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State airlines are massaging figures, says Lufthansa’s Garnadt

[ March 26, 2014   //   ]

State-owned airlines are distorting industry figures because they do not have to operate on a level playing field, Lufthansa Cargo’s outgoing chairman and CEO Karl Ulrich Garnadt told a press conference on 25 March, writes Marcia MacLeod.

Garnadt pointed out that the only airlines which showed a relatively healthy profit during the last financial year were state-owned and that private companies, world-wide, grew very little. For example, in Europe, Cargolux showed a 19% growth rate, whereas Lufthansa Cargo (LC) grew just 1% and Air France/KLM suffered a 5% drop in business. The same anomaly can be seen globally, with state-owned Middle Eastern carriers doing especially well, recording growth rates of up to 35%, in the case of Etihad Cargo.

“State-owned companies are removed from the real world,” Garnadt emphasised. “We need politicians to push for a level playing field and ensure that companies which work to different rules than us do not have more opportunities. We also need to create a public awareness that something is going wrong. At the moment, all we can do is try to improve our own competitiveness and have the self-confidence to survive this (unfair) competition.”

Lufthansa Cargo believes the development of ‘co-operations’ with other airlines will go a long way towards improving its competitiveness. These co-operations, which will begin this summer, will help LC to reach new markets, improve flexibility, increase frequencies for key destinations, and cut costs through the sharing of resources, such as ground handling.

The names of potential partners have not yet been released due to confidentiality agreements. LC also points out that the alliances will be subject to anti-trust approval. However, Garnadt stresses that LC is not planning a ‘Star Alliance’ of cargo.

The introduction of the B777 into LC’s fleet is also seen as a key step in the drive to increase efficiency and customer service and  has already proven its worth in fuel savings and increased punctuality. The third B777 was delivered on 26 March, a fourth is due this summer and a fifth is on order. Due to the uncertainty in the industry over the last four years, the date for taking up another five B777 options has been moved from 2016 to 2019, giving LC until December 2015 to make a decision.

As the new aircraft are meant to replace aging MD-11s, two older MD11F aircraft have been taken out of service, but retained in case they are needed to serve a projected increase in demand.

LC is meanwhile investing €500,000 in a vacuum cooler to speed up the cooling process for imported flowers. Due to be delivered this summer, it is the latest in a series of investments in the company’s 60,000 tonne perishable business. Staffing has been increased from nine to 11 and constant improvements to technology ensure that LC can monitor the temperature of produce, flowers, and pharmaceuticals throughout their airfreight movement. LC is in constant communication with its pilots to ensure goods are carried at the correct temperature.

Although perishables have only grown ‘a small percentage’ over the past year, LC believes that Frankfurt is becoming a stronger player in the perishables business as more premium services are developed.

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