On The Bubble

While industry and governmental analysts say that roughly 10 to 15 percent of airport-related pollution is caused by airside vehicles, including GSE, the problem becomes a bit fuzzier when there is no clear count as to how much GSE exists in the world. An increasing number of service vehicles such as fuelers, water and lavatory trucks have engines that adhere to emissions standards for on-road use, but much of the older GSE on the ramp use engines not designed for low-emission output. Due to the lack of regulation and industry representation, the aviation ground support equipment sector would be the easiest to target for emissions restrictions on products.

Cargo Transport on the Rise
The USA's and Europe's love of all things electronic continues to grow and demand for electronics from the East shows no sign of slowing. The events of September 11, 2001 created a surge in the world, especially in the U.S., to funnel travel dollars into hearth and home. Sales of home entertainment systems and home security products increased steadily after the tragedy and the Asia market gladly stepped up to the task of producing and shipping these goods. Current sales reports from holiday shopping show strong numbers continuing in home electronics and small appliances. Case in point, the Singapore Airport Terminal Services (SATS) reported that revenue contributions from its ground handling business increased by 2.3 percent to S$226.5 million (US$127.9 million), which was attributed to an 11.6 percent increase in cargo volumes handled.

Dnata Cargo, part of the Emirates Group, at Dubai International Airport, reported a record throughput of 167,076 tons handled from April to September 2002 - a 23 percent increase over the same period in 2001.

The U.S. Department of Transportation's phones must be ringing non-stop as UPS and FedEx are wasting no time in trying to gain a foothold in the Chinese market by applying for additional flight frequencies resulting from an air liberalization deal between the U.S. and Hong Kong in October. The agreement approves an additional 56 frequencies over the next two years (currently, only 8 frequencies are authorized for cargo aircraft) and the DOT is in charge of allocation among interested U.S. carriers.

Meanwhile, China Southern Airlines, in June, bought 49 percent of China Postal Airlines to position itself as the premier cargo, mail, and overnight mail carrier in China.

However, a TIACA (The International Air Cargo Association) survey in September of some 500 senior executives revealed that yield decline is the biggest concern for the air cargo industry. Over-regulation of the industry and security finished second and third, respectively. A majority, 60 percent, replied that they were optimistic about prospects for the industry over the next 12 months, but 41 percent of the group thought that it would take at least two years to rise up from the present downturn, and 30 percent forecasted recovery in three years or more.

The Price of Security
Aside from the staggering costs, both physical and emotional, suffered by the aviation industry post-September 11, 2001, costs continue to mount for those products and services meant to enhance security for passengers, crew, and aircraft — but who ultimately has to pay? Airlines? Government? The public?

The price of security for airlines that carry the mail got a lot steeper as the Transportation Security Administration (TSA) put a halt to airlines hauling U.S. mail packages weighing over one pound (0.5 kg) until a security screening process can be developed. Cargo carriers such as FedEx and trucking transport companies are not affected by the TSA restriction and the airlines are lobbying hard in Congress to end this policy. The Post Office has created a new truck hub in Atlanta to compensate for the loss of volume handled previously by Delta Air Lines, which reportedly had generated an extra US$50 million a year in revenue. The TSA does not have a deadline for the implementation of a screening program to allow airlines to renew mail contracts with the Postal Service.

Aviation insurance companies also inflicted monetary pain on airlines and aerospace equipment manufacturers, citing that the price of security had gone up. Product liability insurance premiums increased in some cases, nearly 300 percent for one manufacturer, while the scope of coverage dropped 50 percent. In July, The International Air Transport Association (IATA) proposed Globaltime, a global aviation war risk insurance program to cover the risks left open by the withdrawal of commercial insurance coverage following September 11, 2001. It would provide third-party coverage for airlines and others involved in civil aviation, through a non-profit insurance entity backed by state guarantees.