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European Air Cargo Perspectives. 30th Annual FAA Aviation Forecast Conference March 18, 2005 Dick van den Berg Senior Business Analyst KLM Cargo. The year 2004. 2004 was memorable year for air transport: Merger of Air France and KLM Highest growth in a decade

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European air cargo perspectives l.jpg

European Air Cargo Perspectives

30th Annual FAA Aviation Forecast Conference March 18, 2005

Dick van den Berg

Senior Business Analyst

KLM Cargo


The year 2004 l.jpg
The year 2004

  • 2004 was memorable year for air transport:

    • Merger of Air France and KLM

    • Highest growth in a decade

    • Emergence of the new economic super power China

    • Fuel prices reach high new highs

    • US dollar continues downward trend


Air france klm l.jpg
Air France - KLM

  • One Company

  • 2 Airlines

  • 2 Hubs: Paris and Amsterdam

  • 3 Businesses

Air France - KLM Group

Air France

KLM

Passengers

Cargo

Maintenance

  • The Cargo Business will have an unified management body:

    • This is called “European House”

    • This team will be in charge of network management, marketing and sales


Air france klm4 l.jpg
Air France - KLM

  • AF-KL is world’s largest airline group in international FTK

  • 3 of top-5 are from Asia

  • Korean Air is now larger than Lufthansa


Air france klm5 l.jpg
Air France - KLM

  • AF-KL is world’s largest airline group in international RPK

  • 3 of top-5 airlines are from Europe


Air france klm6 l.jpg

KLM wide body fleet

3 B747 freighter

17 B747 combi

5 B747 full pax

10 MD-11

10 B777

11 B767

Air France wide body fleet

13 B747 freighter

16 B747 full pax

35 B777

37 A330/340

Air France - KLM

Total capacity (freighter+combi+belly) is similar to 35 B747Fs


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Air Cargo Growth

  • Air freight growth shows a “roller coaster ride”

  • 2004 was best year of the last 10 years: +15% FTK

  • Forecast for 2005 and 2006 is lower growth


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Growth of Air Cargo

  • Correlation with GDP growths hard to find

  • Manufacturing trade gives good correlation


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Growth of Air Cargo

  • The growth of air freight correlates well with the growth of semiconductors

  • The crisis of 2001 was mainly a high tech market crisis


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European Growth

  • USA and Europe compared:

  • Growth of air transport and car sales in Europe is not lower than in USA

  • Why is FTK growth in Europe high while GDP growth is low?

  • It is the dollar! And China’s currency is pegged to US $

    • Jan 1, 2004 1 euro = 1.26 US$

    • Jan 1, 2005 1 euro = 1.36 US$

    • Purchasing power in US$ increased by 8%


European growth11 l.jpg
European Growth

  • Imports from China are rising fast

  • China will become dominant in European imports

China will overtake the USA as Europe’s largest import country


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European Growth

  • Rising imports from China are reflected in the air freight data

  • Other Asian markets show much lower growth


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European Growth

Ports:Airports:

1. Rotterdam 1. Frankfurt

2. Hamburg 2. London

3. Antwerp 3. Paris

4. Bremen 4. Amsterdam

Sea trade grows faster than air trade in Europe


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European Growth

  • In Europe there are 8 large freight hubs within 500km

  • These 8 hubs are the largest cargo airports in Europe


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Amsterdam Airport

Economic development in Europe

Shaded Areas Indicate Economic Activity

Stockholm

Amsterdam

London

Vienna

Paris

Munich

Rome

Madrid


Slide16 l.jpg

344 Asian

E

D

Cs

E

D

Cs

Netherlands

57%

Netherlands

56%

Netherlands

57%

Netherlands

56%

12%

Belgium

13%

Belgium

12%

Belgium

13%

Belgium

22%

Germany

7%

Germany

22%

Germany

7%

Germany

5%

France

6%

France

5%

France

6%

France

4%

4%

UK

12%

UK

UK

12%

UK

1%

1%

Other

5%

Other

Other

5%

Other

Amsterdam Airport

European Distribution Centers

Netherlands is market leader!

The Netherlands: Gateway to Europe

611 American E

D

Cs

611 American E

D

Cs


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Amsterdam Airport

Amsterdam 17th century

Amsterdam 21st century

The Dutch always excelled in trade and transport


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Amsterdam Airport

  • China is 47% of growth

  • Import growth is 3 times export growth

  • Amsterdam is now number 1 airport in Europe for China air freight


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Amsterdam Airport

China is now larger than the USA for Amsterdam imports

Exports to China are much lower than to USA


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Air France - KLM Future Growth

Cornerstones of KLM Cargo Network Strategy

  • Exploit the position of Amsterdam Schiphol Airport

    • In heart of Europe and good facilities

    • Large trucking network in Europe

  • Combination of freighter, combi and belly flights

    • large network: 20 main deck + 34 wide-body belly destinations

  • Growth with Skyteam Cargo

    • Largest cargo alliance

    • AeroMexico, Air France, Alitalia, CSA, Delta Air, KLM and Korean Air

  • Growth with special partners

    • NCA, China Southern, NWA, MAS, TNT


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Air France - KLM Future Growth

  • Air France and KLM plan to growth with market:

    • 4 - 6% annual growth

  • Focus on Far East and China in particular

  • Gradual increase of freighter fleet

  • KLM combi fleet will remain in coming years

  • Increase of wide-body belly capacity


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Conclusions

  • Air Cargo is growth business with 4-6% annual growth

  • China is exception: booming growth

  • Business cycle of air cargo is dependent on high tech market

  • Growth in Euope is mainly imports from China

  • The Netherlands is primary gateway to Europe for Chinese products

  • KLM Cargo has strong focus on Far East and China

  • Air France - KLM will grow with market and will remain the number 1 airline group for international air cargo


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