Charter carriers: a growing headache for scheduled airlines

Charter air cargo traffic is fast growing in Europe and especially in Germany and is increasingly threatening the business of scheduled cargo airlines like KLM Cargo, Air France Cargo or Lufthansa Cargo. Heiner Siegmund reports

"We are vigilantly observing this development", says Nils Haupt, spokesman of Lufthansa Cargo. What is causing him headaches is the fact that his global partners, the big forwarders, are increasingly engaging in the charter business by using capacity providers like British MK Airlines, US carrier Kalitta Air or Russian Aeroflot Cargo, for uplifting substantial volumes of freight.

One example is German logistics provider Schenker AG, a subsidiary of Deutsche Bahn. Approximately 4,5 percent of Schenker’s total global air freight of about 750.000 tonnes is already transported on board non-scheduled flights, mainly by Aeroflot Cargo.

Most of these services operated by Aeroflot’s DC-10F link Frankfurt-Hahn airport with destinations in the northern Pacific region, namely Hong Kong, Beijing, Shanghai, Tokyo, Seoul and Osaka. While some of these frequencies are exclusively operated on behalf of Schenker others are flown on a trilateral basis with Kuehne & Nagel and ASB, a subsidiary of Swiss forwarder Panalpina, as partners.

Especially for westbound traffic from Asia to Europe there is a growing demand, with the consequence, that forwarders require reliable and steady capacity to assure a constant flow of their goods.

And there is another reason, the peak seasons, when "this sort of traffic is indispensable, because we need charters in order to uplift the additional volumes generated during those peak seasons," argues Wolfgang Meier, executive vice president of Basel based ASB Air Ltd.

According to Meier, the traditional scheduled carriers can not offer this capacity for spot goods instantly demanded by the consumer markets in Europe and North America like Sony’s Play Station II or other electronic toys and articles manufactured in Japan, China or Taiwan.

Starting with charter transports thirty years ago, ASB meanwhile plays a key role in this business. According to statistics about 9 percent of the total annual volume of estimated 1.3 million tonnes generated by Panalpina/ASB is considered to be charter freight.

Although "you cannot add operations like our "Dixie Jet" to these figures", says Meier, "because this daily flight from Luxemburg to Huntsville in Alabama exists already since 1989. In other words, there is a fine distinction between charter and charter. It is a collective term for a variety of different business models, which range from split charters to scheduled charters and ends at full charters. No matter what their exact names are, more important is that they are gaining grounds step by step, taking volumes from the scheduled carriers."

German market analysts claim that between 15 and 20 percent of all air freight to and from this country already is carried by charter airlines, and the trend is growing.

For Otto Meyer, head of Air France Cargo in Germany, Austria and Luxembourg "it is the market, which goes its own way and which one can not beat."

He adds that "we often are not able to take our aircraft out of their regular schedules on short notice to respond to the sudden capacity demand by the forwarders."

Indeed, a crucial point for AF Cargo, LH Cargo and other scheduled cargo airlines.

However, Meyer expects IATA affiliates like Panalpina, Schenker or K&N to "first ask one of the IATA airlines, if they can carry their shipments, before they knock at the doors of some of the charter providers."

Whether this suggestion is realistic, is doubtful because more and more forwarders consolidate their freight at main gateways. Schenker for instance, already bundles 82 percent of its North American shipments at five US gateways, in Asia concentration at central hubs like Hong Kong or Singapore amounts to even 90 percent and only Europe limps behind with just 45 percent. Consolidation means mass shipments, with rates and capacity as their driving forces.

"It makes a huge difference if you pay an additional 15 or 20 cents a kilogramme for your standard goods by carrying them on board a line carrier, or you have them transported by a charter airline for a noticeably lesser price," says a spokesman of a major European forwarder.

It seems that in future the charter operators might cause more headaches for the managers of the traditional freight carriers – not only in Europe.

(Payloadasia vom 04.04.2004)