BSR Accessibility & Air Cargo

Tallinn, 15-16 October 2013

Presented by:

Anatoli Beifert

www.bal&caircargo.net
www.eu.bal(c.net

Date:

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Avia&on Wright Brothers

They were not -irst men to -ly

They were -irst men who successfully landed
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Real GDP & Air Trac

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Real GDP & Air Trac

Source: Air Transport Association and Worldwatch Institute.

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World scheduled airline nancial result (USD, bill)

2012/02/15
2012/02/15-2012/02/16

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World Air Travel and Freight Carried, 1950-2012

Source: Airlines for America

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Jet Fuel Prices, 1990-2012

2012/02/15
2012/02/15-2012/02/16

Source: US Energy Information Administration

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Operating Revenues of the Airline Industry

2012/02/15
2012/02/15-2012/02/16

Source: ATA Annual Report 2005

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World airlines return on invested capital

Source: McKinsey & Company for IATA

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World airlines return on invested capital

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Average ROIC 2004-2011

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Economic profits in the air transport value

chain 2004-2011 (excluding fuel and labour)

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ROIC for Airports vs. Airlines

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ROIC for Services vs. Airlines

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Bileteral System of Aviation

Barriers to entry are relatively low

Barriers to exit are very high

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Bileteral System of Aviation

Bilateral restrictions prevent the

consolidation that would otherwise
be expected in markets that are
very competitive and protect
inef-icient incumbents in markets
with only a few players
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Bileteral System of Aviation

Highly competitive nature of the
airline industry leads to a
downward pressure on prices
Exacerbated by the perishable
nature of airline seats and the low
marginal cost of -lying an
additional passenger
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Good News
Low returns have not stopped
airlines from growing in the past

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Air cargo volumes in BSR

15.10.13

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Air cargo in BSR

15.10.13

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BSR accessibility and the role of air cargo

Major aviation hubs of the BSR have significant influence on
the accessibility of the BSR:
these hubs offer the intercontinental connections

and regional flights inside the BSR area go via hubs.

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Air Cargo outbound BSR

Source: Baltic.AirCargo.Net 2013

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Air Cargo inbound BSR

Source: Baltic.AirCargo.Net, 2013

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Estonia. Air Cargo Outbound

Source: Baltic.AirCargo.Net 2013

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Estonia. Air Cargo Inbound

Source: Baltic.AirCargo.Net 2013

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Estonia. Air Cargo Forecasting

Forecast!*!air!cargo!demand!handled!at!Tallin!Lennart!Meri!Airport!(EETN)!(Pr>0,1;!k=0,38)!
scenario!

optimistic!
most!likely!
conservative!

2011!

2012!

2013!

2014!

2015!

2016!

20,7%!
53,6%!
0,0%!

23,3%!
30,2%!
0,0%!

17,4%!
4,30%!
0,0%!

13,7%!
6,71%!
0,0%!

13,5%!
6,29%!
0,0%!

13,0%!
5,92%!
0,0%!

Source: http://www.tallinn-airport.ee
Baltic.AirCargo.Net 2013
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Finland Airports activities - outbound

(2005-2011)

Source: Baltic.AirCargo.Net, 2013

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Finland Airports activities - inbound

(2005-2011)

Source: Baltic.AirCargo.Net, 2013

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Role of Air Cargo Finnair Exapmle

Majority of Finnairs revenues comes from EuropeAsia traffic
Air cargo revenues represent 20 % of Asian revenues
Distribution of passenger and cargo revenues in scheduled traffic
(Q4/10)
Domestic
Europe
Asia
US
4%
4%

48%*

52%*

Source: Finnair

AsiaEurope
Via
Helsinki
>60 %

12%
10%

36%
34%

* Cargo revenues represent 20% of Asian revenues

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BSR accessability, role of aviation hubs

Intercontinental flights are dependent on feeder traffic and vice versa:
passengers are flying

and cargo is transported by flying trucks, i.e.

Road Feeder Service

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Bal(c Sea region Programme 2007 2013
ERDF Funds

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Road Feeder Service Flying Trucks

Most suitable concept for air cargo

business for regional airports

Formally Flying Trucks are treated and

handled as real aircrafts

Cargo transported by Flying Trucks is AIR

CARGO (de jure & de facto)

Flying Trucks fulfill all custom and security

rules as if the goods were really flying set
by the authorities.

Special treatment of flying trucks on crossborder points (e.g. BY-EU or RU-EU)

Air cargo, CPH, 2011

7%

35%

26%
32%

Flying
Trucks
Cargo
A/C

Source: Hans Christian Stigaard

Former VP and Traffic Manager at CPH

15.10.13

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WP3 : AIR CARGO - Analysis

Air-Road Intra European Market 2007 (ying trucks)

Source: Boeing 2008

15.10.13

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WP3 : AIR CARGO - Analysis

Air-Road Intra European Market 2011 (ying trucks)

Source: Boeing 2011

15.10.13

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China

Rail Road COMPETITION EXAMPLE

Customs Union (BY, KZ, RU)

EU

Since 1st July 2011 customs control on internal borders of Russian
Federation, Republic Kazakhstan and Belarus was canceled.

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Urumchi - Parchim

15.10.13
2012/02/15-2012/02/16

35
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Des&na&on rou&ng overview

15.10.13
2012/02/15-2012/02/16

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Case study: BJS FRA (via SWZ)

15.10.13
2012/02/15-2012/02/16

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DB Schenker Cargo train: Chongqing Duisburg

operating since April 2011, 11.179 km in 13 days via train

Bild/Grafik

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New Challenges

Background

New EU air cargo framework EU aviation security validations in third countries

The framework requires (subject to exemptions) air carriers carrying cargo or mail from an
airport in a third country for transfer, transit or unloading at European airports, to be
designated as an 'Air Cargo Mail carrier operating into the Union from a Third Country
Airport' ("ACC3").
In order to be designated as an ACC3, the carrier must implement certain security controls
and before 1 July 2014 submit a declaration as to its compliance with security requirements,
and from 1 July 2014 onwards be EU aviation security validated.
Operational goals

Raise the level of third country security (to EU standards) from from third countries
Minimise the burden of the new measures on the EU air cargo industry
Reduce the impact of the new measures on EU appropriate authorities
Ensure that there is a level playing field across the union ; and
Achieve rapid implementation - fully operational by July 1 2014

ACC3 Designation

No ACC3
designation
required
Airport in a third
country listed
with Security
Measures
equivalent to
those of EU
Appropriate Authority
which issued AOC

Air carriers
holding an Air
Operator's
Certificate (AOC)
issued by an EU
MS

Air carriers not

holding an Air
Operator's
Certificate (AOC)
issued by an EU
MS

ACC3 Designation by
Appropriate Authority
Based on:

Appropriate Authority of
Member State listed in
Regulation (EC)
748/2009 (as amended)

Appropriate Authority of
Member State where air
carrier has its major
base of operations in EU
(where Member State is
not listed in Regulation
(EC) 748/2009 or any
other MS with
agreement

1.

Nomination of person
responsible for
implementing security for
relevant cargo operations

2.

Declaration of Commitments
(until 30 June 2014)

3.

EU aviation security
validation report (by1 July
2014, unless designation
extended for objective
reasons [not more than 3
months unless ACC3 applies
an internal security quality
assurance programme]

Cargo & Mail

transported
by Air
Carrier

ACC3
designation
for up to 5
years
ACC3 validation
can be at
representative
number of
airports

EU

Can
transport air
cargo & mail
into every
Member
State

EU
ACC3 given
unique
alphanumeric
identifier and
details entered
into Union
database of
regulated agents
and known
consignors

X
EU

Airport in a third
country

Carrier cannot
transport cargo
or mail into the
Union

No designation
obtained

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ACC3 Timeline

Timeline & High Level Requirements for implementing the new ACC3 Regulation

Milestones

February 1,
2012

November 9,
2012

January 31,
2013

June 30,
2014

Commission
Deadline for MS
Implementing
to demonstrate
Regulation (EU)
how they
No 1082/2012
contribute to the
of 9.11.2012,
implementation of
amending
EU aviation
Commission
security validation
Regulation (EU)
requirements
No 185/2010 of
recruitment,
4 March 2010 in
training and
respect of EU
oversight of EU
aviation security
aviation security
validation
validators
ACC3 Designation based on Declaration of Committments
Commission
Implementing
Regulation (EU)
No 859/2011
establishing the
ACC3
framework
effective 1st
February 2012

July 1,
2014
Designation as
ACC3 must
take place on
the basis of an
EU aviation
security
validation report
unless extended
for objective
reasons

June 30,
2015
Commission to
assess,
evaluate and if
necessary
make a
proposal

June 30,
2016
End of MS
extension of
designation
without
validation for
objective
reasons

ACC3 Designation based on EU aviation security validation (*)

Actions

Designated ACC3s must be entered into the Union Database of Regulated Agents and Known Consignors with unique identifier
ACC3 must maintain a database of validated RAs and KCs

ACC3 must issue security status declaration

Aviation security controls implemented by ACC3s must meet ICAO standards

ACC3 or avia&on security validated RA must issue security status declara&on

ACC3 must meet requirements of the New ACC3 Regulation

(*) Proof of screening to EU Standards to be provided by previously validated entities not meeting this requirement

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China

ransit times vs. costs before 2011

Source:
LAND TRANSPORT OPTIONS
BETWEEN EUROPE AND
ASIA:
Commercial Feasibility Study
July 2010

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China

transit times vs. Costs after 2011

rail

Source:
LAND TRANSPORT OPTIONS
BETWEEN EUROPE AND
ASIA:
Commercial Feasibility Study
July 2010

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BSR accessability, role of hubs

BSR accessibility is heavily dependent on hub and spoke transport
system
Most of the remote areas of the BSR could not reach the same
accessibility (number of destinations, frequencies, transport cost
level) without hub and spoke model:
Maritime:
Container hubs (e.g. Hamburg) offer oversea (intercontinental) connections
and feeder traffic (e.g. Short Sea Shipping) is the spoke between the hub and
the hinterland
Aviation:
Aviation hubs (e.g. CPH) offer intercontinental connections and feeder traffic
(e.g. flying truck, RFS) is the spoke between the hub and the hinterland

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Conclusions

The BSR transport policy should recognize the link

between air cargo and the BSR Accessibility much more
stronger than it does today.
Aviation both airports and airlines are facing strong
competition and the BSR region should utilize
possibilities offered by air cargo

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Conclusions 2

Short Sea Shipping highly recognized concept, respected

in transport policies
RFS / Flying Trucks Trasport Policy
Nowdays very few regional airports in BSR utilize the Road
Feeder Service.

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Conclusions 3

Regional Airports:

We do not know, what we do not know...

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If God had really intended men to -ly, he'd make it easier to get to the Airport.
George Winters

Thank you!

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