Cargolux is wary of the challenging conditions in the air freight industry but at the same time is hopeful that it can take advantage of any available opportunities in the year ahead.
“First of all, there’s a priority to maintain our position,” said Niek van der Weide, executive vice president of sales and marketing at Cargolux, in an interview during the airline’s 45th anniversary world tour event in Hong Kong. “We are now the number-one cargo airline in Europe and number eight in the world. Our capacity will not be growing this year, so we want to maintain the position that we have in the market. We want to be flexible in the number of frequencies that we operate to destinations, and we’ll increase capacity where we see new markets.”
The Cargolux Group operates a core fleet of 13 Boeing 747-400Fs, four of which fly for its Italian joint venture Cargolux Italia, and 13 747-8Fs. While the airline is not planning to grow that for the next few years except for one more 747-8F to be delivered later this year, it is looking to grow its flexible fleet of leased 747-400Fs that can be used for extra flights, charters and as backup for maintenance.
“Charters have become a big part of our operation, so that’s going to be one of the targets where we want to grow in 2016 as well,” said van der Weide. “Last year we set a record with more than 200 charter flights.”
One major project currently in the pipeline is Cargolux China, the new Zhengzhou-based joint venture for which board approval was given in January 2016 and which is expected to commence operations in 2017.
“We’re now starting the paperwork, getting the permits and the AOC, and also starting to hire people, so the project has really started,” said van der Weide. “We’re looking at aircraft – we have not bought any planes today yet but we’re looking at what is available on the market. What we plan to use for Cargolux China is Boeing 747-400Fs, and we’re looking at buying these second-hand. We’re evaluating several aircraft at the moment and a decision will be taken in the course of this year to buy three to start with, eventually going to five.”
The new airline could be affected somewhat by the slowing Chinese economy, which van der Weide said is a concern.
“We see that exports are not growing and are even going down,” he said. “Chinese New Year had a big effect this year, but what was more worrying was that before Chinese New Year, there was not a peak. Now, in the middle of March, it’s very, very slow. It will probably come back to some extent. It’s also to do with the European economy, of course. The stocks are high and there are not many new gadgets and products at the moment.”
However, exports from Europe to China are strong and there is high demand for capacity, to the extent that Cargolux almost carries more cargo into China than out of it.
“Flights from China are a battle,” said van der Weide. “It’s improving a little bit and this week has been a little better, but still not at the level that it should be. From what we’re hearing and seeing, it’s doubtful whether it will be as strong as it was last year because it’s under pressure. In the first two months of this year, there were 25% fewer exports from China than last year. That’s a lot of capacity. The combination of capacity and lack of demand is worrying.”
In the short term, the carrier’s strategy will be to expand its customer base. Van der Weide said that the company had hired 10 more people to look after its key customers so that they will have access to dedicated salespeople.
“That doesn’t mean that we will not look after the rest of our customers, but we will focus a lot more on sales activity and personal contact with the customers this year than we have ever done before,” he said. “It’s a people-oriented business and it’s important that we are close to the market.”
In the longer term, Cargolux is clear as to what its goals are. “We have to be profitable and we have to be lean and mean where we need to be,” said van der Weide. “At some stage in the years to come we will look at what we will do with fleet renewals, but at the moment nothing yet. Most important for us is to keep a grip on what we have, to be the number-one cargo airline in Europe and in the top 10 globally.”
The outlook for this year though, according to van der Weide, is not brilliant.
“I’d say the first six months will be tough because the Chinese market is not that good,” he said. “But on the other hand, if one market is down there may be opportunities in other parts of the world. I’m not pessimistic. You have to be optimistic, but also realistic. In the next few years, there’s still going to be a lot of capacity, but at the same time we see some of our European competitors reducing capacity.”
He added that the rise and fall of the global economy is a cycle which has been seen many times before.
“What’s important is that we keep very, very close to our customers and to what’s happening in the market so we can adjust where needed,” said van der Weide. “If you sit back and sleep, then you lose, for sure.”
By Jeffrey Lee
Asia Cargo News | Hong Kong
