8TH WORLD CARGO SYMPOSIUM LOS ANGELES 11-13 MARCH 2014
Items to Note: Please keep in mind the compliance to competition law
guidelines
Coffee Breaks & Lunch are located in the in exhibition hall
Kindly silence electronic devices
For all agendas and event information visit the event app:
www.eventmobi.com/wcs14
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Success stories and case studies:
What is Branding and How Important is it to Your Marketing Strategy?
Service that sells: The art of profitable operations
↗Jaime Alvarez
↗ Cargo Director, COPA
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Multinacionals in Panama
More than 93 multinationals chosen Panama for their operations Conectivity: is a Key Player for a Decision Maker
2007 2008 2009 2010 2011 2012 2013
217
31
44
63
8693
Multinacionales en Panamá
Source: SEM del Ministerio de Comercio e Industrias. Agosto 2013
Los Ángeles
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Las Vegas Chicago - ORD Toronto Boston*
Washington - Dulles
Orlando
Miami
Nassau
Guadalajara
Monterrey
Nueva York - JFK
Punta Cana
Ciudad de México
Porto Alegre
Guatemala
Cáncun
La Habana
El Salvador Managua
Montego Bay
Tegucigalpa
Guanacaste
San Pedro Sula
Santiago de los Caballeros Puerto
Príncipe
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San Andrés
Santo Domingo
Kingston
Curacao Aruba
San Juan St. Maarten
Valencia Caracas
Puerto España Barranquilla . .
Cartagena PANAMÁ Maracaibo
Iquitos
Pereira Medellín Bucaramanga .
Cúcuta
Guayaquil
Quito
Bogotá Cali
Santa Cruz
Montevideo Buenos Aires
Córdoba
Santiago
Lima
Sao Paulo
Brasilia
Manaos
Asunción
Recife
Belo Horizonte
Rio de Janeiro
Your cargo through the Hub of the Americas to anywhere in the world.
-- Flights operated byCopa Airlines
-- Flights operated by Copa Airlines Colombia
* Flight begin to operate since July 2013
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México
Guatemala San Andrés
Barranquilla
La Habana
Cancún
San José
Managua Santa Marta
Bucaramanga Cúcuta
Cartagena Caracas
Medellín Pereira
Cali
Quito
Guayaquil
Leticia
BOGOTÁ
PANAMÁ
San José
It’s Possible
66 Destinations in 29 Countries
In America
Aircraft Type 2009 2010 2011 2012 2013 2014
EMBRAER-190
26 26 26 26 26 26
BOEING 737-700
20 20 20 18 18 18
BOEING 737-800
9 17 27 39 46 54
55 63 73 83 90 98
Capacity: 160 pax
Range: 5,500 km
Capacity: 124 pax
Range: 5,500 km
Capacity: 94 pax
Range: 4,000 km
It’s Possible to Grow new Markets and more Frequencies
FLEET PLAN
Average Fleet Age of 4.9 years
IT ‘S POSSIBLE TO ENJOY OUR NEW FLEET BOEING SKY INTERIOR 737-800 OFFERING GREATER COMFORT AND ENTERTAINMENT
In our new Business Class you will find:
More comfortable and spacious seats with higher recline pivot, and
leg and foot rest so you can relax.
Electrical and USB ports on all the seats to charge your mobile
devices and access your personal files.
And in both cabins:
A modern entertainment system personalized with individual
screens on each seat with a selection of movies, TV series, music,
and games.
USB ports on all the seats.
Destinations where the Premium fleet operates:
Sao Paulo, Brazil
Buenos Aires, Argentina
Los Angeles, California (March 2013)
Rio de Janeiro, Brazil (May 2013)
Santiago de Chile, Chile (November 2013)
A Leading Cargo Strategy is Possible
• Belly Cargo Only and Full Courier Service
• Vertical integration for small stuff
• Product Oriented and Service Differenciation
• Costumer Service across the system
• Better technology
• Revenue Management
• Low cost operation
To Do Things Different Is Possible
We have cold carts in Panama to keep the temperature of all the products that need special care in their transportation from the origin to the delivery at destination. Also at the warehouse we have one cold room with temperature of 2º to 8º degrees and other one with temperature between 8º and 15º degress.
It’s Possible, but…
• Pax Cargo regulatory issues
• Limited capacity and service
• Parcialization
• More double handling
• Technology limitations
• Fixed cost of security and general cost dilution
• Some International Customs push for fines and limitations
Panama Air Cargo Terminal - PACT
•The most modern air cargo terminal in Panama, Central American and Caribbean Region. •With an area of 95,906 sq.ft. located near to Tocumen International Airport in Panama. This installation consists mainly of warehouses for general cargo, cargo hold securities, miscellaneous hazardous materials and cold rooms. •We have cold rooms with capacity for about 16 pallets. These coolers are divided into two chambers for use with various perishable products. It is ideal for perishable cargo in transit through Panama. •Ramp access for cargo aircraft. •Also have a high security and interconnected by the computerized inventory control, receipt and delivery of cargo, so that the cargo remains consistently safe and controlled.
“It’s possible to make many new and wonderful things
happen on one of the best airlines in the region”
Thank you !
Success stories and case studies:
Performance measurement:
Target achieved, Financial models, Strategic planning:
How do we excel?
↗Gary Hoyle
↗ CFO SAA Cargo
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“Bringing the World to Africa and taking Africa to the World”
Performance measurement: Target
achieved, Financial models, Strategic
planning: How do we excel?
Gary Hoyle, CFO SAA Cargo
“Bringing the World to Africa and taking Africa to the World”
SAA Cargo – 2012/13 Performance Review
“Bringing the World to Africa and taking Africa to the World”
SAA Cargo – Services
Air Freight
Freighter Charters
Road Freight
Ground Handling
“Bringing the World to Africa and taking Africa to the World”
SAA Cargo – Areas
South Africa
• 6 Warehouses
• Scheduled Freighter Service – Narrow Body
• Passenger Fleet – Narrow Body
• Charter Service
• Road Freight Services
Americas
• Oversight
• GSA
• Passenger Fleet – Wide Body
• Road Freight Services
Europe & Asia
• Own Offices
• GSA
• Passenger Fleet – Wide Body
• Road Freight Services
Africa
• GSA
• Scheduled Freighter Service – Narrow Body
• Passenger Fleet – Wide & Narrow Body
• Charter Service
• Road Freight Services
“Bringing the World to Africa and taking Africa to the World”
SAA Cargo – Origin Markets
13%
10%
14%
22%
41%
Markets
Africa Americas Asia Europe South Africa
“Bringing the World to Africa and taking Africa to the World”
SAA Cargo – Performance
Performance measurement is the process of
collecting, analyzing and/or reporting information
regarding the performance of an individual, group,
organization, system or component.
Performance improvement is the concept of
measuring the output of a particular process or
procedure, then modifying the process or procedure to
increase the output, increase efficiency, or increase the
effectiveness of the process or procedure.
“Bringing the World to Africa and taking Africa to the World”
SAA Cargo – History
• Initially used a Hybrid system
• Used a variable cost system to determine pricing
• Not all costs taken into account as accounting
entries had not occurred
• Entered into loss making partnerships
• Started up routes without proper understanding
of costs
• Incorrect short and long term decisions
“Bringing the World to Africa and taking Africa to the World”
SAA Cargo – Concerns
• Decisions relating to Fleet Capacity,
Configuration and Deployment
• Purchase of Capacity / Joint Ventures
• Lack of Information
• Pro-rated revenue vs Origin Revenue
• Poor decision making
“Bringing the World to Africa and taking Africa to the World”
SAA Cargo – Contribution Methodologies
• Revenue Contribution
• Cargo cost allocation
• Partial Cost Allocation
• Full allocation of cost
“Bringing the World to Africa and taking Africa to the World”
SAA Cargo – Brief Overview
2008 • Corrected cargo freighter cost allocation
2011
• Prior to 2011 SAA applied Cargo Cost allocation method
2012
• 2012 Introduction of Partial Cost Allocation Method
2014
• 2014 Introduction of Full Cost Allocation Method
“Bringing the World to Africa and taking Africa to the World”
SAA Cargo – PAX Transfer Pricing
Flight Costs Aircraft Costs
Flight Deck Crew Expenses Aircraft Insurance
Flight Deck Crew Meals Hull Insurance
Maintenance (PBTH) Aircraft Ownsership / Lease
Maintenance (cycles)
Landing Fees
Parking Fees
Navigation
Schedule Costs
Flight Crew Block Hours
Overhaul Maintenance
Cost calculated on cargo capacity to total aircraft weight
Cost allocated on free sale basis
“Bringing the World to Africa and taking Africa to the World”
SAA Cargo – Freighters
• Developed standard costing template for all
routes and aircraft utilised
• Implemented revenue measurement from origin
• Implemented accounting of revenue related to
freighter specific activity
• Changed accounting from fleet basis to asset
specific
“Bringing the World to Africa and taking Africa to the World”
SAA Cargo – Support Services Transfer Pricing
• Actual costs transferred where separately
identifiable
• Time based allocation
• Pro rated allocation on cost/revenue
• Fixed Charge for the year
• Inefficiencies not transferred
• Negotiated on arms length
“Bringing the World to Africa and taking Africa to the World”
SAA Cargo – Future Initiatives
• Ground Handling measurement and optimisation
• Further streamlining of Freighter operations
• Guaranteed space on Pax aircraft
Success stories and case studies:
Importance of Key support staff, Leadership
↗Tim Strauss
↗ MD Cargo Hawaiian Airlines
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SEOUL
TOKYO / HANEDA
SYDNEY
OSAKA / KANSAI SAN FRANCISCO
LOS ANGELES LAS VEGAS
PAGO PAGO PAPEETE
SEATTLE
PORTLAND
PHOENIX SAN DIEGO
SACRAMENTO
OAKLAND
SAN JOSE
NEW YORK / JFK
N E I G H B O R I S L A N D N E T W O R K
LIHUE
KONA HILO
MAUI HONOLULU
BRISBANE
SAPPORO / SENDAI
AUCKLAND
HONOLULU
MAUI
BEIJING
Kawika versus Goliath
• Consumers make choices
• Can’t be as good as the competition
• A Culture of hospitality
• Your people
• Your service
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Where should we spend our treasure?
X
X
X
X
X
X
X
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Competitive Distinct Breakthrough
Product
Service
Relationship
The Advantages of the not-so-big airline
• Simplified Route Structure
• Flattened HQ Organization
• Customer Relationships
• Service Performance
• Global Exposure
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Getting Technology Right
Niche companies can be quick to market but
can’t afford to be wrong to market
Cloud Technology
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A few things that matter
Customers always have a choice
Speed with grace wins
Remove barriers
Develop a clear, simple vision
Deliver more than Cargo
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Kawika versus Goliath
• Small stones, big impact
• 5% loyalty
• 25% - 100% profits
• Quality of market share
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The Air Cargo World
Category Sales Agent
Freight Forwarder
Ground Handler
Capacity Ground Handler
Freight Forwarder
Niche - Small
Partner Partner Partner Airline / Partner
Partner Partner
Niche - Medium
Airline Partner Partner Airline Partner Partner
Niche - Large
Airline Partner Airline Airline Airline Partner
Integrator / Network Carrier
Airline
Airline
Airline
Airline
Airline
Airline
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Market Dynamics for Air Cargo
• Shippers are getting fragmented – Businesses are operating from regional / local warehouses
• Walk-In shippers is a growing trend outside USA
• Consignees are placing orders over the Internet
• Airlines have available cargo capacity, larger network, higher frequency of routes
• Airlines need to have advanced technology infrastructure to compete effectively with Integrators
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17%
29% 54%
US Tonnage Distribution
All Airlines
UPS
Fedex
Cargo is Strategic for Today’s Airline
• Cargo is ‘Ancillary Revenue” which is the area most Airlines are looking
towards for improving profits
• Cargo is a Smaller Percentage of Top Line (4% to 15%) but a could be
Significant Percentage of the Bottom line (15% - 70%)
• Demand for Small Parcel Shipment by Air is Increasing due to increased
global e-commerce. (Amazon is piloting deliveries by Drones!)
• Airlines are charging extra for passenger bags thus creating space in the
belly of the aircraft that can be used for Cargo
“Airlines have moved Cargo efficiently with a network of unrelated but Interconnected Partners when adequate Technology Solutions are available”
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Factors working against a Niche Airline ?
• Cutthroat Competition from Large Players
• Low Brand Recognition for Cargo Business
• Limited Access to Marketplace
• Constrained Capital Resources
• Non-defined Operational Procedures
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Needed Factors
• Ability to Deploy Latest Technology – Most successful companies in today’s world are built upon a robust and flexible technology platform
• Faster Time to Market – Niche Players can launch strategies and initiatives in a shorter timeframe
• Out-of the Box Thinking – Innovation is more readily accepted and seen as a necessary driver to overcome competition
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• Enhance your web presence – Compare your website to Fedex.com and give yourselves a score !
• Segment Cargo Capacity in various product types and upsell based on SLA.
• Create an Online Booking Engine to book cargo in various classes at various price points
• Adopt IATA standards
• Make it easy to do business
Success Factor 1: Embrace the Internet
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Success Factor 2: Optimize IT
• Information Technology is NOT a Core Competence of a Airline – Do not try to reinvent the wheel
• Stay away from buying hardware and building data centers
• More than 1 system is 1 too many
• Adapt Industry Best Practices – No Customization
• Search for a Pay – Per – Use model for everything!
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Cargo Operations
System
Scheduling Excel Accounting
Reporting DB
Manual / Paper
ERP
Typical IT Landscape
for Cargo Management
Systems in a Non
Optimized Airline
Collections
Success Factor 3: Invest in Mobility
• Use of Mobile Technology has exploded in the past 5 years
• Enable Booking of Cargo over Mobile Phones
• Enable Easy Track and Trace using SmartPhones
• Allow SMS based bookings for users without SmartPhones
• Use Barcodes to Increase speed of operations at all levels
• Enable usage of Tablets and iPads for information processing and communication
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Success Factor 4: Business Analytics
• Air Cargo features the most granular data about the economy and its trends
• Movement By Origin / Destination / Routes
• Movement of Commodities
• Movement by Shippers
• Movement by Product Type and many more..
• Big Data Analytics is available today at a relatively low price
• Analytics can assist Decision Making in being able to offer special pricing
• Analytics can assist in improving Yields on routes
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Success Factor 5: Everything Real Time • Today’s customer is hyper connected
• Demand a Air Cargo Management system built upon an open platform allowing real time information exchange
• Share data seamlessly with business partners
• Leverage Passenger systems for schedule management and real time updates
• Connect with business partners
like freight forwarders real time
• Send and Receive Status updates real time
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Case Study: Get away from Traditional - GoAir/Sovika Aviation
• Location: Mumbai, India,
• Same Day Delivery Across India
• Direct Access to end users for Cargo Booking
• Flight Guaranteed Shipment for
Walk-In Customers
• DOUBLE Tonnage in 1
Year!
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An ideal Product Offering ?
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• Cloud Based Solution
• Minimal Capital Expense
• Rapid Time to Market Deployment Capability
• Easy to use for end users – Designed for Cargo Handlers
• Seamless Connectivity amongst business partners
• Built upon IATA Standards
Pickup Operator Delivery Operator Air Operator Warehouse Warehouse
Cargo Management System
End to End Functionality
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Sales Data Management
Capacity Planning
Agent Stock Control
Internet Bookings
Piece Level Identification and Tracking
Flight Schedule Management
Rate and Yield Management
Domestic and International Operations
Revenue Accounting
Debit/Credit Management
Spot Rate / Deal / Incentive
Management
Device / Mobility
Management
Public / Private Hosting
IATA Messaging
Access and Data Control
MIS Reporting & Business Intelligence
e-Booking e-AWB e-Accounting e-Tracking
Single Database, Real-Time information
Enterprise Neural Network Technology • ENN is a Network of Many Smart Information Collection Components (“Nodes”) that
Relay Real Time Information to Central Cloud Processors for Intelligent Decision
Support.
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E-Sensors
• Browser
• App
• RFID
• Barcodes
• GPS
E-Messages
• EDI / CIMP/CXML
• Web Services
• Alerts
E-Mobility
• Smartphones
• Enterprise Handsets
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What is the future of niche markets?
↗ Tom Crabtree, Regional Director Boeing Co.
↗ Tina Newman, COO Mallory Alexander International
↗ Alfred Kuehlewind, CEO Commodity Forwarders Inc
↗ Betsy Bacon, MD Cargo Alaska Airlines
↗ Peter Lamy, American Worldwide Agencies
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Serving the Niche: Alaska Airlines
Betsy Bacon
Managing Director, Cargo – Alaska Airlines
March 12, 2014
Parent company of Alaska Airlines and Horizon Air
Recently announced quarterly dividends
$5 billion in annual operating revenues
Roughly 3% - 4% of US domestic capacity
A track record of profitability
- Ten consecutive years of profits
- Profitable 35 of last 41 years
Award-winning service
Excellent operational performance
Good labor relations
Overview of Alaska Airlines
Cordova
Yakutat
Ketchikan
Wrangell Kodiak
King Salmon
Bethel
Nome
Prudhoe Bay
Barrow
Juneau
Adak
Kotzebue
Fairbanks
Dillingham
Petersburg
Gustavus/ Glacier Bay
Anchorage
Dutch Harbor
Sitka
•Employees 1,600
•Daily Departures
•Today 88
•Summer 117
Our Presence in Alaska
Alaska Airlines - Alaska Region
• Regional headquarters in Anchorage
• Total Employees: 1664
• Total Number of Cities Served: 20
- Of the 20, only 3 are connected to any sort of road system
- Alaska Airlines offers the only mainline jet service
- Alaska Airlines is the lifeline to these communities
• Mileage Plan: 492,803 members in Alaska
- Population of the state is 731,449
• Transport multiple oil and
gas companies to the
slope
• Added capacity to meet
passenger demand
• Opportunity for additional
freighter flying
• Excited for future
opportunities (OCS, In-
state gas)
Oil and Gas
Mining
• Seeing increased demand for
travel in the mining industry
• Southeast: Kensington and
Greens Creek
• Interior: Pogo and Fort Knox
• Northwest: Proud to be the
Red Dog charter operator for
over 20 years
Fishing
• Dedicated air freight support
for the seafood industry
• 25 million pounds of
seafood carried in 2013
• Increase capacity to meet
customer demand
• Combis
• Freighter
Tourism
• Supporter of Alaska ACT
• Significant capacity addition to support tourism growth
• Active involvement in ATIA and local CVBs
Investing in our Communities
• $2 Million given back in 2012
– Angel Flight West
– University of Alaska
– Food Banks throughout Alaska
– Shriners
– Make a Wish
– Arctic Winter Games
– And many, many more.
New Direct Service
• Anchorage – Kona
– 2012
• Fairbanks – Portland
(Seasonal)
– 2013
• Anchorage – Phoenix
(Seasonal)
– Dec. 18
• Anchorage – Las Vegas
– Dec. 19
Cargo
Fleet – Five, 737-400 Combi-Aircraft – One, 737–400 Freighter
Lift – 2013 - 118 million pounds – 70-75% of cargo carried to, from or within the state of Alaska – 2013 – 25 million pounds of fresh and frozen seafood
8TH WORLD CARGO SYMPOSIUM LOS ANGELES 11-13 MARCH 2014
Don’t Miss the Closing Plenary!
Innovation Jam Session
Launching of IATA Innovation Awards
And more…
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