Breaking News - LH Cargo and United Cargo Join Forces

Both carriers will enhance their current close cooperation on the passenger sector with a new cargo agreement. The upcoming pact complements previously concluded ties between ANA Cargo and LH Cargo on the one side and ANA Cargo with UA Cargo which was inked earlier this year. The new deal closes a gap in a global-spanning network operated by the three carriers.

Lufthansa Cargo and United Airlines have agreed to cooperate commercially on transatlantic routes between the U.S. and Europe. Their announcement made today (9 December) doesn’t really come as surprise since speculations about their expected but unconfirmed step to join forces had been swirling around for months. Although both sides reached a basic commercial agreement, a number of details still have to be finalized,including rubber stamping the commercial side of the deal and compliance of the EU and US regulations alongside the government approvals.

Metal neutrality
It can be expected that the LH-UA cargo pact will operate largely according to the ANA-LH Cargo scheme, signed off exactly a year ago. This means both capacity providers will operate a shared network across the North Atlantic offering the market metal neutral capacity from Europe to the USA and vice versa. It can be expected that they will jointly manage their pricing and sales policy, their network planning and their capacity offering. Harmonizing their IT processes is another key issue of high priority standing on top of their worklist as do ground handling processes at destinations served by both airlines to implement standard processes or common warehouse handling to enable even  faster transaction times. 
As is within the terms agreed on between LH Cargo and ANA Cargo it can be presumed that the now LH-UA cargo liaison is based on a revenue sharing model on North Atlantic routes from/to Europe and the USA and the creation of a common cash box for all joint services exercised.
Weathering the storm of growing competition
Both airlines hope that their getting-together will result in added benefits to their clients, enhance the capacity provider’s competitiveness and enlarge their customer base. Due to the deal, both partners can offer the market additional destinations and seamless capacity access. The latter aspect speeds up the flow of goods because LH or UA shipments can be loaded on board the next flight operated either by UA Cargo or LH Cargo at mutually served airports like Chicago, New York, Frankfurt or even London Heathrow or Munich. As result of their step the airlines expect to better their competitive position in a hard-fought market.
UA and LH are already long-term partners in passenger services
Both carriers have a long-lasting partnership dating back to 1997 when both carriers together with Air Canada, SAS and Thai Airways became founding members of the Star Alliance. Years after, this relationship was further deepened when both airlines together with Air Canada achieved antitrust immunity on North Atlantic routes enabling them to align their prices and services.
Although cargo is a different animal compared to passenger services it fits the close cooperation existing between LH and UA.

LH Cargo’s Alexis von Hoensbroech  -  picture LCAG
LH Cargo’s Alexis von Hoensbroech - picture LCAG

Next cargo partnership around the corner
And there is more to come on the cargo field, indicated LH Cargo’s Head of Product and Sales, Alexis von Hoensbroech. He confirmed to CargoForwarder Global that his airline is in advanced negotiations with another freight carrier to join forces. If all goes well, the deal should be concluded by next summer, most likely even earlier. Which candidate it is, he did not reveal, leaving plenty room for speculation.

Who would fit the bill?
The main question arises as to which geographical area LH Cargo sees as being most attractive and viable for a future cooperation along the lines of the ANA and United agreements.
One can imagine that based on the volume of trade flows, that the Far East will again come into this picture and that most probably the German national carrier already is in what could be seen as the final stage of negotiation.
It has to be a carrier which offers just as much capacity and frequencies as LH Cargo does with its combined all-freighter and passenger (belly) cargo space.
Ideally, Air China and/or Cathay Pacific would fit the bill for another Far East sector in addition to Japan’s ANA Cargo.
Cathay being a “oneworld” member might however be a mental stumbling block.
There are others of course, but, who knows, the thinking may well be in a totally different direction such as Africa or even Latin America.
Let’s wait and see!

Heiner Siegmund  /  John Mc Donagh

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