There are trade shows and then there are trade shows. But I have to say that they all pale into insignificance when it comes to attending the GHI Americas conference. Am I biased? Probably, but the Miami Hilton Downtown event on 29-31 March surpassed everyone’s expectations including my own.
I’ve been to many conferences in my career but what made the GHI Americas conference stand out to me and the delegates was the level of genuineness of the GHI organisers in ensuring attendees were truly looked after and connected to the right people for their business. I lost count of the amount of people bowled over by the delivery of the conference, and no I’m not just talking about the cigar rolling on the Biscayne Lady either, which was very apt as we sailed passed Al Capone’s old waterfront home with cigars in our hands, I have to say. It was the little personal touches which made the conference an unforgettable experience. So, hats off to the conference team for doing a great job.
Challenging labour market
On a more serious note, inside the conference hall, the top global players in the industry were ready to enlighten delegates on the tough matters that needed to be addressed in light of the ongoing Covid crisis during the three-day event. There was much to discuss with passenger traffic still only at 40% of pre-Covid levels and the incredibly difficult staffing situation engulfing the industry.
The first major issue to be tackled in the Big Debate on day one was entitled: How do we get our people back? – tackling the critical skills engulfing aviation across the Americas.
David Barker, Senior Divisional Vice President of Airport Operations at dnata started the debate and spoke candidly about the hiring challenge.
“I have been in aviation since 1987 and for 35 years, aviation has been a beautiful and wonderful career for me. Unfortunately, however, US aviation has taken a turn for the worse. Who would have thought before the pandemic that we would have a problem of hiring? Who thought it would not be an employers’ market coming out of the pandemic? So the question is, is the minimum wage a good or bad thing? I actually think that the living wage is killing aviation. The minimum wage at Amazon and MacDonalds is now the same wage as an aviation worker gets. So we, as a community, have a challenge. How do we make aviation a profession again? We have to come together and realise it that we cannot be Starbucks. We are better than that. Aviation is a profession and not a job. We have to raise the bar and create a career path back for the employee. We as a community need to stop undercutting each other and make aviation a profession again ̶ bring sexy back to aviation and be proud of what we do.”
Larry Massaro, Senior VP of Aviation, Eulen America said: “What’s a fair minimum wage? You think you have the answer then 10 minutes later someone else comes along with a better answer and beats you by $10. There has got to be a way that we, as an airline community, can look at a right setting for all competitive wages and salaries.”
Mike Garland, Director Airport and Corporate Procurement, American Airlines said: “What can the community pay? We expect wages to normalise over a period of time and a bidding war doesn’t continue out there,” adding that airlines and handlers will have to learn to coexist alongside Starbucks and Amazon and offer incentives for employees so that they feel value and purpose while offering compensation in different forms to employees.
Emir Pineda, Section Chief Passenger, Trade and Logistics Development, Marketing Division, Miami International Airport, told delegates it was hit hard by the pandemic, but said: “We’ve really turned things around here. Things in Miami have improved dramatically and we expect to continue on this trajectory. It is due to many innovative things we have done here, which can be applied as lessons learned for other parts of the country. But it all starts with all of you. You need to make a difference and dedicate yourself to your people. Your people are your biggest asset. It starts right there, forget equipment, aircraft and systems. If you don’t focus on your staff, none of that matters. As a community as an airport, you got to make that dedication right from the start.”
Nirmala Ramai, Chief Operations Officer, Caribbean Airlines, then spoke about the effect of the pandemic in the context of the situation in the Caribbean when aircraft just stopped flying. “It was shocking and overwhelming. We thought what are we going to do next? What is going to happen? We had to make some hard decisions. Our cashflow just went with nothing coming in, so we had no other choice but to look at furlough options.”
To provide a brief glimpse into the situation, on-time performance and cancellations were at 55% for flights operated during the winter period of 2021 versus the winter period of 2019, with no one to marshal the aircraft at times and managers having to do check-in when things turned for the worse.
“I’m happy to say now that it is different but we have a long way to go,” Ramai added.
Jaime Escobar, Head of Fuel and User Charges, ALTA – Latin American & Caribbean Air Transport Association said: “The situation in Latin America was very different because there were countries which were closed for more than nine months. Other countries closed for more than a year and half. So their recuperation was much slower. Each country has a totally different labour law, different contracts, so it was not easy to furlough people. It was easy to reduce their rates and their pay and of course, it was very easy to get people to come back as they needed to come back to the airport.”
But Escobar stressed that most airlines hired a third party with complex contracts to hire employees which made recruiting a challenge.
In Miami, the situation was different as the airport didn’t furlough any of the employees. But in Latin America, companies lost people and it was difficult for people to come back to work because of the wages.
“Younger people do not feel that sense of belonging to the airline or airport that they work with especially if it was through a third party. They didn’t have that sense of the belonging as they don’t know the history of the airline or their importance of the airline represents to a country. Trinidad, for example, is part of the culture but if you work for a third party, you have no idea of what the airline represents in each country.”
He added that most airlines were now at 90% flight capacity, with all the countries now open.
“As we saw with MIA, the flights are coming like crazy,” he said, adding overcrowding is now an issue throughout the airport and on the ramp. There’s also been issues with not enough fuel providers. “Most of the delays on the ground was because the fuel was not arriving on time.”
Worst crisis in history
On day two, Filipe Reis, Regional Director Airport Passenger and Cargo Services from IATA, gave a presentation on The Outlook for the Americas aviation sector in 2022 and beyond. Interestingly, from the outset he makes it clear that the Covid-19 pandemic was the worst crisis ever to hit the industry when comparing it to previous crises such as the SARS pandemic, 9/11 and the 2009 Great Recession.
He said it was still a long road to recovery with global traffic at 40% of pre-pandemic levels. 9.4 million passengers are expected to travel in 2022 compared to 12.4 million passengers, and $21.9 billion worth of goods are due to be shipped this year compared to $17.8 billion worth of goods in 2019.
Another important fact he relayed was that air transport supports 8.8 million jobs and $1.1 trillion of GDP in North America and 7.6 million jobs and $187billion of GDP in Latin America and the Caribbean.
North America achieved 13.5% growth in cargo volumes (CTKs) in January 2022, beating all regions except Africa which grew by 22% for the same period.
In terms of passenger recovery forecast, it is believed North America will recover to 2019 levels by 2023 with Latin America due to recover by 2024.
Overall, air travel numbers are expected to reach 8 billion in the next 20 years with the largest growth happening in Asia Pacific (4.6%) followed by the Middle East (3.8%) to Africa (3.5%) and Latin America (3.1%), Europe (2.4%) and North America (2.3%).
He said to prepare for growth, there was an urgent need to make air transport more competitive in the Americas in four main areas: safety and infrastructure (investment), competitiveness (decrease taxes), regulatory and framework (follow global best practices) and environmental sustainability in regard to using sustainable aviation fuels and new technologies.
Unsung hero − cargo
The next panel discussion that followed was: Precious Cargo: Getting in trim for the great air cargo opportunity.
Robert Fordree, Executive Vice President – Cargo, Menzies Aviation, spoke about the significant growth opportunities happening in the cargo business, with the company now handling over 2 million tonnes of cargo.
He said: “The pandemic has really brought cargo into a really sharp focus from all airlines, and we are now having much more detailed conversations with airlines that haven’t really carried cargo previously. So it’s really exciting for us. We see that passenger freighters are set to continue for the foreseeable future and are seeing aircraft configurations being changed as well. But we don’t see ‘cargo loaded on seats’ phenomenon that’s been happening over the last couple of years continuing long term as it is just not viable.”
He explained that there is also a lack of main deck capacity, particularly with the situation with Ukraine. Russia’s largest cargo airline AirBridgeCargo is no longer flying its 18 B747F or B777Fs which has had an impact but has opened up other opportunities for other airlines.
Fordree said that airports are starting to embrace cargo and to make the necessary space available in warehouses, with some airports solely focusing on cargo, particularly in North America.
“We need to continue to be agile and responsive. It’s very easy to say but the hardest thing to do. We see flight schedules changing continuously, we’ve had challenges with manpower and equipment being in the right place at the right time. We must continue to be agile as much as we possibly can and we need the right people and right technology to help with what we need to do.”
On that note of focusing on innovation and technology, Menzies appointed a VP of Cargo Tech for the first time last year. “We are working on the operating system that we have for cargo and looking at how we manage that in the future. We have significantly increased our IT cargo team as well.”
Menzies recently had an innovation showcase in London using Heathrow as the ‘testbed for innovation’. Fourteen innovation companies came to present cargo handling solutions including Google and Microsoft . “We are now working through proof of concepts for those technology solutions for cargo handling in the future,” he said, adding that: “It was all very well to have the technology but we still need the people.”
He stressed that it is an enormous challenging labour market and the biggest challenge that Menzies currently faces. It has experienced huge staff turnover in some US markets – 100% in some cases which he admitted was an extraordinary statistic, raising training, security and safety concerns.
“What can we do about it? We want to accelerate the use of technology for the new generation of workers. We have enormous growth potential. We can’t make cargo a sexy business – it’s never going to be that kind of thing, but we can make it an attractive business for people to work in. We work in the global logistics business which people understand far better.”
He finished by saying the industry was very good at communicating internally but more work was needed to be done outside via other social networks rather than conventional routes such as LinkedIn to attract the next generation to the industry.
Donna Mullins, Vice President from Kale Info Solutions, addressed two key topics: what advances are needed on the apron in terms of GSE, telematics, infrastructure and operational agility to keep pace and how crucial is the return of belly cargo to close those gaps.
“Belly freight actually took off in the 1990s when airlines started to realise there’s a lot of space down there that we are not using from the passenger bags – why don’t we do something innovative with it and put cargo there? After 9/11 we were mandated to screen all cargo that went on passenger aircraft. As of 1 July 2021 we screen all cargo whether it is going on passenger aircraft or all cargo aircraft.”
She stated other significant changes during the pandemic, were the so-called preighters which had the passenger seats removed for cargo, helped keep passenger aircraft flying and achieve substantial business in the cargo industry.
“With the passenger uptick coming back – it’s going to reduce our belly space. So we will have to think about what are we going to do with the belly space reducing.”
She commented that the next big thing will be unmanned aircraft that will be able to transport 50% more cargo than standard aircraft. “We have things in our future that are coming and we need to continue to embrace the continuous innovations. Although I work for a technology company, technology is not the answer. It takes a lot [of effort] to implement that technology and make that technology work well for us.”
Scott Case, Founder and Chief Storyteller, Position Global, said cargo has always been an afterthought when it comes to air transport. “Carriers realised during the pandemic what it meant from a profitable point of view,” he said. He stated the importance of cargo in the economy and for providing jobs and the opportunities that should be capitalised to interact with the federal state and regulators to understand its vital role, adding that the industry should be part of those discussions about what it needs in 15, 20, 30 years’ time.
Amazon − foe or friend?
Barker again from dnata started his segment off by saying “thank goodness for cargo” and hoped the community would never forget cargo when things return back to normal. The transport of medical supplies, vaccines, face masks would never have happened if it was not for the partnership of the airlines and putting cargo in cabins, which hadn’t been done before, something Barker himself helped out with when the handler was short-staffed due to Covid.
Interestingly, he put to the audience the question whether the likes of Amazon, Alibaba could be partners in the e-commerce space rather than competitors and went on to explain how dnata has increased its IT investment from 2% pre-pandemic to 6%. “We know we have to innovate,” he said.
Glyn Hughes, Director General, TIACA – the International Air Cargo Association wanted to focus his presentation on the amazing response of the industry to the pandemic.
“This is something in my near four year decades of this industry that if anybody had said that we would be taking brand new passenger aircraft and be taking the seats out, and replacing it with things that were going to save tens of millions of lives around the planet, we would have all said ‘that’s never going to happen’ but that is exactly the reality. The industry just got on with it and did it. They didn’t really focus on it, and didn’t raise enough awareness to the world of how crucial it has actually been.”
Another area Hughes highlighted in regard to how crucial the industry has been, was the value that the cargo industry brought to the world economy comparing the global revenue generated by tourism. He said that while global inbound tourism in 2019 brought $150bn pre-Covid, the value of cargo exported from those countries was $6.4trn. “Eight times more valuable was the cargo leaving the country than the tourism spending coming into the country. So what is going through the airport is national economic prosperity,” adding that in 2021 it went to 20 times more and is expected to be 16 to 18 times in 2022. “Air cargo is not just for Christmas, it’s for national and global prosperity. This industry feeds the world, connects the world, heals the world and entertains the world. The ground handling industry that everyone is associated with are modern day superheroes.”
Electrifying the ramp
Richard Reno, CEO of TLD, presented the latest innovations around battery technologies for electric GSE and how airports in the Americas are developing charging infrastructure and tendering hydrogen GSE where supported.
He said Santiago Airport in Chile is set to be the first in Latin America, which will be capable of receiving and supplying hydrogen-powered aircraft. While hydrogen will play a role on the ramp, Reno said li-ion will dominate the energy landscape for some time yet. “The transition [from ICE to electric] won’t happen overnight…it took 50 years for refrigerators to become the ‘norm’,” he told delegates. “Our fleet took over 30 years to build, it won’t be replaced in two.”
Michael Bloomfield, Chairman of IAEMA continued the theme of electrification and the big advancements in battery technology that is coming, especially quantum glass battery technology which charges 200 times faster than traditional batteries. “This will be a dramatic change in the use of electric,” he said.
Also, he talked about sodium based technology for mobile applications as an exciting development to watch. It is more stable than lithium, delivers higher energy efficiency levels and best of all does not use rare metals such as lithium and cobalt but uses salt.
He mentioned that there are companies out there pushing hydrogen-driven vehicles today but there were complications around making hydrogen work in reality and there was a lot of R&D investment being spent on it today.
Bloomfield also spoke about how GSE suppliers are developing new innovations like the new motorised conveyor system from Ramper Innovations, and spoke at length about autonomous technologies being an area to watch moving forward for improving ramp safety such as autonomous docking solutions. For belly safety applications, he praised Mallaghan’s BendiBelt that has removed the problem of back strain for many operators.
Brad Compton, VP Global Sales of Textron, agreed that ‘autonomous’ is the keyword talked about in handling circles, and goes hand in hand with safety, saying: “What used to be futuristic, is now commonplace and has become a discussion point on the ramp.”
Christian Eitner, Region Manager, JBT Aerotech, spoke on the company’s innovative offerings, such as its Eco Programme, JetDock related to automation, its ProCare brand to support customers and its iOPS system related to telematics. He said through the Eco Programme, JBT Tech had developed Stage V engines for the European market and had converted existing equipment. It has also developed a hydrogen cargo loader and de-icer with less glycol consumption. He also highlighted with labour scarcity and skills shortages, JetDock was a good solution to automatically dock aircraft.
The next panel discussion was on Sustainability: Stepping up to the challenge in the Americas.
Monika Piwowarczyk, Chief Operating Officer, Arajet said: “If we can limit our turnaround time by 10 minutes, the impact on the environment would be massive – meaning on a daily basis around the world approximately 100,000 flights are being operated. 100,000 flights being reduced in the turnaround time by 10 minutes saves 1,000 tonnes of fuel. 1,000 tonnes of fuel can be reduced just by the simple fact of cutting down our turnaround time, meaning 250 flights could be operated per day without any footprint if we only lowered the turnaround time by 10 minutes. This is my short LCC message that I want to tell the industry. Let us focus on our policies and procedures and try to make sure that the use of our GPU and ASU is kept at an absolute minimum.”
Barker joined the panel and told delegates dnata was the first handler in the Americas to do a full green turnaround and said it has a $100million target from 2022 to 2023 to reduce its carbon footprint by 20%. He also said when it comes to sustainability we have to look at the “man in the mirror”. “If we are going to achieve carbon neutral it’s every decision that we make every single day,” he said: “We have to make real clear goals about how we are going to achieve it and how we are going to get there as a community”. He added while airport infrastructure is limited to accommodating green equipment, hybrid solutions will be key in bridging this gap until airports are ready.
Menzies has set a target to be carbon neutral by 2033, in the same year that it will be celebrating its 200th anniversary. Fordree said: “Do we have a clear path about how we are going to get there? Absolutely not. Are we completely invested and have a huge desire to be carbon neutral by 2033, yes, we do. We have a board that is directing all the operational teams that there will be no more diesel-powered GSE, everything has to be electric. We then fall into the same challenge that many of our colleagues on the panel have said, where do we plug all of our electric GSE in if the infrastructure doesn’t quite support it yet? So there is a lot that we need to do. But the key point is the people.”
He concluded that if the industry doesn’t have the same collective approach about being sustainable then “we might not have an industry that we can talk about”, being mindful of the fact that the younger generation might not want to fly on aircraft plane that burns that amount of fuel in the future. “I don’t have the same thought and consideration but the younger generation does,” he said.
The third day was dedicated to Latin America under the theme: Putting the jigsaw back together again. Ruben Atehortua Sandoval, Head of Cargo Operations DWC, dnata said: “Latin America is a very exciting market in terms of the amount of people that we have and the amount of companies that we have there, combined with North America it’s a huge market,” he said. “It is part of the emerging markets because we have a middle-class which is growing and they want to spend money.”
In terms of traffic to/from/within Latin America, it was relatively resilient during the pandemic and is forecast to see a strong 2022 and dynamic passenger flows within the region and to/from North America. Also 2019 passenger numbers are forecast to be surpassed in 2023 for Central America (102%), followed by South America in 2024 (103%) and the Caribbean in 2025 (101%).
During the pandemic, one of the challenges was the limited government aid given to Latin American airlines compared to American, European and Asian companies. In addition, restructuring costs are putting an extra burden on airlines’ bottom line.
One of the changes to be felt immediately in the region, Sandoval explained, was the reduction of local routes in each country in favour of optimising resources for more profitable routes.
“We are seeing new players in the market, new airlines, new ground handlers; a lot of people are moving around. So airlines are focusing on customer loyalty,” said Sandoval.
Another big change post-Covid is the popularity in leisure trips over business travel which could push “a different pricing logic”. “One of the things we learned from the pandemic in Latin America is that people want to travel for leisure and don’t want to travel for business anymore,” he said.
Whatever happens in the industry in the Americas, it is not going to be dull. The next GHI pit stop will be at the all-new GSE Expo Europe in Paris in September and the 23rd annual GHI conference in Dublin in November. See you there!