# Presentation: 551116

## 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
-  Emergence of the new economic super power China
-  Fuel prices reach high new highs
-  US dollar continues downward trend

## Air France - KLM

- Air France - KLM Group

- Air France

- KLM

- Passengers

- Maintenance

- Cargo

- One Company
- 2 Airlines
- 2 Hubs: Paris and Amsterdam
- 3 Businesses

- 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 - 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 - KLM

-  AF-KL is world’s largest airline group in international RPK
-  3 of top-5 airlines are from Europe

## Air France - KLM

- _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

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

## 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

## Growth of Air Cargo

-  Correlation with GDP growths hard to find
-  Manufacturing trade gives good correlation

## 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

## European Growth

- 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%

-  USA and Europe compared:
-  Growth of air transport and car sales in Europe is not lower than in USA

## European Growth

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

-  Imports from China are rising fast
-  China will become dominant in European imports

## European Growth

-  Rising imports from China are reflected in the air freight data
-  Other Asian markets show much lower growth

## 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**

## European Growth

-  In Europe there are 8 large freight hubs within 500km
-  These 8 hubs are the largest cargo airports in Europe

## Amsterdam Airport

- Amsterdam

** **

- Stockholm

- Vienna

- Rome

- London

- Paris

- Madrid

- Munich

**Economic development in Europe**
**Shaded Areas Indicate Economic Activity**

** **

- European Distribution Centers
- Netherlands is market leader!
- The Netherlands: Gateway to Europe

**611 American E**

**611 American E**

**D**

**D**

**Cs**

**Cs**

- Amsterdam Airport

## Amsterdam Airport

- Amsterdam 17th century

- Amsterdam 21st century

- The Dutch always excelled in trade and transport

## 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

## Amsterdam Airport

- China is now larger than the USA for Amsterdam imports
- Exports to China are much lower than to USA

## 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

## 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

## 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