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Magazine Stories January Issue 2009
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Thursday, 28 January 2016
AS the Thai tourism industry counts the cost of the recent political unrest and hotels and resorts across the country report near-zero occupancies, Thai International is battling the effects of the recent Bangkok airport blockades as well as the global downturn as it strives to fill both cargo holds and seats.
Unlike recent demonstrations in Greece, which closed Athens airport and disrupted airline schedules but whose effects - largely - were regional, Bangkok is one of the world’s most important cargo origin/destination and trans-shipment points as well as a passenger hub for travel between Australasia and Europe and intra-Asia.
As a result, Bangkok’s Suvarnabhumi Airport complex, the hub of Thai Cargo operations, went into immediate damage control mode as soon as authorities decided to close the airport for safety reasons during the blockade.
“Flights en-route to Bangkok when authorities closed the airport were diverted to Don Mueang and Phuket airports,” said Tony Mulherin, cargo manager Australia, Thai International Cargo.
“Then during the crisis, we co-ordinated through our global stations flights on a skeleton schedule to Utapao Airport, a military airport near the beach resort of Pattaya.
“Unfortunately, due to the lack of handling equipment at Utapao, no cargo was able to be carried on these services.”
While staff across the network battled to keep as many customers happy as possible — and anecdotal evidence is that they assisted freight carriage into Thailand during the crisis in some ‘unorthodox’ ways, it was almost two weeks before court action prompted the new election that ended the siege.
After careful checks to ensure the complex was safe and secure and systems were restarted, Suvarnabhumi Airport started the long process of resuming normal operations at 1100hrs on 05 December.
The entire period was a nightmarish situation for Thai Cargo. Inevitably, some cargo booked on the carrier was picked up by rival airlines and delivered via neighbouring countries’ hubs; and as the old joke goes: ‘Customer loyalty often is the lack of a cheaper alternative’.
However, as part of the business recovery strategy, Thai International Cargo staff contacted all their customers and believe most if not all will give the carrier another chance.
“I believe our customers fully understand that we were caught in something that was not of our making and for this reason, the support they previously gave us will return quickly,” said Mulherin.
“There has been a slight reduction on some services; however, all our Australian services were re-instated immediately and now are performing to schedule.”
There are no guarantees that a similar situation will not reoccur in future, but Mulherin thinks it is highly unlikely.
“Thailand’s new prime minister, Abhisit Vejjajiva, formerly the leader of the opposition Democrat party, was voted into power by parliament. He won the parliamentary vote called after Somchai Wongsawat was removed from office by the Constitutional Court and he and the new government have been royally-endorsed. The government, along with the Thai people, all have the same hope for harmony and unity within the country and are working together to ensure the best outcome. Therefore it is most unlikely this type of situation will re-occur.”
Mulherin praised the efforts of his Australian staff during the crisis. “They selflessly worked long hours and did a fantastic job,” said Mulherin.
“It was above and beyond the call of duty and I am proud of their efforts in exceptionally difficult circumstances.”
Mulherin also offered some proactive advice for companies involved in any way with their customers:
“Take nothing for granted. Something like this can come from nowhere and have a significant impact on business."
“Business relationships are about long-term confidence and trust between the partners. We believe that is most important and through our everyday relationships we strive to deliver the best service to our customers so that when such a crisis happens, our customers have the confidence that we will never neglect them and will do our utmost for them.”
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Magazine Stories January Issue 2009
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Thursday, 28 January 2016
THE FIRST week of December was a “big week in sport” for the Australian Customs Service, with the introduction of new legislation and the announcement of a new name and a revised role, writes Andrew Hudson.
A new name and new role for Customs
In an announcement to Australia’s Federal Parliament on 4 December 2008, the prime minister released the long awaited review of national security. As part of a new strategy announced at the same time, he also announced that Customs will be revamped to better help with border security and to work against people smuggling. Customs will be provided with new resources and a new name the “Australian Customs and Border Protection Service”.
New Legislation
On 3 December 2008, the minister for Home Affairs introduced the new Customs Amendment (Enhanced Border Controls and Other Measures) Bill 2008 (Bill) into Federal Parliament. The Bill delivers legislative reform which has been promised for some time. Further, the Bill also introduces a significant additional level of liability for those associated with goods under Customs’ control.
Some highlights of the Bill are discussed below.
Arrival report and report of stores and prohibited goods
The Bill proposes to amend section 64AA of the Customs Act 1901 (“Act”) so that the “Arrival Report” and the “Stores and Prohibited Goods Report” will now always be required the next business day after the arrival of the vessel or aircraft.
Timeliness of cargo reporting
The Act currently provides for “cargo reports” to be made within a prescribed period before the estimated time of arrival of an aircraft or vessel. That has caused problems for cargo reporters to get the required information in time for that report.
For some time, Customs has adopted the view that while it would monitor compliance based on the legislative provisions (ie whether the cargo report is late according to estimated time of arrival), it would only take any compliance action if the cargo report was found to be made late if the time to report had been based on actual time of arrival. This is set out in ACN2007/03.
Schedule 3 to the Bill introduces a new subsection 64AB(14A). The effect is to provide that even if a cargo report is late based on the estimated time of arrival, if the report, when made, was within the prescribed timeframe based on the actual time of arrival, then Customs will not be able to prosecute the relevant cargo reporter or issue an Infringement Notice.
Missing goods and goods delivered without authority
Schedule 4 of the Bill introduces a new area of liability for those dealing with goods under Customs’ control.
According to the Explanatory Memorandum, Customs is concerned that those dealing with “non dutiable” goods may not be subject to redress if such goods are missing or delivered without authority. As a result, the Bill introduces new sections 36 and 37 of the Act to create a new offence for a failure to keep goods safely or a failure to account for the goods.
There is also a deeming provision so that if goods are removed by a person to a place other than a warehouse following receipt of authority or permission given under section 71E of the Act, that person is taken to have been entrusted with possession or custody and control of the goods and becomes liable under the new provisions.
The scheme of the provisions is similar to that in section 33 of the Act with a “3 tier” scheme. First, there are significant penalties for those who intentionally fail to keep goods safely, or fail to account for the goods regardless of the value of those goods. Second, there are strict liability penalties if the offences occur in an “inadvertent” fashion.
On the third tier, Customs will have the option of issuing Infringement Notices for any breach of the relevant sections.
Section 37 then sets out what constitutes “accounting” for the goods. This requires Customs to either sight the goods or to be “satisfied” that the goods have been dealt with in accordance with the Act.
I will report on progress of the Bill over time.
Conclusion
While the majority of the amendments reflect issues that have been raised with Customs for some time, the new offences under sections 36 and 37 of the Act do create significant additional liability for those handling and moving goods under Customs’ control. Those operating in the affected part of industry should be carefully reviewing their terms and conditions of trade to ensure that this new liability can be passed on to others where appropriate, should review practices to minimise risks and must act to ensure that their insurances cover these new liabilities.
Next Year
Many thanks for your support during 2008. It has been a busy year but 2009 promises to be even more challenging as governments struggle to stop the world’s economies from sliding into recession and facilitate trade in the face of increased threats to national and international security.
Seasons Greetings to all of you and all the best for 2009. Here’s hoping that Santa does not fall foul of the new and revised Australian Customs and Border Protection!
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Magazine Stories January Issue 2009
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Thursday, 28 January 2016
DIRECT cargo flights across the Taiwan Strait began mid December as part of the historic recent agreements between China and Taiwan that also liberalised passenger air charters, shipping and postal services.
The agreements were signed on November 4 by Chen Yunlin, chairman of China’s Association for Relations Across the Taiwan Strait, and Chiang Pin-kung, chairman of the Straits Exchange Foundation, Taiwan’s counterpart organisation for opening up transportation, trade, tourism and an array of services.
Both organisations are de facto government bodies, structured as benign mechanisms to sidestep political/trade problems caused by China regarding Taiwan as simply another province that will one day return to the national fold.
Regardless of Taiwan’s future, the new air cargo service and other developments between the two are much more than symbolic links.
The air cargo agreement allows 60 ‘chartered’ flights per month for most of the year, rising slightly in the peak October/November period.
Both China and Taiwan have cleared a substantial number of airports for cross-Strait services. Commercial demand, however, has to date seen most of the air cargo traffic moving between only a few major centres, as has also happened with maritime services.
The agreement means that aircraft on services between China and Taiwan can follow direct flight paths, rather than detouring through Hong Kong or Macau airspace. This is likely to ensure that cargo rates and passenger fares remain at a reasonable and fairly stable level.
The fast pace of events this year is due to a willingness on both sides to get something done, after years of prevaricating and giving last-minute green lights to only a limited number of holiday period passenger charters.
A big break-through was the election of president Ma Ying-jeou earlier this year. His election platform called for opening up cross-Strait transportation and trade, as well as dropping controversial plans for self-government that were progressed under the previous administration.
Discussions got under way surprisingly quickly after the new president took office on May 20.
It wouldn’t be all plain sailing, President Ma warned in his Double Tenth National Day speech in October. “While differences still exist between Taiwan and mainland China over sovereignty issues, we hope that the two sides can apply wisdom to shelve disputes and chart courses to steadily extend the political reconciliation achieved in cross-strait relations to the international arena.”
During the agreement talks, Chen — the highest-ranking mainland official to visit Taiwan since it split from the mainland — underlined their importance to the wellbeing of both China and Taiwan. “The financial turmoil is more severe than the 1997 Asian financial crisis,” he said. “The conditions pose severe challenges to both sides and highlight the importance of financial and economic co-operation.”
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Magazine Stories January Issue 2009
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Thursday, 28 January 2016
MOVES to revamp Australia’s quarantine system — and have the multi-million dollar upgrade cost paid by taxing international travellers — are “dishonest” and should not be implemented, says the Board of Airline Representatives of Australia (BARA).
The proposed initiative follows a federal government report into last year’s outbreak of equine influenza. It recommended abolishing the existing inspection system and replacing it at a cost of some millions of dollars. It also suggested the cost should largely be funded by a hike in the Passenger Movement Charge (PMC).
“The PMC is arguably Australia’s most dishonest tax. It should be abolished, not extended,” said Warren Bennett, BARA’s executive director.
“Given that the PMC is such a discredited tax instrument, it is incredible that the Beale report on Australia’s quarantine and bio-security arrangements should recommend using it to fund a A$260 million a year boost to border controls.
“It is equally incredible that the government should consider the proposal. Quarantine and bio-security are a part of Australia’s national security regime. The cost should be met from consolidated revenue - not a narrow-based, inefficient funding mechanism,” said Bennett.
He said the PMC was completely lacking in transparency and was, therefore, totally unaccountable. “All money collected - hundreds of millions of dollars a year - disappears into a black hole of consolidated revenue with no way of ensuring that the revenue received is allocated as it should be.
“Because it is essentially a lie, the PMC is a refuge and prime target for contemporary cargo cultists and the ‘gimme gimme money for nothing’ brigade. It seems any self interest group looking for a handout to pay for a pet project jumps on the PMC. The cargo cultists know there is no audit of where or to whom the PMC is distributed,” argued Bennett.
“Furthermore, the PMC is poorly administered. It is collected by airlines from passengers and passed on to the government. However, successive governments have failed to ensure that the PMC actually falls on those who are nominally meant to pay. “Every time a change is made to the PMC, the government forgets that airline tickets are pre-sold with the previous PMC amount collected from the passengers. But governments expect airlines to make up the difference to the new, higher charge.
“Airlines bear the cost. It amounts to a tax on tourism,” added Bennett.
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Magazine Stories January Issue 2009
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Thursday, 28 January 2016
AIR New Zealand’s test of a second-generation biofuel, hoped to prove a sustainable source of energy for its global fleet, now will go ahead between Christmas and New Year.
And another New Zealand biofuel initiative with aviation potential also is progressing steadily and a flight test is getting closer, according to its developers.
Air New Zealand postponed its pioneering flight earlier this month because the airline was coping with the loss of one of its aircraft and Air NZ crew while in the final stages of a long-term charter with a European carrier.
It is developing a fuel called J50, a 50/50 blend of jatropha oil and standard Jet A1 fuel. J50 has been billed as a world first, created at the airline’s Auckland engineering base.
The flight project is a joint initiative involving Air New Zealand, Boeing, Rolls-Royce and UOP, with support from Terasol Energy. It will involve the use of J50 in one of a B744’s four engines, with senior airline and Boeing captains flying and observing.
Jatropha is a hardy family of trees and shrubs whose seeds carry up to 40 per cent oil. It is increasingly used as biodiesel for road vehicles, with residue sometimes processed into biomass to power electricity plants.
At least three or four airlines and research institutes, along with some potential commercial suppliers, are working on jatropha’s capabilities for blending as an aviation fuel or for other fuel purposes.
Captain David Morgan, Air New Zealand’s chief pilot and general manager airline operations, says the joint initiative partners have been non-negotiable about three criteria any environmentally sustainable fuel must meet for the test flight program.
First, the fuel source must genuinely be environmentally sustainable and not compete with existing food resources.
Next, the fuel must be a drop-in replacement for traditional jet fuel and technically be at least as good as any existing product. Finally, it should be cost competitive and readily available.
Further research is required on the production of jatropha oil - it tends to be variable in its production quantity, although quality is said to be more dependable.
Meantime, Blenheim-based Aquaflow Bionomic Corporation has reported success in refining wild algae to produce another world first: Synthetic paraffinic kerosene (SPK). When blended with petroleum-based kerosene, this is expected to be suitable for aviation use.
Nick Gerritsen, a director of Aquaflow, describes the development as “a major breakthrough which confirms that wild and naturally-occurring algae and its components can produce quality, sustainable aviation fuel”.
He says the sample meets Jet A1 specifications.
The algae was converted using technology from US-based UOP, a Honeywell company which confirmed the sample met the critical specifications for SPK, including density, flash point and freeze point.
The wild algae sample also yielded a sample of diesel fuel.
“We are a company focused upon developing the sustainable production of green crude, similar to that which could be expected from mineral crude oil, and combining that with waste treatment and clean water production,” said Gerritson.
Wild algae grow in wastewater and are continuously harvested. They do not compete with food crops or agricultural land.
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Magazine Stories January Issue 2009
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Thursday, 28 January 2016
THE INTERNATIONAL Air Transport Association (IATA) has challenged Europe to deliver a Single European Sky (SES) by 2012.
“After decades of talks and little action, failure to implement an effective SES is Europe’s biggest environmental embarrassment. In 2007, this failure resulted in 21 million minutes of delays and 468 million kilometres of unnecessary flight. It wasted 16 million tonnes of CO2. This crisis that is gripping the airline industry highlights the fact that airlines cannot afford the EUR 5 billion cost that this brings. And neither can Europe afford the impact on its competitiveness. This must change fast,” said IATA director general and ceo Giovanni Bisignani in a keynote address to the European Air Transport Summit held in Bordeaux.
IATA fully supports the European Commission’s performance-driven approach that was proposed in the SES II package proposed by the EC’s commissioner for Transport and vice president Tajani earlier this year. “We need binding performance targets at national and community levels, functional airspace blocks (FABs) co-ordinated by a strong network manager with harmonised safety oversight through the European Aviation Safety Agency (EASA), and the enabling of Single European Sky ATM Research (SESAR) technology to allow a Single European Sky to deliver its promised benefits,” said Bisignani.
The plan to combine European airspace into nine cross-national FABs will increase system capacity by 70 per cent, reduce average delays to one minute or less, cut user costs by 50 per cent and reduce the environmental impact per flight by 10 per cent by 2020 while improving safety, he said. “These nine FABs cannot be kingdoms operating independently. We need a strong network manager to drive efficiencies and meet binding performance targets. And we need an EASA with sufficient resources to provide safety oversight for airports and air navigation service providers.
“2012 is the year. We need nine FABs in place, delivering benefits against binding performance targets with a strong network manager. This is the minimum requirement. Even if Europe chooses to overlook the major flaws of its emissions trading scheme (ETS) proposal-the unilateral approach is illegal and the regional scope is ineffective-the only credibility that is left is the SES. Airlines cannot accept being charged for emissions in Europe when the inefficiency of the system forces them to waste 16 million tonnes of CO2 each year,” said Bisignani, who went on to attack two persistent myths surrounding the SES.
“First, job losses are a misplaced fear when there is a global shortage of air traffic controllers and SESAR (the technology component of SES) will generate 200,000 highly skilled jobs in Europe. “Second, FABs don’t reduce sovereignty. Europe faces the same question with the Euro. Today nobody questions the sovereignty of the Euro-Zone states. SES is no different. Sovereignty is even institutionalised in the independent National Supervisory Authority. These are two myths which we must kill with facts,” said Bisignani.
In terms of existing results, he said IATA’s Four Pillar Strategy to Address Climate Change was delivering on its promise. The strategy focuses on technology, operations, infrastructure and positive economic measures including ETS.
Since 2004, IATA’s efforts including route shortening and working directly with airlines to implement best operational practices have saved 59 million tonnes of CO2 with a cost saving of US$12 billion. An effective SES would be a key contributor to these efforts, Bisignani said.
Elsewhere, he called on the EC to contribute to a global solution on economic measures addressing change. “While focusing technical efforts to deliver the SES by 2012, Europe must aim its political efforts on the International Civil Aviation Organisation (ICAO). Article 2 of the Kyoto Protocol gives ICAO the responsibility to find an effective global solution for aviation’s emissions that is global and voluntary for states. This summer the G8 affirmed this role in their Summit Declaration. With 44 European states among ICAO’s 189 contracting members and with three states on the 15 member ICAO Group on International Aviation and Climate Change (GIACC), Europe has a duty to ensure that ICAO delivers a global result and to harmonise its approach with the global solution,” said Bisignani.
In the meantime, Bisignani urged Europe not to include its misguided unilateral approach to aviation and ETS in the General Review process of the European ETS. “Don’t make a bad decision worse by including aviation in the ETS General Review. It makes absolutely no sense to review something that has not even started yet, let alone even consider raising auctioning levels beyond the current 15 per cent,” said Bisignani.
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Magazine Stories January Issue 2009
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Thursday, 28 January 2016
After cripplingly high fuel prices in the first half of this year, the severity of the global economic downturn is “of great concern” to carriers in the Asia-Pacific region.
And according to Andrew Herdman, director general of the Association of Asia-Pacific Airlines (AAPA), the next 12-18 months will be extremely difficult times for airlines worldwide.
“We have already seen a number of airline failures. Some others won’t survive the current crisis, he told delegates to the AAPA 52nd Assembly of Presidents in Taipei.
And he went on: “We have already seen passenger demand softening. This year, passenger numbers worldwide have grown barely two per cent, while cargo volumes are declining. This is in stark contrast to the record levels of both passenger and cargo traffic seen in 2007.”
Herdman said that IATA had forecast that global RPKs would decline by 2.2 per cent in 2009 and that the industry would not see growth above four per cent until 2011. Cargo FTKs were forecast to fall by 1.5 per cent this year, with a similar rate of decline for 2009.
“Clearly, business confidence has also been shaken, as the combination of weakening demand and tightening credit markets pushes up the cost of capital - leading to further caution in terms of planned capacity expansion and investment.
“Industry profitability remains extremely fragile. IATA is forecasting overall industry losses of US$5.2 billion in 2008 and US$4.1 billion in 2009, with a return to profitability only expected in 2010. Even these figures may prove to be too optimistic. Indeed, we are going through some turbulent times,” said Herdman.
“However, as has been the case for past crises, Asia-Pacific carriers are responding promptly and effectively to meet the latest series of challenges facing the industry, with careful adjustments to both capacity and route networks, as well as seeking further operational cost savings.
“Despite these severe commercial pressures, we have continued to place the highest priority on maintaining safe operations, with ongoing improvements to further enhance the industry’s extraordinary safety record. Nevertheless, there is a need to further strengthen regulatory oversight. Governments around the world need to ensure that they are operating in full compliance with agreed ICAO standards, or face the very real threat of sanctions by other governments if identified deficiencies are not promptly addressed. As part of joint efforts to raise overall standards across the region, AAPA is actively engaging with air transport regulators and other stakeholders to finalise a new safety roadmap aimed at further strengthening regional safety oversight.”
Herdman said that even in good times, airlines were constantly striving to minimise costs and boost overall productivity. “Now, more than ever, we need the support of airports, air navigation service providers and other industry stakeholders to achieve further efficiency improvements.
“We urge governments to recognise that they also have an important role to play in ensuring that further industry liberalisation allows airlines the freedom to compete like other international businesses, including reviewing the way in which national ownership and control rules inhibit airlines from competing more effectively in a global marketplace.
“But we certainly do not need more ill-conceived taxes on aviation, designed to raise revenues for state treasuries without any demonstrable benefit to industry or society at large. I am relieved that a number of European governments have come to their senses and withdrawn earlier plans for new airline passenger taxes. Other governments please take note.”
AAPA, said Herdman, was firmly against the unilateral imposition of punitive “green taxes” that in reality did nothing for the environment.
And he added: “Not withstanding the gloomy outlook for the global economy, we are positive about prospects of recovery. Overall, we remain confident that Asia-Pacific airlines are well positioned to cope with current challenges - and are still investing to take advantage of future growth opportunities.
“Worldwide, over the next two decades ICAO expects the number of flights to double, with passenger growth compounding at around five per cent annually, whilst air cargo demand is forecast to grow at six per cent over the same period.”
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Magazine Stories January Issue 2009
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Thursday, 28 January 2016
A WORLD-leading provider of critical insights into energy and environmental markets says the Carbon Pollution Reduction Scheme (CPRS) White Paper is a mixed blessing for traders and future CPRS participants.
The CPRS is the main proposed policy instrument for Australia to reduce its emissions of greenhouse gases in line with its international obligations.
“In a carefully pitched, persuasive manner the government sets forth the likely rules and regulations of the CPRS in the long-anticipated White Paper,” said William Greene, senior analyst at Point Carbon. “However, in a move likely to frustrate traders, the government sets the level of demand for permits at the mercy of the post-Kyoto climate change negotiation process”.
Point Carbon, which is headquartered in Oslo, has more than 15,000 clients, including the world’s major energy companies, financial institutions, organisations and governments in more than 150 countries.
Like the European Union, the Australian government has made a moderate but unconditional 2020 greenhouse gas reduction commitment. It also pledges deeper cuts if “all major economies commit to substantially restrain emissions and all developed countries take on comparable reductions to that of Australia”. By proposing to set the cap in early 2010, the government will not enable traders to calculate demand for Australian permits until that time.
“Whether risk managers can handle the uncertainty remains to be seen,” said Greene.
But traders in general are optimistic about prospects for the CPRS, despite the credit crisis. This is according to a recent Point Carbon poll of six investment banks and four large energy and extractive companies.
Of the 10 companies, eight stated that they “will seek to take speculative positions in Australian emissions permits (AEUs)”. Five claimed to already have experience trading carbon either via the New South Wales greenhouse gas abatement scheme or the international Kyoto markets.
“The poll was intended to measure market sentiment and strategies among the largest Australian trading houses and GHG emitters,” said Greene. “It indicates cautious optimism about the commercial opportunities for trading Australian allowances (AEUs) in the opening years of the scheme.
He added that traders would be relieved that the proposal for a short-term fixed AEU price did not make it into the White Paper. “Otherwise that would have killed the market.
“The White Paper irons out a lot of uncertainty, but it also leaves some loose ends. Risk managers may now be willing to loosen the purse strings for carbon traders - but only a little. We will probably see some publicity trades in the coming days, but whether that will lead to accelerating liquidity is tough to call.”
Point Carbon is actively reporting and advising on the emerging Australian emissions trading scheme. As part of its research activities, the company will conduct regular surveys of market players to gauge perceptions of the scheme and its likelihood of success.
