11 / 01 / 2013
Instead they have been hit by a double whammy of continued global economic weakness and continued growth in belly capacity.
Certainly Lufthansa Cargo chairman, Karl Ulrich Garnadt (right), cannot point to any signs of recovery, and says there was even bad news in the weakening of German exports from September onwards – previously one of the few sources of strength in the market.
Lufthansa may not have seen such a rapid rise in this respect as carriers like Emirates or Qatar Airways, but it still had some belly capacity growth in the first three quarters of the year.
That meant that in order to trim cargo capacity to market conditions it had to make substantial cuts in freighter operations. They were down as much as 10 per cent year-on-year in the first three quarters of 2012, resulting in an overall capacity cut (ie including belly capacity too) of 7.9 per cent.
In fact, he notes that from the current winter schedule, passenger capacity has now contracted slightly at the German airline, allowing the cargo division to bring its MD-11 fleet back up to full utilisation in the fourth quarter.
He expects this trend to continue, with the share of cargo carried by freighters edging up in the coming year or two.
“You need a regular, reliable passenger net-work and then to use the dedicated freighter fleet to flexibly respond to market changes. We fly freighters to wherever passenger capacity is not sufficient or to places with no passenger network – such as Hyderabad. The benefit of freighters is that you can react to new opportunities in this way.”
Lufthansa Cargo perhaps also needed somewhere to deploy capacity that it had pulled out of China, having cancelled its freighter service to Chongqing at the end of the summer schedule due to weak demand.
He also takes a forthright line on the demise of Jade Cargo International, the joint venture between Lufthansa Cargo and Shenzhen Airlines, which flew its last flight in December 2011.
“Our current thinking is to use them to replace the [ageing] MD-11Fs, but if the market has come back by then we would have the choice to use them for growth,” he says. He sounds quite happy to have the luxury of waiting until next year to make that decision, however.
In the long-term, maintenance costs for them will go up but, on the other hand, they are written down, so we have the flexibility to ground them without [incremental] loss if the market then goes down.”