Exactly one year ago, Ashwin Bhat, then still CCO of Lufthansa Cargo, spoke of a post-pandemic situation and the new normal in which airfreight found itself. Today, 12 months later and in his new role as CEO of the cargo airline, he speaks of “uncertainty as being the new normal”. The industry lurches from one challenge to the next, he exclaimed during the Frankfurt-held Air Cargo Conference last week, naming inflation, consumer reluctance, and the downturn of core markets - predominantly China - as evidence of this thesis.
The latest results of the German cargo airline prove this volatility. In August, capacity grew by 9%, because belly capacities returned, whereas yields went down 36%. “We are sitting on a roller-coaster,” Mr. Bhat exclaimed. However, every crisis is followed by an upswing, as the history of air cargo teaches, he said. He cited long-term market forecasts that Airbus, Boeing, and industry analysts regularly provide. They predict that air freight will keep growing at an average rate of 3.1% per year, beyond the current decade. According to the cargo chief, this is due to 5 megatrends:
Firstly, globalization:
“It is not dead, but changing,” Ashwin declared. There is a visible China+1 or even China+2 trend, with enterprises relocating their production. A trend to which Lufthansa Cargo has
responded with changes to its network. For example, Hanoi was added to the route program and India was strengthened.
Secondly, e-commerce:
It’s here to stay, he forecasted. Therefore, Lufthansa Cargo intends to drive forward the handling of parcels and packages at its FRA hub and offer the market hub and spoke services using its
A321 freighters on regional routes, but also to the Middle East and North Africa. The cargo airline’s fleet will be increased from currently two to four units before the end of this year. As far
as fast ground handling at Frankfurt Airport is concerned, Lufthansa Cargo is in partnership with Georgi Handling: A division of labor that is already underway.
Digital infrastructure:
The third megatrend is smart data management. Lufthansa Cargo will continue to expand its digital infrastructure, synchronizing the new world of data with artificial intelligence. This will
improve the customer experience, drive sales initiatives, minimize errors and raise product quality to a higher level, the manager outlined.
Sustainability
That is the fourth megatrend mentioned by Mr. Bhat. By 2022, 2% of the freighter fleet's fuel will be SAF. While this doesn't sound like much, it is nevertheless two years ahead of the
environmental targets set for civil aviation at the 2015 Paris Conference. He clarified that Lufthansa Cargo will continue to drive decarbonization, “because if we don't do it on our own
initiative, the legislator will force us to do it through requirements.”
People
The last and actually most important point concerns the company's own employees. “People are the most relevant topic because we are in a people's business,” the executive stressed. A
considerable part of the staff will retire in the next few years, so they will have to be replaced to keep the business going. He announced encouraging staff to gain frontline experience through
temporary employment at various stations within the worldwide Lufthansa Cargo network. “This staff exchange gives our people the feeling of the uniqueness of our company and conveys our
special corporate culture to them at first hand.”
The CEO rounded off his megatrend list by stating that “caring for and assisting our staff in planning their life cycle in coordination with our company's requirements and their personal
needs is our top priority.” Before putting the mic aside, he recounted this incident: A woman had recently been outraged by the fact that Lufthansa Cargo was apparently having sharks
slaughtered en masse in order to use their skin to cover the fuselage of its own freighters because of the favorable aerodynamics. “The example shows: We still have a lot of educational work
to do,” were his closing words at the ACCF.
Jobs at airports must be made more attractive
Human Capital was also the core topic on the owner of the Frankfurt-based service provider, Logistic Training Center (LTC), Elke Wasser’s agenda,. The company, which has been on the market for
three decades, has earned a resounding name for itself because of its innovative personnel and coaching concepts in the cargo industry. Ms. Wasser pointed out the increasing shortage of skilled
personnel in the aviation industry, as the baby boomer cohorts will soon be retiring from the workforce. This creates a huge staffing gap for many logistics companies and cargo airlines, and not
just at Frankfurt Airport. So, what to do? After all, there is no magic formula to fill the glaring gap fast. Here are her points:
- More staff urgently need to be brought to the Rhine-Main site to be available for ground processes such as freight handling, apron activities, cargo loading, etc.
- The attractiveness of most jobs must urgently be improved. After all, why did so few employees return to the airport after the wave of layoffs when passenger flights were down during the pandemic? This is something that those in charge need to think about more carefully, she noted.
- Above all, air freight needs a better reputation. This could be achieved, at least in part, through a presence of main cargo actors at job fairs, presentations at trade events, and the consolidation of job advertisements launched by different players.
However, the most important thing, she concluded, was for today's employees to report positively on Frankfurt Airport as a workplace in their personal environment. This is the most convincing approach and promotes the interest of some interlocutors to take a closer look at job offers from airlines, handling agents, forwarders, sales agents, or the airport itself.
Beluga goes commercial
The conference was rounded off with news from Benoit Lemonnier, Managing Director Airbus Beluga Transport. His company expects to receive the EASA AOC in early OCT23 for its fleet of five Airbus
A300-600ST (Super Transporter) aircraft, also called ‘Belugas’ because of their whale-like appearance. Operating under the IATA code BCO, the company will then offer transports for commercial
customers as well as the military of safe partner states. For this purpose, three of the aircraft will be equipped an autonomous loader. The BXL Beluga version can carry up to 44 tons and is an
option especially for bulky and voluminous goods. Its sister model, the Beluga BST, can fit a 40-ton load.
Asked about the ratio between factory flights to transport Airbus components to the end lines in Toulouse and Hamburg, and commercial flights, he said that in the future 10% will be
Airbus-internal shuttles and 90% will be third-party orders.
With the complete loss of the Antonov-124-100 wide-body freighters operated by Russia's Volga-Dnepr Airline, which was grounded by Western sanctions, the market is at least again being offered
larger capacity for the transport of outsized cargo via Airbus Beluga Transport.
The company is headquartered in Toulouse.
Heiner Siegmund
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