The Luxembourg Centre for Supply Chain Management (LCL) from the University of Luxembourg had the honor to host the successful 2023 version of the European Aviation Conference. The conference took place between the 29th of November and the 1st of December 2023. The first two days, termed Policy Days, served as a platform for enriching discussions on contemporary topics in aviation, whereas the third day, rebranded as Research Day, provided the opportunity to reflect on the topics discussed and link them back to research opportunities.

The focus of this year’s conference was air cargo. Based at the heart of Europe, Luxembourg is the home of one of the world’s largest cargo carriers, Cargolux, which was also the key sponsor of the event. Recent years have taught us quite vividly how important is the role of cargo, so a thorough discussion on policy making was imminent.

 

Summary of Day I

The opening session chaired by Andrew Charlton (Aviation Advocacy) featured Glyn Hughes (The International Air Cargo Association), Maxim Straus (Cargolux) and Chris Grames (Boeing) set the scene and touched on most topics discussed later at the conference. Importantly, it was stated that cargo has greater contribution to the global economy than passengers. Boeing dominated the market for freighters as it incorporates freight thinking into the design of its planes. There are numerous prevailing issues faced by cargo carriers such as queuing priorities at airports, e-commerce and the lack of infrastructure to support its growth, fueling especially with the looming SAF regulation, taxation and over flying.

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The session on trade was chaired by Cortney Robinson (The International Civil Aviation Organization) and had Brian Pearce (University College London), Steve Altman (NYU) and Selçuk Gençaslan (Turkish Airlines) as speakers. The data discussed revealed that the world is getting smaller. Indeed, regional trade still dominates, but overall, there is no evidence that global trade is shrinking. In fact, we observe trade distances growing over time. Nevertheless, in recent years we observe reversion of liberalization as more protectionism is taking place.

In the next session Charles Stotler (UM Law) had a fireside chat with Mohamed Khalifa Rahma (International Civil Aviation Organization) where numerous priorities of ICAO were discussed, such as digitalization and sustainability. Also the Council Aviation Recovery Task Force (CART) was debated to shed light on the ongoing dynamics taking place. It concluded with a call for broader collaboration with academia to find win-win solutions for impactful research.

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Digitalization is critical aspect of the sector. A discussion on the topic was led by Glyn Hughes (who covered for Arnaud Lambert, LuxProvide) with Virginia Cram-Martos (Triangularity, also representing UN/CEFACT), Steven Pope (ICC Global Trade & Deutsche Post DHL Group), Lucas Fernandez (covering for Chris McDermott, Champ Cargosystems) and Nico De Cauwer (International Port Community System Association) as speakers. The sector has gone through its 9/11 moment after a bomb alert on a Yemen-US flight which alerted the importance of coordination and end-to-end visibility. A key message is that digital transformation is embracing change. Several efforts to enhance standardization and trust were discussed including the Verifiable Credentials aimed at boosting trust and facilitating cross-border trade.

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Barry Humphries (BKH Aviation) chaired the discussion on air service agreements. The session welcomed Carlos Bermejo Acosta (DG Move), Mark Bosly (UK Dept of Transport), Vann Chanty (Cambodia’s Civil Aviation, representing Association of Southeast Asian Nations, ASEAN), and Roque Felizardo Da Silva Neto (Brazil’s Civil Aviation Agency, representing LACAC) for a discussion that highlighted the rise of regional alliances. While in Europe there is some reversion of the scope of liberalization (given concerns relating to ownership and control), other regions seek opportunities for closer integration as evidenced by ASEAN and LACAC.

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Wouter Dewulf (University of Antwerp) led an interactive session with David Gillen (University of British Columbia) and Joachim Arts (University of Luxembourg) on supply chain integration and active participation from the audience. Views were shared on whether e-commerce companies are better of being asset-light or asset-heavy, whether Maersk’s move into air freight will be successful or not, and who benefits from uncertainties. Agreement was clear: data is the new oil.

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The final session chaired by Ken Button (George Mason University) featured Gianmaria Martini (University of Bergamo) and Eric Tchouamou Nyoja (University of Huddersfield) who discussed how to best integrate the global south. There is clear need to avoid the Appalachian effect so as to avoid further exploitation of the global south and ensure they benefit from globalization. A point was made about the role of geography and access to waterways.

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Summary of Day II

In the opening session Thomas Immelmann (University of Applied Sciences Bremen) introduced the Martin Kunz Lecture and gave the honor to Thomas Klein (Cargolux) who presented the evolution of the sector in recent years. While historically air freight used to perform and grow at twice the rate of GDP growth until 2000, since then the trends have reversed. One challenge is the growth of services. Another is the fuel price rollercoaster. He noted the strong seasonality and shed light on profitability calculation, especially during COVID.

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Simon Wright (The Economist) then remotely interviewed Filip Cornelis (DG Move) starting by reviewing the priorities of the commission. While cargo was not a topic until COVID it emerged as an item of strategic relevance. Nevertheless, the view is that cargo specific policies are not demanded and should be integrated into the broader discussion. As views of member States vary dramatically it is important to find common grounds, to which end they are working on common standards encapsulating social rights, level playing filed, sustainability and so forth. Some European carriers are reaching the limit of growth within the EU, but this is less of an issue for cargo. SAF seems to be high on the agenda with clear targets and policy for coming years. The Commission does not have the mandate to address demand management. A discussion emerged on Schiphol airport and the importance of the balanced approach that need to be followed.

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The presentation by OECD/ITF was handled by Luis Martinez and Andrea Papu Carrone and stressed that current ambitions are not enough and that high ambition is required to meet targets. Overall, the projections suggest that passengers traffic is expected to grow while cargo is likely to lightly drop. Hence, the only solution for the short term is via demand management. An important trade off emerges as financial incentives shifts in favor of liquidity meaning companies are moving away from assets (i.e., less warehousing and inventory) in favor of transportation (and hence relying on air freight).

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This set the scene for the discussion on climate impacts led by Anna Straubinger (ZEW – Leibniz Centre for European Economic Research) with Marcos Gonzalez Alvarez (DG Clima), Stefan Grebe (CE Delft), Laurent Donceel (A4E - Airlines for Europe) and Bill Hemmings (Rosetta Advisory Services) as speakers. It started with a quote by the European Commission’s President, Ursula von der Leyen, that “carbon emissions must have a price. Every person and every sector will have to contribute.” It was noted that freight accounts for 15% of global aviation emissions and that non-CO2 are responsible for 2/3 of climate aviation impacts. It appears that we are reaching the natural limits of fuel efficiency suggesting that technology might not be able to offer further break throughs. It is imperative that SAF will have to ramp up. The four components of FIT for 55 were reviewed. Global carbon price shall be achieved. The topic of taxation was elaborated. Whereas the EU abstains from taxing aviation fuel, the UK imposes differential tax on passengers and many countries are taxing aviation fuel domestically. Interestingly the US has a veto right on such a tax in the EU although a similar one exists in the US.

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Infrastructure and operational challenges were discussed in the ensuing led by Anne Lange (Frankfurt University of Applied Sciences). The speakers included Marcus Bezold (Lufthansa Cargo AG), Ram Menon (Wallenborn Group) and Daniel Kohl, Director (Luxembourg’s Cluster for Logistics - C4L). The trucking sector is fairly fragmented and has not made significant progress in terms of digitalization. It is also subject to intense pressure to modernize the fleet—e.g., transition from Euro 5 to Euro 6—although the gains are minimal and the cost cannot be justified. Further, transitioning to electric is challenging given the current economics of the existing technology. Studies of life cycle analysis of certain decisions (e.g., replacing pallets to light weight ones) shall be studied to provide more clarity.

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Benjamin Bierwirth (Frankfurt University of Applied Sciences and Avistics GmbH) chaired the session on drones with Tiago Lopes (European Investment Bank), Luc Antoon (Skeyes Belgian Air Traffic Control) and Vincent Pedrini (Luxembourg Drone Federation) as speakers. The drone eco-system is growing with aspects including cargo, passengers, dual-use, surveillance, MRO, flight operations, ATM, ground infrastructure, and IT. There is an emerging need to standardize and harmonize to facilitate and support the growth of the sector. The challenge is how to simultaneously solve the three elements of the equation: safety, financial stability, and regulation and policy. It appears that further development in the EU might be limited and players seek locations where regulatory oversight is lax. Benjamin played a video on behalf of Irena Deville (Dronamics) which demonstrated the Black Swan, the world’s first cargo drone airline.

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Day II concluded with The Tretheway debate on the topic “Has liberalisation peaked?” chaired by Ian Kincaid (InterVISTAS Consulting) with Barry Humphreys (BKH Aviation) and Mark Rodmell (European Civil Aviation Conference) speaking for Team Peaked and Brian Pearce (University College London) and Steven Truxal (Leiden University) speaking for Team Liberalization Will Continue. Both sides brought convincing arguments; nevertheless, the latter team won the debate.

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Summary of Day III

The Research Day started with a keynote by Tae Hoon Oum (University of British Columbia) on Future transport research requirements, where he reviewed the changing global economic and political environment accounting for aviation policy issues.

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The panel led by Benny Mantin (University of Luxembourg) reviewed some of the take aways from the preceding two days and brought discussion involving panelists with diverse backgrounds: Cortney Robinson (International Civil Aviation Organization), David Gillen (University of British Columbia), Charles Stotler (The University of Mississippi), and Achim Czerny (The Hong Kong Polytechnic University). The opportunities for research were clear and some discussion evolved around the importance and contribution of passengers to global trade with an emphasis on leisure versus business travelers. Core pillars for future research include the role of technology (engines, fuel, drones, airships), taxation and how to incorporate behavioral economics into the domain, finance (infrastructure, fuel, fixed vs variable), and passengers vs cargo demand.

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A keynote by Steven Truxal (Leiden University) entitled “EU air regulation under review: what’s on the horizon?” provided an exposé on EU air regulation reviewing seven important pieces: (i) state aid, (ii) horizontal guidelines which is linked to Article 101 of the Treaty of the Functioning of the EU. The former two have already been concluded. The next five pieces are forthcoming: (iii) Air Service Regulations which dates back to 1008/2008 and require an update which may see topics such as financial health, ownership and control, UAS, restriction of flights in a crisis, PSOs to include sustainability criteria and so forth, (iv) slot allocation regulations – 793/2004, to maximize existing capacity and may see stricter requirements on slot use, (v) Energy Taxation Directive, linked to 2003/96, with kerosene and heavy oil not any more being fully exempt, (vi) Due Diligence Directive, which links to sustainability, and (vii) Air Passenger Rights Regulation, which is a revision of Reg. 261/2004 and Reg. 1107/2006.

 

All in all, more than 30 research presentations were delivered during the day and numerous posters were presented.

 

Gratitude

Developing the program was not an easy task, but with the help of many, we have established a program committee with members who took close care of the roles they were assigned. In that respect, we would like to mention all members of the program committee:

• Benny Mantin of the University of Luxembourg

• Thomas Immelman of the University of Applied Sciences, Bremen

• Cortney Robinson from ICAO

• Charles Stotler from the University of Mississippi Center for Air and Space Law

• Benjamin Bierwith and Anne Lange of the Frankfurt University of Applied Sciences

• Carlos Grau Tanner of Global Express Association

• And Bill Hemmings of Rosetta Advisory Services

Your contributions to the program have been immense. Thank you!

 

The Program of the Research Day has benefited greatly from the hard work and dedication of Ane Elixabete Ripoll-Zarraga from the Autonomous University of Barcelona (Universitat Autònoma de Barcelona (UAB))

 

To make this event successful and ensure a low cost ticket for our audience and in particular the students, we have to thank our numerous sponsors.

First and foremost, Cargloux – our key sponsor. We had many conversations with the Cargolux team that helped us brainstorm topics for discussion and identify speakers. Thank you.

 

Great thank you goes to

• CHAMP cargo systems

• InterVistas

• GARS

• Turkish Cargo

• Wallenborn and

• Frontier Economics

All of whom have contributed generously to the success of this conference

 

We also have several academic sponsors

• the University of Mississippi Center for Air and Space Law

• Heilbronn University of Applied Sciences

• The HK Polytechnic University

• And my own center

For the very kind support. Thank you all

 

Further, we have partnered with the Chamber of Commerce and the Cluster 4 Logistics to co-host this event here at the chamber.

Last but not least, we would like to thank our media partners:

• Airliners.de

• The Load Star

• And AirCargo News

All of which have published articles promoting our conference.

 

To conclude, we would to thank the administrative team – Jackie Brown and Eleonore Graces – for their extensive, tremendous and flawless work. Without them there would not have a conference.

 

Thank you all for joining us in Luxembourg, we trust you have enjoyed the event!