These announcements were made by CEO Andrés Bianchi of LATAM Cargo in an exclusive interview with CargoForwarder Global. The Miami-based manager also said that the freighter flights between Santiago de Chile and Chicago launched five months ago proved to be successful despite the current market weakness.
Mr Bianchi, the global air freight industry is currently facing a tough time with volumes going south as seen in many markets. In which way does this challenging economic situation affect
the business of LATAM Cargo?
AB: We experienced a difficult start into 2019 because of multiple reasons. In a nutshell: South America’s ongoing political and economic uncertainty, traffic into Argentina, Brazil and Chile decreased and remains weak. This has also led to depressed rates. On the other hand, northbound traffic developed robust with loads consisting mainly of perishables.
Any ray of hope on the horizon?
AB: Yes, but mainly due to capacity adjustments. For instance, in Brazil Avianca pulled their A330F out of the domestic market last spring. Simultaneously, they stopped intra-Brazilian passenger flights, which took lower deck capacity off the market. We are filling this gap right now, left by Avianca in Brazil. We have also observed some adjustments in Europe-Latin America routes.
Let me add to this another important aspect: The decision to exit B777F ops and move to an all-B767F fleet has proven to be the right one. Particularly in times like these, with contracting traffic, this comparably smaller freighter variant fits very well with the markets in which we operate. This minimizes the commercial risks of intercont flights LATAM Cargo conducts between South America, the USA and Europe, allows us to be creative in our routings and enables us to take advantage of opportunities faster.
You plan to relocate your European HQ from Frankfurt to Madrid. What reason for and when will this happen?
AB: Our HQ for passenger operations is located in Madrid for quite some time already. With Guido Henke’s retirement, our long-time Director Europe-Middle/East-Africa, we thought it would make sense to concentrate most of our activities at a single location, thinning out our Frankfurt office. However, we don’t expect to see any change in how we cover the market because of this move.
An additional factor is that Latin American cargo managers feel more comfortable if they are based in a Spanish speaking environment. It makes transfers much easier because of the many cultural and linguistic affinities, appreciated particularly by their families.
LATAM terminated their Rome flights after introducing services only in April 2018. Because competitor Alitalia fought LATAM aggressively off?
AB: The decision was mainly driven by poor market conditions and overcapacity on routes between South America and Europe. In this case, in particular the economic crisis in Argentina - which has tight links to Italy - led to a significant decrease in passenger numbers. While cargo was also weaker than expected, our decision to pull out of Rome was not driven by this.
LATAM also canceled the announced passenger flights to Munich. Why?
AB: The reasons are similar: If the economy isn’t there and there is overcapacity, it makes no sense to launch passenger operations. The project is not canceled, just delayed. From a cargo standpoint Munich is an interesting market.
You skipped Munich but started serving Copenhagen with a weekly freighter coming from Brussels. What reasons for?
AB: The B767 allows experimenting new origin-destination routes. As emphasized before, the B67F is ideal to serve smaller markets. We hope to capture a sizable portion of the traffic flows from Scandinavia to Brazil. In addition to CPH we are evaluating another origin/destination in Europe. But it’s premature to deliver details.
CFG: Speaking about routes: LATAM Cargo started freighter flights between Santiago and Chicago in mid-February 2019. How has this service developed and are other U.S. destinations served
directly from Santiago standing on your to-do list to be operated in the near future?
AB: The bottom line is positive, both in economic and commercial dimension. Results have been good and the route has been well received by our customers. Chicago is in a strategic location to consolidate our company’s presence in the Midwestern United States and it also offers unmatched connectivity to Asia. By opening this new route and working with our interline partners, we cut down transit time to Asian markets to less than 35 hours, positioning us as one of the best alternative to ship cargo from Chile.
Our network from Chile into the US includes four structural destinations plus two seasonal ones. This includes all-cargo flights, non-stop passenger flights and connecting flights in our hubs in Lima and Sao Paulo. We plan to continue to expand this network combining all these options in order to better satisfy the needs of our customers.
Mr Bianchi, thank you for this interview.