Brussels Hosts a Growing Cadre of New All-Cargo Airlines

One can never have enough cargo carriers in Belgium, it seems. The euro state is nurturing the birth of no less than three fledgling cargo airlines. Apparently all are determined to grab a share of the same market.

The start-up to watch could be Cargo B Airlines, which expects to begin operations in October with two leased 747-200 freighters. The aircraft are owned by 3P Air Freighters, an investment arm of Belgian bank, Petercam. A third freighter is planned for April 2008.

Most noteworthy about Cargo B is that Rob Kuijpers, former CEO of DHL Worldwide Express, will head the opeation.

"We see this as a golden opportunity in the Belgian market, which is singularly lacking in maindeck capacity," said Kuijpers. "There is also limited widebodied belly space following the demise of national carrier Sabena, which has not been replaced even with the launch of SN Brussels Airlines, which also has a more limited network."

After departing DHL, Kuijpers was for nearly four years executive chairman of SN Brussels. He resigned in September 2005 over apparent disagreements over future strategy.

Kuijpers believes his time with DHL will serve him best in launching Cargo B. It's not incidental, admits the former DHL executive, that the express operator will soon relocate its main European hub from Brussels to Leipzig in Germany.

"This will obviously leave a large capacity vacuum at Brussels, because DHL, besides handling its own express traffic, was also a significant provider of general cargo capacity for other carriers."

Kuijpers sees DHL's departure from Brussels as an ideal opportunity to enlist top-flight staff for his airline as well. DHL announced its departure from Brussels after failing to persuade the Belgian government not to impose a total nighttime flight ban. It was Kuijpers, it turns out, who fought on behalf of his former employer.

"I can't believe the Belgian government intends to sacrifice up to 6,000 jobs," he said.

Kuijpers insists the now-imposed night flight ban will not hurt Cargo B. "The strong likelihood is that we will begin with a rotation to points in West Africa, before continuing on to Johannesburg or Nairobi to pick up return loads of perishables," he said.

Initially, this will be a one aircraft operation, with the second aircraft on standby. "After Africa, we want to launch a similar operation to South America, carrying hard freight to, say, Sao Paulo and again returning with perishables by way of Quito or Bogota," he said.

From 2010, Kuijpers' strategy calls for the Cargo B fleet to be replaced with newer equipment, but he doesn't expect the fleet to grow beyond four or five aircraft.

Gorilla Competes

Another would-be Belgian cargo carrier is Silverfleet Airlines. Rather than wait for DHL to exit Brussels, the beast took advantage of the express operator's existing operation. Since January, Silverfleet has purchased block space on a four-times-weekly DHL DC-10 freighter flight between Brussels and Lagos, Nigeria.

Silverfleet GM Eduard Braken said this available capacity on DHL provided an immediate entry to Africa with up to four ULD positions on each flight.

"We've had delays initiating our own operation, so this has proved to be a very good interim solution," said Braken.

Silverfleet intends to enter the African cargo market for real this month with a 747-200 freighter leased from Evergreen Airlines.

"The original concept was to operate southbound services to Lagos and Brazzaville in the Congo and return by way of Johannesburg or Nairobi with perishables," but that was not cost effective, said Braken.

Silverfleet is the main shareholder of Brazzaville-based carrier Finalair. "The intention now is to use Finalair's (operating certificate) to operate internal routes within Africa, probably using a DC-8 freighter," said Braken. "These operations would then feed 747F flights to and from Brazzaville."

Braken, another Dutchman, with a background as a forwarder and general sales agent, is anxious to make an impact with his Belgian start-up.

"We want to raise the profile of our carrier beyond that of just serving the African market," said Braken. "Which is why we've started a weekly B747 freighter operation between Brussels and New York JFK.

"You only have to see what's happening in the Belgium market, with freight being trucked across the borders to France, Luxembourg, even the U.K., because of the lack of maindeck capacity out of Brussels. We want to get some of that business back."

Perhaps the most unusual Belgian cargo start-up is Connexus Air, headed not by a Dutchman, but an Australian. Anthony Martin is chairman and owner of Connexus, an aircraft maintenance company based at Liege airport, near Belgium.

Martin said he plans to purchase three DC-10 freighters, initially for use on long-haul services, and three 727 freighters to provide regional lift.

"Ideally we would have liked to have purchased MD-11Fs, but they get snapped up straightaway by the big boys," said Martin.

He said the airline would operate from Liege, with flights to West and Central Africa. Perishables will be the main commodity on return flights.

Martin says the DC-10 freighters can be profitable "by serving offline points, where shippers are prepared to pay a few cents more to avoid on forwarding and onward trucking charges."

All the start-ups cite market conditions, but the greatest development in the market in recent months hasn't been on the demand side but on the capacity side. No doubt Belgium's three start-ups were influenced by the European Union's flight ban of several African cargo carriers over safety concerns raised by their continued use of a motley assortment of aging equipment.

Footnote: Das Air Cargo, the African cargo carrier banned from E.U. space over safety concerns (Air Cargo World, March 2007) had its ban lifted. Frank Wright, director of flight operations, said the Uganda-based airline plans to resume Europe service soon with three DC-10 freighters.

Lufthansa Pays

Lufthansa Cargo is projecting stronger returns this year after rising costs, including the airline's settlement in lawsuits over allegations of price-fixing, dragged down earnings in 2006.

The world's second-largest international cargo airline, Lufthansa earned a $108.3 million operating profit last year, down from $143.8 million the year before. The airline's revenue jumped 3.4 percent to $3.78 billion as overall tonnage pushed up while cargo yield edged down slightly.

But higher costs were more of a drag on earnings, the airline said.

Lufthansa last September agreed to pay $85 million in the United States and $5.3 million in Canada to settle class-action suits filed in the wake of investigations in North America and Europe of alleged collusion among airlines in cargo surcharges.

Lufthansa says its fuel costs soared 18.5 percent in 2006 to more than $660 million.

The airline is projecting a "significantly higher" profit this year despite what it says are ongoing challenges in the market and at its main hub in Frankfurt, where the carrier is contending with proposals for tougher environmental restrictions.

"In the next few years we would use market chances and invest substantially in the Frankfurt base. But that will only be possible with the right underlying conditions for our operations at Europe's biggest air cargo hub," said Lufthansa Cargo Chairman Carsten Spohr.

... Briefly

After a stagnant 2006, European air cargo traffic took a turn downward in January compared to the same month a year ago. The European Airline Association said traffic to the Far East, Europe's largest freigtht market, fell 5.3 percent and business on the No. 2 North Atlantic lanes fell 5.4 percent. ... French logistics company Geodis said its net profit grew 50 percent in 2006 to $64 million on a 5.3 percent gain in gross sales, to $5 billion. The company, partly owned by France's SCNF Railway, set new performance targets to raise turnover 40 percent and to double its operating profit and improve margins from 2.8 percent to 4 percent. ... Finnair led Europe's top-tier carriers in cargo growth in 2006 with a 15.7 percent gain in freight traffic, with a little more than a 408 million freight tonne kilometers flown. Virgin Atlantic saw traffic grow 15.1 percent over 2005. ... Cargo traffic at Frankfurt Airport in January 2007 rose 2.6 percent over the previous year to 149,221 tonnes. ... AirBridge Cargo started twice-weekly 747 freighter flights between Frankfurt and St. Petersburg. ... As part of its re-fleeting efforts, Cargolux closed the sale lease-back transaction by way of Luxembourg-based Freighter Leasing, a joint venture in which Cargolux holds a one-third interest. ... Rutges Cargo launched an express service called "Urgent" for deliveries in the London area.

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