air Eyes Domestic Venture
Kalitta Air is considering the launch of a new domestic air freight charter airline to replace Kitty Hawk Airlines, which ceased scheduled service in early November after failing to
emerge from Chapter 11 bankruptcy.
On Jan. 9, officials of Kalitta Air briefed over 55 members of the Air Forwarders Association on a conference call on the proposed Aug. 15, 2008 launch of a nine aircraft charter airline
based at Kitty Hawk's former facility at Ft. Wayne, Ind.
The fleet will consist of 727-200s, A300s and the possibility of a 70 Series DC8. The airline will operate four nights per week and include road feeder service to major cities. The airline
will provide only overnight, first-come service.
Connie Kalitta, founder and CEO of Kalitta Air, will own and operate Kalitta Air Freight, but participating forwarders will be required to provide seed money upfront that will be returned
if the venture does not get off the ground. If, however, the airline is launched but fails after a short time, the seed money will not be returned.
Each forwarder will also be required to pay a fixed monthly fee based on the16 cities served initially. No more specific information on the fee arrangement was provided.
The cost to Mr. Kalitta "will be in the range of $15 million for acquisition of assets (aircraft) and the associated start up costs," said the proposal.
The forwarders will be asked to form a working committee to work with the principles on the new airline. "In addition, we are asking them to participate in a rebate system that will be
based on profit," said Bob Hunter, a Kalitta Air principal, who is spearheading the new venture, and will become president if the charter airline is launched. "If this business is profitable,
the participants will participate in some of the profit," Hunter said.
Hunter stressed that the new venture, "will be a completely separate entity that has nothing to do with any of the other Kalitta companies," he said.
Robert W. Moorman
UPS Freight Raises Rates
UPS Freight will raise its rates an average of 5.4 percent on non-contractual shipments in the United States and Canada. The increase goes into effect on Feb. 4 for minimum charge,
LTL and truckload rates.
The price hike comes as LTL pricing generally is rising. Bank of America Securities recently reported its index for LTL pricing grew 4.9 percent in November and a full percentage point
faster than rates grew in October. The investment house said it suggests truck pricing may be stabilizing, but added, "We think higher diesel fuel prices are the primary cause of recent
nominal yield gains."
Continental first to take delivery of Boeing 737-900ER
SEATTLE /PRNewswire-FirstCall/ -- Boeing (NYSE: BA) and Continental Airlines (NYSE: CAL) today (Jan 14) celebrated the delivery of the airline's first Next-Generation 737-900ER
(Extended Range) airplane. With this delivery, Continental becomes the first airline in the Americas to operate the 737-900ER, a higher-capacity, longer-range derivative and newest
member of the Next-Generation 737 airplane family.
Continental was the first airline in the Americas to order the 737-900ER and currently has 26 more on order. Continental this year expects to take delivery of an average of two-to-three
new Next-Generation 737s per month, which includes a mix of 737-900ERs and 737-800s. The airplanes are part of Continental's comprehensive fleet strategy, which focuses on
improving operational efficiency and customer comfort.
"Continental's new 737-900ER will have among the lowest operating costs in the industry and allows us to build upon our efficient Boeing Next-Generation 737 fleet," said Larry Kellner,
chairman and chief executive officer of Continental Airlines. "These aircraft are part of our continued focus on fleet modernization, fuel efficiency and delivering the best product in
the business."
"With more range, outstanding reliability and the best operating economics of any single-aisle jet in its class, the Boeing 737-900ER is an ideal fit for Continental's growth plans," said
John Wojick, vice president of Sales, Boeing Commercial Airplanes. "These state-of-the-art Boeing airplanes certainly will contribute to Continental's continued success."
Continental's 737-900ER is configured with 173 seats in a two-class layout, with 20 first-class and 153 economy-class seats. All of the airplanes are equipped with performance-
enhancing Blended Winglets, which improve fuel efficiency and reduce CO2 emissions by up to 4 percent. In the past 10 years, Continental has recorded a 35-percent improvement in
fuel efficiency, mainly as a result of fleet modernization.
Source: Continental Airlines
Posted by: just4airlines.com at 0440h UTC Jan 15, 2008
International Highlights:
For the Laptop Toters, a Roomier Flight to Europe
By JOE SHARKEY, New York Times
Published: January 15, 2008
BRITISH AIRWAYS announced its plans last week to join the new boutique premium-class airline game across the Atlantic. But it isn’t bringing a lot of money to the table.
In an interview, Dale Moss, a 30-year British Air veteran who is the managing director of the new subsidiary, OpenSkies, discussed the strategy behind a bid for the high-end market at a
time the American economy seems to be in for some turbulence.
First, the basics. As reported here previously, OpenSkies will start small, with a single Boeing 757 from British Airways’ fleet.
Starting in June, OpenSkies will fly the 757 (with another to be added late this year and four more by the end of 2009, when new routes are planned) configured with 82 seats. Business
class will have 24 flat-bed seats; behind that will be 28 “premium economy” seats with 52 inches of legroom; and — in a move that some competitors say they find confounding — there
will be 30 coach seats in five rows.
The initial route has not been set yet, partly because of uncertainty about whether Newark will have to be the fallback if a landing slot cannot be freed at Kennedy International Airport.
Nor has British Air yet announced whether the European city will be Paris or Brussels, but it will be one of the two, and the other will be added later.
The bet, which would have good odds in a growing economy, is that business travel between Europe and the United States is growing and that premium or mostly premium niche
carriers can take a chunk of that market with lower fares and attractive products.
MaxJet, one of two carriers that started up on the high-competition New York-to-London route two years ago, went out of business on Dec. 24, after what competitors said was an
overexpansion of its routes.
The other start-ups flying between New York/Newark and London — Eos and Silverjet — say they are in good shape and are developing loyal corporate travel bases. So does l’Avion, a
start-up airline that began flying between Paris and Newark early last year.
One marketing key, said Mr. Moss, is attracting business from the rapidly growing ranks of smaller companies and the self-employed in both Europe and the United States.
“We’re really gearing ourselves for the medium-size corporations, smaller companies and entrepreneurs,” Mr. Moss said. “I really believe that’s our customer base, those companies and
entrepreneurs who can’t get the really great deals” that big-volume corporations can negotiate with the major airlines.
“It’s amazing how many small businesses there are,” he said. “We have a little temporary office in Blue Bell, Pa., in a campus filed with hundreds of offices — all filled with businesses of
two to 10 people.”
Another bet is that the core customers for these airlines have been travelling more frequently to and from Europe, at least for now, and that the extra cost for a premium seat will
continue to be seen as justifiable.
“If you’re a road warrior doing 20 or 25 trans-Atlantics a year, let me tell you, you can’t do that from a coach seat without beating your body up,” Mr. Moss said. “Road warriors today go
from airplane to meeting, and go right back on an airplane. They take their laptops with them. They try to sleep. It’s hard to do that in a 3-by-3 configuration. What we want to try to do is
provide them a sense of a little more room, not luxury, but a little more product.”
Mr. Moss said that he could not discuss pricing yet, but he said that OpenSkies — whose later routes will include Amsterdam, Frankfurt, Milan and Madrid — would be “extraordinarily
competitive.”
Other people involved with the development of the airline told me that the decision to put in a token economy section was hotly debated, with the traditionalists insisting on including
coach seats, if only to lure budget-minded customers who could be persuaded to upgrade next time.
“This is a predominantly premium airline,” Mr. Moss said when asked about the coach seats. “And if we get a customer base that’s that strong, let me tell you it would be the easiest thing
in the world to take those 30 seats out and fill it with what is appropriate.”
Organic Growth
Fresh organic produce shipped by air could soon be the next target of the environmental campaigners
By Roger Turney
As if the debate over carbon emissions weren't enough, airlines could soon face a challenge over their organic footprint amid calls to virtually ban the
shipment of all air shipments of organic produce.
The startling move comes from the United Kingdom's Soil Association, the country's leading campaigner and certification organization for organic food and farming. It verifies the
organic credentials of 70 percent of the UK's $4 billion organic produce market, with most imported produce coming into the country from Africa and South America.
Less than 1 percent of organic imports into the UK come by air, but this market already valued at $84 million a year and growing rapidly.
But the association claims more than 80 percent of the volume is grown in low-income countries. Said Anna Bradley, chair of the Soil Association's standards board: "It is neither
sustainable nor responsible to encourage poorer farmers to be reliant on air freight; we need to seek alternative markets for these producers, so that they are no longer dependent on air
freight to get their produce to market."
The Soil Association is seeking to impose stringent standards on all organic produce flown into the UK, which would demand that all producers not only meet tougher ethical trade
standards, but that they agree to reduce any remaining reliance on air freight.
The association's ultimate goal, said Bradley, is to minimize the use of air freight for all imported produce.
Sans Airlines
In recent months, the association conducted a series of studies and meetings with input from more than 200 interested parties, including growers, suppliers and importers. Notably, no
airlines were consulted. Ken Hayes, standards research manager for the Soil Association, said the group is concerned about the long-term impact that shipping produce by air could
have on the environment.
"We recognize that a general ban could potentially inhibit growth in the organic market and focusing on the environmental impact of air freight could be considered disproportionate
and unfair when in the UK, for example, the majority of carbon dioxide emissions for food transport occurs on UK roads, not in the air," Hayes said.
A selective ban might work, he said, but that would be difficult, involving social and political judgments that would be extremely difficult for an organic certification body to make.
"But that would at least allow us to make the call allowing the shipment of organic produce by air in justifiable situations, such as guaranteeing year round supply," Hayes said.
One suggestion is to push the decision onto the end customer by labeling all organic produce shipped by air. Hayes said this labeling would "prick the conscious of the customer," but
does not help resolve the complex debate over the safest form of transportation.
The association could consider carbon offsetting as a way to balance its priorities with the business demands of the fast-growing UK organic produce market. "The only problem is that
no national standard for offsetting yet exists," said Hayes
After further consultation through 2008, the new standards are set to be applied from the start of 2009.
Over Top
But is some organic produce suppliers believe the Soil Association might be in danger of overreacting.
Anthony Pile is chairman of Blue Skies, an organic produce supplier, which imports fresh pineapple into the UK from Ghana in West Africa.
"We have always felt that focusing on air freight in the organic food audit trail grossly simplifies the issue and does not take into account the social and economic impact of organic
farming in somewhere like Africa."
He called for the UK Soil Association to commission a more detailed study into the environmental impact of organic food production.
"We need to get across the message that measuring environmental impact is not as simple as counting the, 'food miles' or targeting the airplanes," said Pile. "It is about looking at the
whole story from when it is grown to when it is eaten."
Environmental groups have targeted what has become known as food miles as one example of problems growing out of globalization, arguing that food shipped around the world has
had a troubling impact on the environment. One study showed food imports into the UK doubled in the 1990s and industries such as the strawberry and apple farms have been sharply
cut back while imports soared.
Pile insists Blue Skies only exports products from Ghana using passenger aircraft on existing scheduled services. "If we were to stop flying organic produce, the planes would still fly and
the extra space left in the belly holds would probably be filled by non-perishable goods, which do not necessarily need to be flown," Pile said.
Although not consulted, the airfreight industry also has a viewpoint.
"There is a great deal of noise surrounding the issues of organically produced and ethically sourced perishables," said Ed Searancke, general manager of customer delivery for British
Airways World Cargo. "But there is also a lack of industry data, which is needed to enable us to have an informed debate."
BAWC handled 115,000 tonnes of perishables through London Heathrow last year. With year on year growth rates of between 5 percent and 10 percent, perishables now represents a
fifth of the airline's cargo tonnage.
Don't expect the carriers to go all-organic any time soon.
Legal Corner:
Anti-trust Suit Filed Against Forwarders
A group of shippers is suing several of the world's forwarders in a class-action claim that they are violating anti-trust laws.
Precision Associates, James Barnes and Anything Goes, which does business as Mail Boxes Etc., filed a class-action lawsuit in the U.S. District Court for the Eastern District of New York.
Named in the suit were Panalpina, Kuehne + Nagel, Expeditors International of Washington, EGL, UTi Worldwide, Deutsche Post and its DHL Express subsidiary, Deutsche Bahn and its
Schenker subsidiary and the Association of Swiss Forwarders.
Authorities in Europe and the United States recently expanded their investigations of allegations of price-fixing in the air cargo industry to include some forwarders.
The forwarders have been maintaining since the international investigations became public that they have done nothing wrong and have been assisting the law enforcement agencies
involved.
Beginning at least as early as Jan. 1, 2002, to present, the lawsuit alleges, the forwarders violated the Sherman act by raising, fixing, stabilizing and maintaining prices at artificially
high and non-competitive levels.
The lawsuit says the forwarders met to discuss and agree upon future price increases, share "actual transactional prices."
DHL to Pay Contractors $25M
DHL will pay $25 million to settle a national class-action suit by some 1,400 contractors stemming from payment disputes dating back to 1994, according to company officials and one
of the lawyers representing one of the contractors.
The contractors alleged that glitches in the DHL computer system - a legacy from Airborne Express, which DHL bought in 2003 -- prevented certain types of shipments from being
processed correctly, said R. Anthony Rupp III, a lawyer with the Buffalo firm of Rupp Baase who represented contractors involved in the case.
While linking data from shipments from across the country with confirmation information, the DHL system also mistakenly prevented any payment for those jobs, the lawsuit alleged.
DHL denies any such glitches in its computer system. "There are none," said Josh Frank, DHL vice president of legal.
The company agreed to the settlement, Frank said, because such class action lawsuits can be distracting an expensive.
In an internal memo to DHL managers obtained by Traffic World, the company said it had settled "to avoid prolonged and expensive litigation" with a one-time payout that it hopes "as
many contractors as possible" will pursue.
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| NOLAN PAHUD |
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