Introduction
The aviation industry is one of the most sensitive industries that require strict observation of safety measures and adherence to rules and policies at all times. Airlines and airports are expected to operate in accordance with (IAW) the regulations set by the International Civil Aviation Organization (ICAO) (Hoffmann 2013). Handling cargo operations is different from that which focuses on passengers.
There are key roles and procedures in air cargo, such as the standards, rules, administration, and organizations that must be observed at all times. Safety issues must also be considered at all times. As Sales (2013) notes, when an airline company is operating both passenger and cargo planes, it is crucial to maintain safety at all times. Any undesirable outcome in the cargo segment of the business can have a direct negative impact on the passenger segment and vice versa.
Diversification is one of the best ways of increasing a company’s revenues without having to expand to a new market. However, it comes with greater responsibilities and the need to be perfect in all the areas of operation. In this paper, the focus will be to develop a business report that will address critical areas of operation that the management will need to take into consideration when starting operations in this new industry.
Discussion
Air cargo transport has gained massive relevance in the United Arab Emirates, especially in the city of Dubai, which has become one of the leading global business hubs in the world. Companies from Fair East and Europe are using Dubai as a gateway to the Middle East and African markets. Al Maktoum International Airport is one of the airports serving airlines in this market. The management of the new airline must understand that market competition is stiff. Other than the local and regional carriers, this new company will also have to deal with international competitors. The following are important factors that will have to be taken into account to achieve the desired level of success.
Commercial Considerations
When starting this new venture, the management will have to understand the commercial factors that will influence the business process. One of the first factors that must be considered is the potential import and export of airfreight commodities. Electronics and related accessories will be one of the primary targets that this firm should target to transport. Laptops, mobile phones, television sets, gaming consoles, and music systems from China, Japan, Europe, and other developed economies will be imported into the country. The same commodities will have to be exported to regional and international markets as necessary.
It means that the mobile phone and computer hardware industries will be one of the primary targets for this company. The pharmaceutical industry, the tobacco industry, and the precious mineral sector will also be part of the sources of demand for inbound and outbound freight.
The potential inbound and outbound freight volume is expected to vary based on a number of factors. According to Oxford Business Group (2017), “the annual volume of discharged freight at Al Maktoum International Airport in 2016 was 63,945 tons while the uplifted freight was 91,771 tones” (64). The report also indicates that there has been a consistent increase in the fright volume at the regional airport.
The average increase in volume has been about 35% each year for the last ten years (Oxford Business Group 2017). It means that this new company will enjoy a huge and consistently expanding market. The free economic zones within this airport will also offer this company opportunity to expand its business operations. The local and international companies operating within this zone can use the services of this airline to facilitate their importation of products from various international markets. The firm will have opportunities to service multimodal transport requirements for international shippers and cargo agents.
It can form a partnership with local and international shipping agents to ensure that its customers can get air, land, and sea transport services whenever they need them. Figure 1 below shows the interior of the Airbus A 330 cargo aircraft that it should use to facilitate the movement of cargo.
Airport Components, Infrastructure, and Access
According to Hoffmann (2013), one of the important factors that a freight company must consider is the airfield topography. For instance, the runways must be capable of accommodating the right aircraft. Some runways are designed to accommodate smaller planes, while others can accommodate large Airbus cargo aircraft. Al Maktoum International Airport has the right runways, taxiways, and airfield access that can accommodate the large Airbus A330 that this company will be using.
The navigational aids such as the control towers are advanced to the international levels and can easily accommodate such aircraft. The airport has the right apron space and parking, firefighting services, effective security, fuel tanks that can help refuel the planes, and terminal locations appropriate for the planned activities. Figure 2 below is a map of Al Maktoum Airport that shows its topography.
Al Maktoum International Airport is properly serviced by road and rail networks that make it easy for customers to transport their goods to and from the airport with ease. The location of the regional harbor is also near enough, making it easy to link air freight with sea freight whenever it is needed. Such infrastructural developments make the airport strategic as a regional hub. According to Hoffmann (2013), Al Maktoum Airport has an annual capacity of 12,000,000 long tons and 13,000,000 short tons of freight. It also has the capacity to process about 260 million passengers every year. The constant improvements done at the airport will increase its freight and cargo capacity. The forecasts show that the cargo capacity may increase by 40% while the passenger capacity will increase by 45% in the year 2020 (Sales 2013).
The management of the airport has been keen on ensuring that the carbon emission is reduced to the lowest level possible. It has taken the initiative to use solar energy as a way of reducing the use of Hydrocarbon energy. It has taken various other initiatives to protect the environment. However, it is yet to come up with specific environmental regulations regarding aircraft emissions, movement, and type beyond what is set by the International Air Transport Association (IATA), the International Civil Aviation Organization (ICAO), and the General Civil Aviation Authority (GCAA) of Emirates (Burns 2015).
All aircrafts using this airport must meet the emission standards set by these bodies. Al Maktoum International Airport operates 24-hours a day. It is often congested during the summer holidays. Such congestions may cause schedule delays, but measures are in place to ensure that such undesirable situations are avoided.
Key roles and Procedures in Air Cargo Operations
Freight forwarders and cargo agents play a critical role that is worth discussing as they will be instrumental in ensuring that this new company achieves the desired level of success. These agents are often logistics experts that facilitate the movement of their client’s products from the manufacturer’s warehouse to the airport by road. When they operate at an international level, they also facilitate the movement of goods from the airport to the desired destination.
They also prepare and process customs and other relevant documents for the shipment on behalf of their clients. Working closely with these agents can enable this company to expand its market share. The management of this company will have to ensure that it understands commodity restrictions as set by the local and international authorities. Contraband goods such as drugs, dangerous weapons, and unlicensed animal trophies should not be carried by this aircraft. Sales (2013) also notes that commodities that may pose a threat to other passengers or cabin crew, such as pet snakes, explosives, and knives, should not be allowed into the plane.
The management should understand the documentation requirements, the standard flow of documents, and the scope of Electronic data interchange (EDI) services. The certification confirming the content of the cargo, the owner, the recipient, and health or hazard factors should be properly documented. Using the EDI services, this airline will be able to share and receive vital information about clients or cargo that may pose a serious threat to the airline or airport facilities. It is ethically important for this firm to avoid sharing sensitive customers’ information unless it is necessary to do so or it is in line with the safety and security measures.
The airline company should embrace the standard booking procedure. Customers should be allowed to make an online booking or visit any of the booking offices within the airport. The management should ensure that the accepted goods are not classified as contraband or dangerous to the airport or airlines and their crew members. The airline should also require their clients to provide import/export declaration forms to determine if they are following the customs regulations about what needs to be imported or exported within allowable amounts.
It will be necessary to ensure that this airline gets the necessary license before starting its operations. The General Civil Aviation Authority (GCAA) is the body responsible for licensing aircraft to start operating as passenger or cargo airlines. The body will need to determine the capacity of this new company, its ability to operate within the set guidelines, and the availability of space at Al Maktoum International Airport before issuing the necessary permit.
The company will need to convince this authority that it is able to follow the transshipment procedures set at the airport before it can get the needed license. It means that it will be necessary to have standardized unit load devices to facilitate loading and unloading services. The storage and cooling system should also follow the guidelines provided by the local and international airports. Figure 3 below shows the loading and unloading equipment that will be required of the new airline when seeking the permit.
Facilities Management
The management of Al Maktoum International Airport, on behalf of the General Civil Aviation Authority (GCAA) that owns all the airports in the country, charges a specific fee for airlines using its facilities as a way of financing its expansion and maintenance. Charges on landing are set at AED 13.0 per ton for up to 4.5 tons of cargo. 4.5 tons to 45 tones are charged AED 15.1 per ton. When the cargo is over 45 tons, the charge is set at AED 16.4 per ton. The airport also charges aircraft parking fees. For narrow-body aircraft, the charge is AED 235 for the first one and a half hours of landing. For any additional hour, the charge is set at AED 383.
For the wide-body aircraft, they are required to pay AED 353 for the first one and a half hours of landing. Any additional hour after that will require the aircraft to pay AED 648. The airlines are also required to pay an aerobridge occupancy charge of AED 524 for every two hours within the airport, a security charge of AED 300 usage, and an airport fire service charge of AED 200 (Oxford Business Group 2017). The fees are expected to fund the development and expansion of the airport. It will be necessary for this new airline to have access to cargo terminal buildings, especially the designated sheds where its customers can take and receive their goods.
It will need to have an airside where the cargo is processed before it is taken to the plane and a landside where customers can receive their parcels. The management will need to hire aeronautical engineers to service the planes, aircraft cleaning agencies, and other relevant experts who will ensure that the planes are in the right conditions before taking to the air. The firm should be ready to pay the relevant costs. Hoffmann (2013) advises that a cargo plane should have effective ground handling support services that will ensure that cargo is loaded and unloaded into the airport with utmost precision and within the set timeline.
A trend is emerging where many airline companies are outsourcing such services instead of employing permanent workers to do the job. The outsourced agencies often set reasonable costs, but they are efficient and understand what they are doing. They can be trusted to load and unload the parcels within the right time. Another advantage is that when these services are outsourced, it is possible to pass over the liabilities of breakage caused by mishandling to the company. Although this company is just about to start its operations, it is necessary to start planning for sea-air and land-air transshipment. Having the right facilities for such transshipment will be critical in ensuring that this company can embrace multimodal transport for its customers.
Air Cargo Safety Issues
According to Brebbia, Tomii, Tzieropoulos, and Ning (2013), one of the main concerns in the modern aviation sector is security and safety concerns. Airlines and airports are faced with constant threats of attack from criminal organizations and extremist groups. They pose a threat of physical attacks using dangerous weapons such as assault rifles, bombs, and other explosives. Others are using cyber technologies to launch their attack from remote locations. It is the responsibility of the airlines and airports to ensure that they maintain the safety and security of their passengers, cargo, cabin crew, and airport and airline facilities.
The management of this airport will need to ensure that loading and unloading of cargo and onward dispatch are carried out based on the set security and safety standards. According to Burns (2015), molecular-level laser scanners are becoming popular when inspecting the cargo when loading them into the plane. The 3-D scanners help in ensuring that the cargo being loaded into the aircraft does not contain any explosives, dangerous and unauthorized weapons, or any other item that is illegal. The scanner also helps in ensuring that hazardous cargo is properly labeled and properly restrained within the right container. Figure 4 below shows how the flammable or other dangerous cargo should be labeled and packaged before loading into the planes to ensure that the crew and airport remain safe.
The management will need to ensure that the health and safety of the crew members are maintained at all times. The health and safety of the crew should not be compromised when transporting dangerous cargo. IATA regulations require airlines to take their crew members through regular training so that they can understand the emerging trends in managing hazardous cargo. They should be equipped with the necessary skills needed in the inspection and management of various classes of cargo. The airline should also adhere to quality assurance standards when handling cargo. Care should be taken when transporting chemicals and minerals that are classified as volatile.
Hoffmann (2013) advises that stowing of allowable but hazardous cargo should be done based on the international regulations and local policies set by the aviation authority. One of the requirements is that such cargo must be packaged in the right containers before they are accepted for transportation. The containers must be properly labeled and placed within the aircraft as per the standard procedures to ensure that they cannot move once fastened and cannot be subjected to unnecessary vibration. Jaffe (2015) also states that all containers should be loaded in a planned stow position.
The requirement not only enhances safety when handling dangerous cargo but also helps in sorting them out when they reach the destination. The cargo handlers should be reminded about the need to avoid smoking. The use of signs, in addition to strict rules that they are required to follow, should help in reminding them of the need to avoid smoking when handling cargo. In cases where the cargo is flammable or highly volatile, there should be additional supervision to ensure that actions taken by the loaded do not pose a threat to cargo, crew members, the plane, or airport facilities.
Conclusion and Recommendations
Al Maktoum International Airport is one of the fastest developing airports growing in relevance regionally and internationally. When a new airport is planning to start a cargo operation at this airport, it is important to take a number of factors into consideration. The airport itself has specific rules and regulations that must be observed by all airlines using its facilities. It has set charges that must be paid by such airlines to enhance their sustainability. The new airline will need to observe the following recommendations to ensure that it achieves success based on the information obtained from this research:
- The management will need to align its cargo operations with the local and international policies and regulations.
- The new company will need to take its employees, especially those handling cargo, through special training to understand emerging security concepts and concerns.
- The management should be ready to pay the relevant charges when using Al Maktoum International Airport and other global airports that it will be using.
Reference List
Brebbia, C, Tomii, N, Tzieropoulos, P & Ning, B 2013, Computers in Railways XII: Computer System Design and Operation in the railways and other transit systems, Lightning Source, London.
Burns, M 2015, port management and operations, Taylor & Francis Group, London.
Hoffmann, R 2013, Dynamic capacity control in air cargo revenue management, Scientific Publishing, Singapore.
Jaffe, S 2015, Airspace closure and civil aviation: a strategic resource for airline managers, Ashgate, London.
Oxford Business Group 2017, The report: Abu Dhabi 2016, Oxford Business Group, London.
Sales, M 2013, The air logistics handbook: air freight and the global supply chain, Taylor & Francis Group, London.