Transcript KFR Meal Service Procedures

AIR CARGO
AN INDICATOR OF ECONOMIC
PROGRESS
Role of Air Cargo in Economic Development
Air Service Liberalization
Improving Customs Quality
Reducing Corruption
Inadequate Infrastructure - Challenge to Air Cargo
Cargo warehousing facilities are not up to standards at India’s major
airports
Currently, India is upgrading its major airports, which account for 93% of
the total international and 84.4% of the total domestic freight handled
Once the infrastructure issues are addressed and the new cargo airports
are made operational, the market will witness tremendous growth within
the next 5years
Dwell time for import and export cargo at Indian airports is 3 to 5 days as
compared to an average of 6 to 12 hours in other leading international
airports.
The state of customs clearing and delivery of cargo has remained a rough
ride for cargo operators
Recession Hits Industry
The airlines industry globally lost 50 billion dollar in the past 10 years,
with 11 billion dollars in 2009 alone
Revenue declined by 80 billion dollar last year
Singapore airlines and British airways went into losses and Japan Airways
was forced to file for bankruptcy
The economic slump and credit crises have caused carriers 3 ½ years of
growth in freight
Japan Airways this month became Asia’s first major flag carrier to seek
bankruptcy protection after 4 government bailouts failed to revive it
About 34 carriers have gone out of business in 2008
Forecast for 2010
IATA forecast for a 2009 loss of $ 2.5 billion at this stage last year was swiftly
overtaken as the depth of the economic crisis emerged. But while the association has
already added $ 2 billion to its 2010 loss forecast since its September view. It hopes
there will be no repeat this year
It looks as though some of the risk we were facing this time last year , we may not
face this year
Two principal concerns : Fuel and Yields – We do expect there will be some
improvements but because of the weakness and yields and the increase in fuel prices,
we do not expect more than halving the losses
High fuel prices were the dominant factor in losses of 2008 and continued to haunt
some in 2009
Capacity and its potential impact on yields is still the biggest risk
in 2010 mainly
because of low utilization of existing fleet.
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contd…
Forecast for 2010
Global economic projections 2010 are for a return to growth
The World Bank in its 2009 global outlook summary forecasts 2% growth in
world GDP for 2010,followed by 3.2% for 2011
It sees economic growth strongest in developing nations next year; China
and India are forecast to grow 8.8% and 6.5% respectively
Economic growth does not automatically translate to better airline fortunes
“ITS ALL ABOUT WHAT HAPPENS TO CONSUMER SPEND”
A lot of air freight business has been in Asia, so for a lot of airlines in the air
cargo business, there is better news there because Asia will be driving this
business.
It maintained that worldwide airfreight traffic will triple by 2027 and that
“current near-term market weakness and worldwide economic uncertainty”
wont affect long-term demand significantly.
Source : World Bank
Growth and Current Air Cargo Traffic Figures
Dec 09 vs. Dec 08
FTK Growth
AFTK Growth
Africa
33.00%
4.50%
Asia/Pacific
34.40%
7.70%
Europe
5.20%
-9.50%
Latin America
37.40%
20.00%
Middle East
32.10%
13.70%
North America
23.90%
-7.80%
Industry
24.40%
0.60%
AFTK: Available Freight Tonne Kilometers measures available total freight capacity
FLF: Freight Load Factor is % of AFTKs used
Source - IATA
Ground Reality - India Cargo
Even with Air cargo open skies , India’s air cargo growth barely kept pace
with the rest of the world
From 1991 – 1997 , the country reported an annual air growth of 120,000
tons ; from 300,000 to 420, 000
Even though this was a 40 % increase from the seven year period, it
translates to only 5.7 % annual growth ; well above world average GDP
and trade growth , but somewhat less than the air cargo growth for the
same period
By India’s own account , poor logistics infrastructure has impeded growth
In many developing countries, corruption and customs inefficiencies play
further debilitating roles.
Air Cargo Given Year End Lift But Concerns
Airlines around the world are breathing a sigh of relief that there was
something like normal air cargo peak season towards the end of 2009,but
there remains profound doubts about the durability of the recovery
Despite projections of a bloodbath, especially after the glut of airline
collapses in Autumn 2008,the number of airline failures in 2009 has been
relatively limited by comparison-in the region of 30 so far this year
Air cargo “Is kind of the tail of the dog”- The global economy is the dog
and when it is sleeping, the tail isn't moving anywhere anytime soon
Long -Term hopes :- In its latest 20 year forecast, its predicted that world
air cargo will grow 5.8% annually over the next two decades, down just
slightly from the 6.1% rate it projected in previous forecasts
Global Scenario
Air Cargo Market Opportunities in India
Air cargo market in India thrives with economic development and rising
international trade
Increasing globalization, establishment of manufacturing facilities and
India’s growing might in the IT sector have contributed to the boom since
2007
International trade has boosted prospects for the air cargo market in India
Export and import have registered a double digit growth rate of 23% in
2007
Air cargo enables nations, regardless of locations, to efficiently connect
to distant markets and global supply chains in speedy, reliable manner
Major policies include 100% FDI permissible for existing airports and under
automatic routes and 100% tax exemption for airport projects over a
period of 10 years
Air cargo is the means by which the globalised world moves its valuable
goods and manufacturing components
As per IATA the biggest drop in airfreight started in September 2008, a
drop of 7.7% and October was 7.9%. This was when IATA forecasted 5%
drop in cargo over 2008
China the biggest player in air freight had a drop for 5 straight quarters
and a total drop expected is around 5% to 6 %
US meltdown has added to the woes of china basically since they are the
biggest buyers of consumer goods
Big players like FedEx / UPS and the freighter companies reported a 22%
decline in cargo freight not only in US but also in Europe and Asia pacific
regions. DHL losses in the US alone was $1.3 billion
Daily air shipments dropped from 1.2 mio to just 100,000
However the positive sign in this recession is that it has shown strong
recoveries from previous economic downturn such as the Asian Economic
crisis, the 9/11 attacks and the SARS outbreak
In our region India and China will continue to remain a source of strong
economic growth with substantial industrialization and related investment
It has been predicted that the world freighter fleet from 1950 today will
increase in 2027 to 3890 over the next two decades
Predictions today on the Indian market growth is around 6%- 8%
Government has planned GDP in the same range which means that India
will grow in the present conditions
Globally the growth is around 3% to 4 % which can grow if US and China
along with the G8 and G20 countries agree to settle the differences
Thank You