Flying through market turbulence.

• Author: Richardson, Jeffrey
• Position: Air Cargo Outlook - Industry Overview

While Alaska's international cargo-handling activity was strengthened, market shakeups caused by bold competitive strategies created foul-weather flying conditions for many air carriers in 1991. The coming year surely will provide more navigation challenges ... and, perhaps, new opportunities.

A year of aviation setbacks around the world and increased competition in local and regional markets has unsettled the air-cargo industry in Alaska. But despite the short-term pressure on profit margins produced by these difficulties, industry analysts point to a number of positive developments that could benefit the 49th state's air-transport sector.

In general, Alaska's air-cargo indicators for 1991 ranged from poor to fair. At Anchorage International Airport, where analysts keep a close watch on the cargo pulse, domestic cargo volumes were down. International cargo offset those losses, however, and the airport posted a relatively strong showing.

According to figures maintained by Avtech Alaska Inc., an independent aviation research and consulting firm, the amount of domestic cargo handled at Anchorage International Airport dropped from approximately 386 million pounds in calendar year 1990 to a little more than 361 million pounds last year.

Anders Westman, the airport's marketing manager, says the drop in domestic cargo was an anomaly caused by the diversion of carriers and cargo to the Persian Gulf war. He also points out that despite a long-anticipated loss of passenger stopovers in Anchorage, airport revenues were down only a couple of million dollars, from $55.26 million in fiscal year 1990 (July 1, 1989, to June 30, 1990) to $53.30 million in FY 1991. "Our overall cargo landings were up 2.2 percent (in FY 1991)," says Westman.

Westman estimates that the aircraft landed weight for cargo at the Anchorage airport will tally up at 8.20 billion pounds for calendar year 1991, compared with 8.15 billion pounds in 1990 and 8.06 billion pounds in 1989. Landed weight is a unit of measure that combines aircraft weight with the weight of cargo on board. It is part of the methodology used by airports to measure cargo activity and to support requests for federal airport assistance.

Westman notes that international cargo traffic continues to be especially strong, with growth projected for the next 5 to 15 years.

Several carriers, both domestic and international, noted sharp drops in the amount of fish products they hauled in 1991. "Last year was very much an off year. Seafood, especially salmon, was a disaster in some parts of the state. We made only a couple of crab trips," says Ed Rogers, director of cargo sales and marketing for Anchorage-based MarkAir. He estimates the volume of fish product hauled by his company within Alaska was down as much as 40 percent.

Another factor in cargo traffic at Alaska's largest airport last year was the flux produced by carrier routing changes. That shuffling kept carriers scrambling for business that remained virtually unchanged from the previous year.

MarkAir shook up Alaska Airlines and other competitors in December and January by adding new passenger and cargo service within Alaska, including Southeast, and making a bid for the Anchorage-Seattle market. MarkAir's Rogers concedes the company will have to prove itself on the Seattle run.

Carriers flying cargo to intrastate markets also had to deal with a new kid on the block when Wilbur's Inc. of Anchorage began hauling freight to a number of Alaskan communities. Because a huge volume of intrastate cargo is U.S. mail, which, by regulation, is divided equally among all certified carriers serving a given community, Wilbur's competitors were immediately affected. Recently, though, Wilbur's closed indefinitely.

World Wise. According to Westman, last year was the worst for the airline industry since World War II, thanks to disruptions from the gulf war and the deepening global recession. But he says many analysts agree that the air-cargo segment of the industry is and will continue to be a bright spot, especially in Anchorage.

"International cargo is one of the few areas of continued projected growth in the aviation industry. For Alaska, 1991 was indicative of that trend. Its growth will probably outpace all other activity here," says Westman.

While Anchorage has lost ground as a stopover for international...