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FEDERAL AVIATION ADMINISTRATION. Annual Forecast Conference Washington, D.C. March 18, 2005. AIR CARGO DEMAND: An Overview. Stephen A. Alterman President Cargo Airline Association Washington, D.C. Board of Directors ABX Air, Inc. Atlas Air Federal Express UPS. Members

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Federal aviation administration

FEDERAL AVIATION ADMINISTRATION

Annual Forecast Conference

Washington, D.C.

March 18, 2005


Air cargo demand an overview

AIR CARGO DEMAND:An Overview

Stephen A. Alterman

President

Cargo Airline Association

Washington, D.C.


Cargo airline association air carrier membership

Board of Directors

ABX Air, Inc.

Atlas Air

Federal Express

UPS

Members

Air Transport International

Capital Cargo International

CNF, Inc.

DHL Express

First Air

Gemini

Kalitta Air

Kitty Hawk

USA Jet

CARGO AIRLINE ASSOCIATION AIR CARRIER MEMBERSHIP


Air cargo overview

AIR CARGO OVERVIEW

  • Air Cargo Industry Segments

    Bellies of Passenger Aircraft

    Air Freight Forwarders

    All-Cargo Aircraft

    Regional Aircraft

    All segments provide the services necessary to satisfy shipper demand.


Demand drivers

DEMAND DRIVERS

  • Time Definite Service (Reliability)

  • Speed

  • Traceability

  • Probably NOT Price


Demand limitations

DEMAND LIMITATIONS

  • Uncertain Economic Picture

  • Security Concerns

  • Escalating Fuel Prices

    Necessary Fuel Surcharges

    Price Competition from Other Modes


High value commodities are traditionally transported by air

HIGH VALUE COMMODITIES ARE TRADITIONALLY TRANSPORTED BY AIR

  • High-tech electronics

  • Human organs

  • Important documents


What this means

WHAT THIS MEANS

  • While only approximately 2% of all freight moves by air, 45-50% of the value of freight transported qualifies as air freight


Who carries this freight

WHO CARRIES THIS FREIGHT?

DOMESTIC TRAFFIC

  • 2004

    Passenger Carriers – 24.1%

    All-Cargo Carriers – 75.9%

  • Forecast Period (12 Years)

    Passenger Carriers – 20.0%

    All-Cargo Carriers – 80.0%

    Source: 2005 FAA Forecast, March 2005


Who carries this freight1

WHO CARRIES THIS FREIGHT?

International Traffic

  • 2004

    Passenger Carriers – 40.3%

    All-Cargo Carriers – 59.7%

  • Forecast Period (12 Years)

    Passenger Carriers – 36.4%

    All-Cargo Carriers – 63.6%

    Source: 2005 FAA Forecast, March 2005


Domestic v international

DOMESTIC v. INTERNATIONAL

  • Demand increasing more dramatically in international markets – particularly Asia

  • For 2004, FAA estimates approximately 45% more growth internationally (5.5% annually internationally v. 3.8% domestically). FAA March 2005 Forecast

  • 91% more annualized international growth than domestic for next twelve years – 2005-2015 (6.3% annually v. 3.3 %). FAA March 2005 Forecast


Domestic v international1

DOMESTIC v. INTERNATIONAL

  • Relatively smaller domestic growth

    Less than robust domestic economy

    Mature industry

  • Greater international growth

    Opening of new markets

    Expanding Asian economy


Conclusion

CONCLUSION

  • Demand for air cargo services continues to grow – especially in international markets

  • Industry members are well positioned to meet these growing demands

  • Governments must move to further open markets to allow carriers to meet the needs of the world’s shippers


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