Working to keep cargo airlines aloft

Washington, D.C., is not for non-conformists. "Go along to get along" is the city's unofficial mantra, and those marching to a different drummer often find themselves getting drummed out of town.

So how does one explain the staying power of Steve Alterman?

Alterman, the long-time president of the Cargo Airline Association, which represents the nation's all-cargo air carriers, isn't a typical Beltway power broker. For one thing, if he could, he would avoid Washington altogether in favor of working from the Outer Banks of North Carolina, where he's had a home for decades.

For another, Alterman doesn't hesitate to speak his mind. He's been known to ruffle the feathers of government officials, such as the time he suggested the Transportation Security Administration (TSA) consider using pigs instead of dogs to sniff out explosives. "Pigs have a better sense of smell, they can work longer hours than dogs, and if they don't work out, you have bacon for breakfast," he said.

But beneath the iconoclastic exterior lies a professional with nonpareil skill in steering his association through the highly complex pathways of aviation, regulation, and the law. With 42 years in D.C.'s trenches—35 of those running the same association—Alterman knows his business inside and out. His knowledge of rules and processes has made him worth his weight in gold to his members. As one executive remarked in the 1990s when Alterman's "association" was just himself: "We get more mileage from one person than from an army of lawyers and lobbyists."

Earlier this year, Alterman spoke with Senior Editor Mark B. Solomon about his outlook for air freight and aviation, and the challenges confronting his group's members.

Q: How did you find your way into the aviation world?
A: I had two choices coming out of law school. I was offered a job in the enforcement division of the Civil Aeronautics Board, and a job at a law firm in Boston. I decided I didn't want to sit in the back room of a law firm writing briefs for partners for seven years, working until 10 o'clock every night. I was always interested in aviation, even though I never worked in it. So I came here.

Q: Do you know anyone who's been doing this longer?
A: I don't know anyone who's been doing the same job as long as I have. I left the government in 1975 to basically do this. When I started, we were the Air Freight Forwarders Association. After Congress deregulated the air-cargo portion of the airline industry in 1977, we decided our future lay more with those flying the planes. So we began letting airlines into the association, and we eventually morphed into an airline group.

Q: By the time this interview is published, the industry will be required to screen or inspect all cargo moving in the bellies of passenger planes on both domestic and outbound international flights. Do you think the industry will meet the deadline without disruptions?
A: Not internationally, and I don't know about domestically. Our members are all-cargo carriers and not affected by the mandate. However, we do use passenger airlines for lift when necessary, so we are interested in the issue.

From an observer's perspective, the TSA has come up with a good idea in theory. But not enough shippers have signed up for the Certified Cargo Screening Program [a voluntary government initiative that authorizes various supply chain participants to screen cargo], so it will put a lot of pressure on freight forwarders to handle the screening if shippers simply turn over the shipments and tell them to do it.

Q: Do you think the screening mandate is overkill, given that for nearly a decade, there has been a risk-based security program in place that has seemed to work effectively?
A: I wouldn't phrase it as overkill. But I'm not sure if 100-percent inspection of all freight is necessary. I would say that it would help if there were provisions allowing for [more] K-9s to serve as screeners and take some of the burden off of the individuals. The problem is there aren't enough "government dogs" available and the mandate doesn't call for [private-sector dogs] to be used.

I am very concerned that at some point shippers, who are already paying a premium to ship by air, will look at the compliance edicts and say it's not worth using air freight. And what about the shipment that's booked to fly at 10 p.m. that night but can't be flown out until the next morning because the carrier didn't have enough time to screen it? It defeats the purpose of using air freight, which is speed and reliability. That's more of a danger than the cost of compliance.

Q: You've worked in D.C. since 1968 and have seen administrations come and go. How does this one compare with regard to transportation?
A: If you define transportation very broadly, they seem very interested in it. But I don't think that interest has translated into any benefits for air freight or the airlines. In the [2009] stimulus package, airlines got zero money. Meanwhile, the airports got $1.1 billion. You have to wonder what priority the airlines are for the administration.

Q: For decades, you have argued that air freight is a separate and distinct business from air passenger travel and should be treated as such. Do you still feel the need to make that argument?
A: Yes, but we need to press it differently. It used to be that air freight was viewed as a byproduct of the passenger airline business. No one really talked about us. Now, air freight has become a major player. The industry is not ignored as it was when I first got into it. But it is still a different business from passenger aviation. We both fly aircraft but in many ways, that's where the similarities end.

For example, there has been an ongoing debate over flight duty time and how many hours pilots can operate. Our pilots have different work schedules and requirements. We operate in a totally different manner than do the passenger airlines, and the rules may need to be different for our segment of the industry.

It extends into security. There are people who have questioned why passenger airlines have to perform 100-percent screening of their freight while all-cargo carriers do not. What they don't take into consideration is that we already screen 100 percent of our packages to protect against the possibility of stowaways, which is the major threat to our industry.

Q: Stowaways?
A: Absolutely. The major threat to all-cargo carriers is a 9/11 scenario where someone takes over a plane and uses it as a weapon of mass destruction. We're also sensitive to the threat of explosives, but to us it's a secondary threat.

Q: Other than security, is there one issue that's front burner for your members?
A: Fuel costs, and I don't know what to do about it. The margins for our carriers are not great, and the break-even price for oil is about $70 a barrel. Our model is not designed to handle oil prices at $170 a barrel.

Beyond the economics, the reason fuel prices are such a concern is that we can't do anything about them. The issues that worry me the most are the ones we don't have control over.