LH Cargo Charter Flexible Flier

     At CNS this week we learn that many executives have changed their plan to deal with new world business circumstances.
     In some cases change has been a driver of survival especially when the phone stops ringing altogether.
     Sometimes the action of change means looking toward new horizons of business.
     Other instances reveal that often taking some bold action to do things a bit differently can be discovered in your own backyard.
     Increasingly Lufthansa Cargo Charter Agency is utilizing aircraft belonging to the fleet of Lufthansa Cargo Group.
     This was the case recently when the agency arranged five ad hoc flights urgently needed to send implements and equipment to the Central Asian region. The special feature of the transports organized by the air cargo charter broker was that four of the flights relied on Lufthansa Cargo MD-11 freighters, while a B747-400F operated by the Chinese carrier Jade Cargo was used for the fifth transport.
     “We are chartering more freighters from our parent company Lufthansa Cargo as well as from Jade, which belongs to the Lufthansa Cargo Group,” says Lufthansa Cargo Charter managing director Christian Fink.
     Lufthansa has a 25 percent stake in Shenzhen-based Jade.
     However, as Christian Fink points out, this practice only applies to large freighter aircraft such as the MD-11F or the B747-F when they are needed to meet special customer requirements. “Parallel our global classic charter business continues with large aircraft like the Antonov 124 and with smaller freighters,” Fink adds.
     Making greater use of the group’s aircraft is all part of LH Charter’s strategy to improve the capacity of the planes during the present economic downturn.
     Especially since parent company Lufthansa Cargo has grounded a number of MD-11Fs due to little market demand.
     A year ago, the charter world looked pretty different with LH Cargo having high load factors and very tight flight schedules.
     “As a result, we had little opportunities to use the aircraft for our own charter assignments,” says Fink.
     Now things have changed: “enough capacity, not enough freight” is the problem the industry faces today.
     In this sluggish economic environment, charter flights are highly sought after for improving the load factor and fleet utilization.
     A new situation for Lufthansa Cargo’s and Jade’s cockpit crews: instead of flying to Hong Kong, Singapore, New York or Chicago, their duty suddenly also includes trips to Brazzaville, Congo, to Khartoum, Sudan or to Lahore, Pakistan.
     For some captains and first officers, these assignments “take a bit of getting used to”, Christian Fink admits.
     But charter flights to Africa or Central Asia mean additional business, which also raises the load factor and consequently secures jobs within the Group.
     In order to increase the possible use of the Group’s own freighters, shippers and forwarders have to be integrated more closely.
     “We try to pro-actively persuade them that some consignments need not necessarily be transported on a jumbo freighter but would also fit on an MD-11F, if the cargo volume is right and the pallet size can be tailored for being loaded on board of this freighter,“ adds Heide Enfield, Head of Global Market Development at Lufthansa Cargo Charter from the main office in Kelsterbach Germany.
     With its “group aircraft first” strategy, Lufthansa Cargo Charter is pursuing the business model it introduced in the nineties, when it was still a department within Lufthansa Cargo.
     Back then, the charter division was responsible for marketing surplus capacity on scheduled freighter flights. But in the following years, the load factors improved and frequencies went up.
     Consequently, from 2001 onwards, Lufthansa Cargo Charter – that had been established as an autonomous business unit – relied more heavily on third-party aircraft and also hired freighters for its parent company LH Cargo.
     As an independent company, it was also able to acquire business that was not restricted to Boeing 747Fs or MD11Fs.      “Instead, we were able to organize any available aircraft worldwide to meet our customers’ needs,” explains Heide Enfield.
     The company duly succeeded in boosting its revenues “from €20 million euros in 2001, its first year after being outsourced, to more than €100 million euros in 2008,” Christian Fink said. Since he expects earnings to fall in 2009 due to the global economic crisis, the company has launched a program to secure the company’s profitability.
     Special business such as airfreighting equipment for concerts or works of art for exhibitions or transporting racing cars to the desired location provide some glimmer of light on the horizon.
     Also there are still niche opportunities, such as the growing market for second-hand construction machines and for transporting them.
     Furthermore, regions such as the Middle East, Iraq and Afghanistan, where charter flights remain essential for local industry or for supplying the military, are crisis resistant.
     Since January 2009, Lufthansa Cargo Charter has therefore been exclusively marketing an IL-76, which can be deployed flexibly from Sharjah or Dubai for flights to Kabul, Baghdad to the CIS countries or North Africa.
     The freighter forms a link in the Lufthansa Cargo Group’s transport chain. For example, consignments can be booked from New York to Kandahar with a through air waybill.
     “Lufthansa Cargo takes them on a scheduled flight to Dubai or Sharjah, from where our IL-76 then flies the final leg to their destinations“, says Christian Fink.
     In 2009, Lufthansa Charter expects to operate significantly more flights with heavylift AN-124 freighters.
     “Last year, we had about a dozen heavylift assignments, but we already have customers indicating more than 20 orders for 2009,” he explains.
     LH Charter also intends to expand the global sales reach into Southeast Asia and Latin America in close cooperation with their partners.
Heiner Siegmund