Air Cargo Safety Remains a Weak Link in Asia Pacific Supply Chain

Last year’s tragic crash of AirAsia’s flight QZ 8501 enroute from Surabaya in Indonesia to Singapore remains a mystery, but may have been a “wake up call” for Asia Pacific airlines.

While that is small consolation to the families of 56 passengers gone missing, and 106 who were found dead, industry leaders are addressing urgent air safety concerns – with profound implications for the cargo community.
With Indonesia’s aviation potential being lauded as “huge” by trade analysts, the nation can hardly wait to repair its tarnished image.

“Indonesia needs an aviation master plan based on global standards and developed in partnership by aviation stakeholders including the government,” says Tony Tyler, Director General and CEO of The International Air Transport Association (IATA).

Such a plan, he says, should set a common vision for addressing top priorities such as safety, capacity and regulation. And of course it must be followed by real actions.

Just how critical is this situation? Consider this: Indonesia has had at least one plane loss every year since 2010. In the International Civil Aviation Organization’s (ICAO) Universal Safety Oversight Audit Program (USOAP), Indonesia was assessed as being well below the global average. Indeed, The U.S. Federation Aviation Administration downgraded Indonesia to Category 2 in its International Aviation Safety Assessment program.

Furthermore, the EU continues to have a ban on all but five Indonesian carriers.

Turning around such a dismal safety record will not be easy, say analysts. For such a plan to succeed, the country must be supported by the aviation infrastructure – both on the ground and in the air. This means building a world-class hub, managing scarce capacity, and modernizing air traffic management.

The most efficient solution, analysts add, is to maximize the potential of one airport – Soekarno Hatta – where significant investment has already been made. There is plenty of land and the basic runway structure is relatively efficient. The terminal areas will, however, need a major redevelopment.

Air cargo shippers would like the “vision” to be similar in scale to the super-terminals of Pacific Rim load centers in Beijing, Hong Kong and Incheon.

At the same time, however, increasing traffic puts pressure on air traffic management. There are over 800 aircraft on order by Indonesian airlines. As they are delivered, Indonesia’s already busy skies will become even more congested.

Analysts at Boeing say this is consistent with a regional trend.

To accommodate growing demand, the entire Asia Pacific region will need 13,460 new airplanes, valued at $2,020 billion. By 2033, the fleet will be three times larger than it is today, maintains Boeing. Network carriers, the mainstay of international long-haul air transportation, will help drive demand for 3,570 widebody airplanes.

Obviously air cargo also plays a crucial role, transporting goods over difficult terrain and vast stretches of ocean. Many of the world’s largest and most efficient cargo operators are located in Asia and the Boeing forecasters say the region’s air cargo will grow 5.5 percent per year. Carriers in the region are expected to take 360 new production freighters and 530 converted freighters.

Both IATA and Boeing concur that the structure of the Asia Pacific airline industry is changing as regulations liberalize and carriers expand beyond national boundaries. Cross-border co-branded subsidiary agreements and direct investment in foreign airlines allow established airlines access to new markets and promote expanded air service to small markets.

But shippers understand that air safety regulations have not kept pace with this rapid expansion of services. For this to happen Indonesia must apply smarter regulation principles when establishing new protocols. These include clearly defining the problem to be solved, consulting with the industry, conducting rigorous cost-benefit analysis and finally…ensuring consistency with global standards.

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