Lufthansa Augurs Season Of Change

There could hardly have been a more attentive audience than the one Lufthansa Cargo board member Stephan Gemkow, in charge of finance and personnel discovered, and held at rapt attention on December 14th, in Frankfurt at the Air Cargo Club Germany.
      More than a few of the ACD’s 130 members and a couple of guests were left in the unaccustomed role of “sympathizing” with the eloquent young speaker during and after a presentation that was delivered in an open, candid and free style, while the executive moved about the crowded room.
      Herr Gemkow’s disarming frankness in describing Lufthansa Cargo today, was different and unexpected.
      Finally, here was a frank discussion from somebody in charge at Lufthansa that echoed what many others in the room and industry already feel about the airline.
      Stephan Gemkow spoke with more than a slight degree of self-effacing criticism.
      The notion that Lufthansa Cargo is not interested in small cargo agents, and that the carrier’s attention has been purely with the big leading multinational logistics providers, is being reversed.
      That the forwarding industry blames the carrier for making inroads into their area of action in both pre-or-after-flight, and a feeling of little communication or consultation was acknowledged with an expression tinged in regret and hope for opportunities lost, but perhaps not gone forever.
      Also up for scrutiny at Lufthansa Cargo is how the future will unfold now, that apparently the season of continuously implementing new product lines, systems, procedures – and the foundation of several product-dedicated services, each requiring their own complex management team and administration, seems to be over.
      The hard reality is, everybody will have to make do with less, Mr. Gemkow said.
He pointed to more than 400 people from several management levels within the company that are slated to see their jobs disappear during the next few months.
      Truth on the table here in Frankfurt says that Lufthansa Cargo is presently suffering from a kind of paralysis – and the patient is not in good shape at all.
      Lay some of the blame to external difficulties such as prevailing fuel prizes, security costs, declining yields, and most of all the dramatic deduction from budget through currency exchange losses.
      To look at him, Stephan Gemkow does not sound nor look like somebody just giving up – to the contrary.
      The entire (remaining) management team of Lufthansa Cargo he said have “rolled up our sleeves ” while implementing some “tough, practical and effective measures,” to do the splits.
      “We are mandated to reduce expenditures in all activities while increasing income.”
      Those words sound simple and down to earth and by the reaction in the room, exactly what people want to hear.
      But one executive noted:
      “What they must do in all respects is a tremendously complex job considering how a multitude of external and internal influences are deeply ingrained in their global network.”
      Comparisons of the high-tech sophisticated systems in application today and old fashioned wisdom such as customer orientation and visible management efficiency, came from the floor and were discussed.
      It was also suggested that an airline should fly from “a to b,” and leave the complex ground arrangements to others, notably – the forwarding industry.
      Some activities mentioned by Stephan Gemkow sound quite forward-looking with promise.
      No standstill but a CPM (continuous process management) is one.
The competitive advantage of the security hub concept was noted as part of Lufthansa Cargo's future.
      Other innovations such the new cooperation with US Airways, play into a plan that will target growth without major investment.
      Reduction of belly competition by controlling more capacity through total cargo management, offered by subsidiary “cargo counts” and being marketed to small niche airlines was also noted.
      The joint venture with DHL was highlighted as a success story contributing to Lufthansa Cargo.
      The joint venture in China forming Jade Cargo Airlines was scored as part of the future plan.
      Finally, it was mentioned once more, in case anybody missed it, that the relationship of carrier to agent needs a face-lifting in order to offer the shipping industry sound logistics solutions.
      All in all, Stephan Gemkow and the audience both were the show here during an outstanding, albeit brief encounter.
      Open and up-front presentations by all, that included more than a few views spelled out as food for thought.
      Maybe everybody's mind was not changed here, but the bet is that in the end most attendees were moved by each other’s words.
      Many in the club clearly understood the airline admitting mistakes made everyone party to an unusual, if not landmark event.
      The words coming late in the year indicate that maybe, next year has already begun at Lufthansa Cargo.    GFM