Tonnage is down, but world airports focus on future growth
By Karen E. Thuermer, AJOT
While the world economy appears stalled and air cargo growth nearly a pipe dream, the old adage “if we build it, they will come” remains the mantra at some airports. Despite the current setbacks, air cargo will grow again, say the experts, and airports must be ready.
Aerial view of Kuala Lumpur International Airport in Malaysia
In fact, if Boeing Co.’s forecast for China’s spending on commercial aircraft rings true and the market there increases 25 percent over the next two decades, China’s airports will face a strain to accommodate increased traffic and cargo if they do not expand.
Committing millions of dollars for airport expansion may be difficult in these days of tight budgets, but airport executives around the world agree that air cargo will regain strength and are positioning themselves for the future. They understand that airlines have their eye on: lucrative routes and that airports that fill aircraft and turn planes quickly for a good price win their business.
Past leaders may not be indicative of tomorrow’s winners. For now, the International Airports Council (IAC) lists Hong Kong (HKG), Memphis (MEM), Shanghai (PVG), Incheon (ICH), Anchorage (ANC), Paris (CDG), Frankfurt (FRA), Dubai (DBX), Tokyo (NRT), Louisville (SDF), Singapore (SIN), Miami (MIA), Los Angeles (LAX), Taipei (TPE), and Beijing (PEK) as the world’s top 15 airports for 2010 for loaded and unloaded freight and mail in metric tonnes, using the latest data available. (See Chart)
London’s Heathrow Airport comes in 16th on the list, which may come as a surprise; Chicago O’Hare (ORD) is listed 18th, and New York’s JFK (JFK), 19th.
Memphis (2nd) and Louisville (10th) win kudos because they are the international base for the world’s largest integrated carriers: FedEx and UPS.
Anchorage’s Ted Stevens Anchorage International Airport (ANC) achieves its 5th place status because it offers a superb refueling, transshipment location for carriers flying between Asia and North America. ANC is less than nine hours by air from 90 percent of the industrialized world. Another plus, the Alaska International Airport System also has the most liberalized air cargo transfer rights in the United States.
Hong Kong’s HKIA
Hong Kong International Airport (HKIA), which also goes under the code HKG, has long held a top position for its transshipment gateway status to the Pearl River Delta, one of the world’s most dynamic manufacturing regions.
HKIA officials want to maintain their ranking. Consequently, the Hong Kong government approved in March the construction of a third runway that is expected to cost some $17 billion and take 10 years to complete. Currently, the airport’s two-runway system will reach its practical maximum runway capacity by 2020, after which time HKIA will only be able to accommodate a marginal increase in flights. The new runway will make it possible for HKIA to accommodate its forecasted demand up to at least 2030, and secure the airport’s status as one of the world’s most important aviation hubs.
Hactl, HKIA’s largest cargo handler, reports in a press release, positive figures throughout the entire first half of 2012. The balance of Hactl’s business, however, has been shifting for two years with exports holding their own while transshipments are growing steadily.
“Hong Kong’s growing role as a transshipment hub for the entire region is clearly compensating for current instability in traffic to and from China,” says Lilian Chan, Hactl executive director. “This underscores the importance of the airport authority’s plans to build a third runway. We need this extra capacity if we are to protect the airport’s role as a regional hub, and safeguard local employment and the economy of Hong Kong.”
Meanwhile, Cathay Pacific is opening its new cargo terminal next year. It is designed to have a capacity of 2.6 million tonnes per annum.
This January, FedEx expanded the size of its cargo operations at HKIA by nearly 40 percent in a bid to improve efficiency and "strengthen its on-time delivery commitment to customers." The expansion saw the facility's floor space expand by 37 percent to 50,563 square feet, as well as the addition of new equipment, staff and a new storage area.
According to FedEx, the improvements mean the cargo center will now be able to process three freighter loads of cargo in just under 45 minutes. The Hong Kong airport facility is constantly ranked No. 1 in on-time performance among all FedEx facilities around the world. "This expansion will further strengthen our ability to ensure our customers' satisfaction and ease of mind with FedEx reliable, efficient service,” says Anthony Leung, managing director, FedEx Express Hong Kong and Macau in a statement.
Operating with three parallel runways, Shanghai Pudong International Airport (PVG) is scheduled for a third passenger terminal by 2015 in additional to a satellite terminal and two additional runways. Officials there state that this will raise its annual capacity from 60 million passengers to 80 million, along with the ability to handle six million tonnes of freight.
Construction is expected to be completed in 2015 and will double the capacity of the airport.
With 3,227,914 metric tonnes handled in 2010, the airport is the world's third busiest airport by cargo traffic. PVG also served a total of 40,578,621 passengers in 2010, making it the third busiest airport in mainland China and the 20th busiest in the world. As of December 2011, PVG hosted 87 airlines serving 194 destinations.
Elsewhere in Asia
Seoul, Korea’s Incheon Airport (ICH) is undergoing four phases of expansion, with construction on the third to begin in 2013 with a completion in 2018. The new terminal covers roughly 43 square miles with the terminal building itself covering 13.5 square miles. An estimated 18 million passengers will use the new terminal annually.
ICH is the main hub for Korean Air, Asiana Airlines and Polar Air Cargo.
Located some 43 miles from Seoul is the airport’s cargo terminal complex. The
complex comprises three cargo terminals and five separate warehouses. Each cargo terminal is designed to provide carriers with unique services and a cargo warehouse of approximately 38,000 square feet. They are separated into three areas, import, passing and export.
The complex was originally designed to process 1.7 million tons of cargo per year. As a result of expansions to two of the three terminals, however, the complex is now able to process 3.8 million tons of freight per year. A second expansion is scheduled, and once it is complete, the airport will have a processing ability of around 4.9 million metric tons per year. This is because the expansion, which was originally designed to allow an expansion to 4.5 million tons per year, includes expansions by Korean Air Cargo and Asiana Cargo.
While ICH already claims to have the eighth highest international traffic in the world, it is trying to catch up to the size and capacity of other top airports around the world.
In another development, a 6,685 square meter logistics center in the free trade zone near the airport was recently completed by ICH. It is occupied by YG-1 Co., Ltd., the fifth largest manufacturer of cutting tools in the world that also specializes in the handling of mechanical, auto and aircraft parts.
Singapore’s Changi Airport Groups has launched an approximate $12.2 million initiative to boost air freight volumes in the region. Freighters that land at Singapore Changi Airport (SIN) after April receive a 20 percent fee rebate. Cargo tenants that lease property at Changi Airfreight Center enjoy rental rebates of up to 20 percent.
This July, Yangtze River Express, a Chinese all-cargo carrier, commenced air freight with eight-weekly services using 65-tonne A332F aircraft connecting PVG to SIN with stopovers in Bangkok and Chongqing.
Japan’s Narita International Airport (NRT) has been holding its own, despite that nation’s devastating earthquake, tsunami and damage to its nuclear power plants. Handling nearly 2.173 million tonnes of cargo in 2010, with only a negligible amount being domestic, NRT’s cargo business soars above that of the other two Tokyo airports: Haneda International (HND) and Kansai International Airport (KIX).
This year, however, combination carrier American Airlines (AA) cancelled routes from the United States to NRT in favor of HND. In January, AA switched service from JFK to NRT to JKF to HND, and in August applied for a LAX to HND slot with the U.S. Department of Transportation. It cites HND’s closer location to Tokyo for passenger traffic as a reason.
Delta Air Lines had recently surrendered its Detroit to Tokyo Haneda slot.
Joint-venture partner JAL continued to offer NRT-JFK service on a daily basis.
Middle East Activity
The Middle East continues to allocate large investments for developing new and existing airports. In July, Dubai announced a nearly $8 billion expansion of DXB. Its goal is to overtake Hong Kong, London and Paris to become the world’s busiest international hub by 2015.
The work focuses on expanding terminals for passenger service. Dubai International Airport’s capacity is expected to increase from 60 million to 90 million passengers by 2018. Cargo traffic is expected to grow at a rate of 6.7 percent a year over the same period.
Dubai Airports, the company that operates the hub, also plans to focus on the second phase of Dubai World Central Airport (DWC) in 2020, when construction has been completed on DBX. This new airport is earmarked to eventually become home to Emirates Airline’s operations.
Dubai Airports launched cargo operations at DWC on June 27 this year as part of the first phase of the project. The airport has 22 freight operators signed up and operating.
According to officials, when completed in the mid 2020s, DWC will become the world’s largest airport with an ultimate capacity of 160 million passengers and 12 million tonnes of cargo per annum. The airport forms the heart of a greater project also called Dubai World Central, a 86 square mile multiphase development of six clustered zones that includes the Dubai Logistics City (DLC), Commercial City, Residential City, Aviation City and the Golf City. The development is the region’s first integrated, multi-modal transportation platform connecting air, sea, and land.
While many airports around the world remain focused on growing their cargo business, the view from Europe is clouded by government decisions and economic conditions.
In Germany the big news has been the ban of night flights from 11pm to 5 am from Frankfurt Airport (FRA), a move that most notably impacts Lufthansa cargo operations -- particularly to the United States and China. Already FRA cargo volumes have plummeted during the first half of 2012 by 9 percent compared to the first six months of 2011.
This has only been compounded by the European debt crisis, which is not yet fully resolved.
“There is a real danger of Frankfurt losing its position as the best and most attractive airfreight hub in Europe,” emphasizes Karl Ulrich Garnadt, chairman of the Executive Board and CEO of Lufthansa Cargo. “As an export world champion, Germany is reliant on dependable connections to ship airfreight to destinations around the globe. Frankfurt Airport plays, in that respect, a highly important role since around 40 percent of German exports are transported by air.”
He predicts the decision will impact companies in Frankfurt and the Rhineland industrial area that depend on night flights to give them a competitive logistics solution.
“By loosing night flights, the quality of Frankfurt as a logistics hub will have an impact on investment decisions by companies,” Garnadt proclaims.
Meanwhile, last October the airport opened its fourth runway, which officials say will boost airline takeoffs and landings from 83 per hour to a potential 126, and increase passenger traffic from the current 53 million a year to 88.6 million by 2020.
In recent years, FRA has slipped behind Paris Charles de Gaulle (CDG) as the biggest airport in Continental Europe.
This June, a new satellite terminal opened at CDG dedicated to long-haul flights. Dubbed S4, the terminal has the ability to handle 16 aircraft at the same time, with an expected capacity of 7.8 million passengers per year.
CDG’s cargo strategy centers on supporting the expansion of express cargo traffic primarily by continuing the extension of the FedEx hub with four additional aircraft stands, and expanding a cargo station by 193,750 square feet in 2012 and two warehouses in 2012 and 2013 that will offer nearly 270,000 square feet.
The United States continues to see development at airports.
Los Angeles World Airports (LAWA) is in the midst of a multi-billion dollar development program for Los Angeles International Airport (LAX) where the focus is on passenger traffic and the new Tom Bradley International Terminal (TBIT).
Other major airfield and facility projects are in planning or underway. These include a new Central Utility Plant, new taxiways and taxi lanes, and renovations to other terminals.
Nevertheless, LAX is feeling the effects of the downtrodden world economy. Figures indicate 2011 tonnage at 1,773,215; down from 1,852,791 in 2010.
A major cargo distribution center, LAX has 1,000 cargo flights each day linking Los Angeles with the world. Its handling facilities include the 98-acre Century Cargo Complex, the 57.4-acre Imperial Complex, the Imperial Cargo Center and a number of terminals on the south side of the airport.
“LAX has more new international flights than any other U.S. airport, except for New York (JFK),” reports Mark Thorpe, Los Angeles World Airports (LAWA) Air Service Development Director.
Miami International Airport (MIA) slipped to 12th from a 10th place cargo ranking in 2010, according to statistics from ACI. MIA benefits from carriers that connect through MIA on their way to Latin America connections. More recently, Asian carriers such as Asiana, Korean Air, China Airlines, and Cathay Pacific have been attracted to MIA to take advantage of these connections.
According to Chris Mangos, director of the Marketing Division of the Miami-Dade Aviation Department of MIA, two of the fastest growing commodities making their way to South America via MIA are computers and peripherals and telecommunications equipment.
A plus, Centurion Air Cargo is expected to open a new 800,000 square foot cargo center and global headquarters at MIA this year. It will serve as one of the largest carriers of perishable goods between North, Central and South America. It will also house an international shipping and receiving hub that will feature dry and refrigerated warehouse areas and a ramp with space to park up to eight wide-body freighters.
MIA is coming off a huge Master Plan that the Miami-Dade County Board of County Commissioners adopted in 1994. As a result, the airport completed a new 1.7 million square foot South Terminal and 3.2 million square foot North Terminal for passenger traffic. This indicates how MIA continues to make itself attractive to airlines and is prepared for growth in the future.
Any effort to increase passenger traffic can have a positive impact on cargo volumes since many passenger planes carry freight in their bellyholds.