This is at least the message Peter Gerber, Lufthansa Cargo’s helmsman gave to a gathering of members of the press last Monday at Frankfurt Airport and hosted by both Fraport and LH Cargo.
Is it going to be that easy to stay in the “league”?
The gathering under the motto of a “summer evening drink” was held in Fraport’s luxurious DaVinci House, which is situated almost on the threshold between Frankfurt’s two main runways and also included a specialized viewing tour of the loading of an LH Cargo MD-11 freighter beforehand.
Mr Gerber gave a clear message in that Lufthansa Cargo is facing tough times in the so-called general cargo sector and must position itself differently in the future in order to effectively combat the continued decreasing yields it and many other carriers are facing.
This, he stated can only be achieved with a well thought out mixture of effective cost cutting which will not harm the carrier’s customers and the introduction of new product lines.
C40 cost cutting program is first step
The reduction in costs is necessary due to the depressing general air freight trend, Gerber said. The C40 cost saving program is aimed at saving up to 80 million euros annually and entails a manpower cut of between 700 to 800 in the near future, Mr Gerber stresses. These drastic steps will have no negative effect for LH Cargo’s clients, as the carrier will not reduce staff in the important interface between the airline and its customers, he noted.
New products - new customer approach!
However, just cutting costs is not enough according to the LH Cargo top man. New product lines are essential for the carrier to continue in the Champions League in the future. Gerber stated that the carrier will within the coming weeks outline a new competitive product for the general cargo product. Whether this will be geared towards a further new joint-venture along the lines of the LH Cargo – ANA, United or Cathay Pacific deals which were recently inked, remains to be seen.
Private customers and e-commerce
The German national carrier’s cargo management is intent on offering a specialized product to “the man on the street.” This year already the carrier will introduce a so-called “Freight Ticket” which can be accessed by the public via a smartphone App. With this, passengers can for example book their motorbikes for a trip through the USA directly with Lufthansa along with booking their own flight. This was previously only possible through a freight agent.
The e-commerce boom has not gone unnoticed by LH Cargo and according to Mr Gerber there are plans to intensify talks with the mega e-commerce giants such as Amazon in order to profit from this ever growing lucrative market.
Too much capacity
This has been a fact for some time and the continued boom on orders for long range passenger aircraft with plenty of belly space are making it more and more difficult to run freighters at an acceptable load factor or revenue return. Lufthansa Cargo has no plans to do away with their freighter fleet of B777Fs and MD-11Fs.
However, the writing is on the wall and as Mr Gerber made clear to his audience, new product lines and better yields are of utmost importance if the carrier is to stay in the Champions League and win the final match.
John Mc Donagh