Security has been a constant driver of change in air cargo recently, and we expect this to continue in 2012. But equally important is a host of other regulatory issues — including enhanced customs risk assessment techniques, emissions standards and environmental initiatives, and increased tariffs and taxes. This amalgam of government regulations will have a profound impact in the coming year.
There were encouraging signs of government-industry cooperation in 2011. The TSA’s decision to postpone the Dec. 31, 2011 deadline for 100 percent screening of cargo on inbound U.S. passenger aircraft demonstrated a willingness to listen to and integrate business ideas and concerns. All stakeholders share the same goal: the development of global standards for a risk-based protocol that enhances air cargo security without unduly impeding commerce. With collaboration, the goal is attainable.
Balanced freight capacity versus demand was fundamental to air cargo’s success in 2010, but unfortunately this discipline has not carried over into 2011. IATA reports worldwide demand has grown only 0.4 percent through September while capacity has grown 6.1 percent. We now are experiencing the downward pressure on rates that inevitably results from this imbalance. Factor in the uncertain economic conditions, political unrest and national debt crises, and the result is a very unstable environment for industry profitability.
Government regulatory policy can help or seriously hinder our business. As long as we have a level playing field, the speed, reliability and security of air cargo make us a powerful competitor. However, the cost of compliance with increasing regulations widens the price gap between air cargo and other modes.
The challenge for air carriers in 2012 is to remain competitive, and profitable, in the face of these costs. To meet this challenge, it is vital our industry speak with one unified voice on regulatory matters and that we work together to ensure our voice is heard.