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EU Carriers Continue to Struggle

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Air and Sea Cargo
Posted on 27 Aug 15

Cargo carriers in the European Union are still struggling to strive with declining market shares and pricing controls

In the European Union, only four airline groups, including Air France-KLM, Cargolux, IAG, and Lufthansa that almost carry 90 percent of the cargo flown by EU established carriers. Historically, these four airlines have been the most successful and esteemed airlines of the world, but history does not remain the same, and all of these once-mighty cargo operations have fought in the ultimate few years as opposition from new airlines in the Middle East, Turkey, and Russia has eaten into their market share and declining their pricing control.

All freight airlines Cargolux answered by selling a 35% stake to Henan Civil Aviation Development & Investment Co. and switching to a Luxembourg China double hub scheme.

Cargolux strategy is different from other three carriers, it does not show the same financial record and traffic as others and its strategy seems to be working.

In the last year 2014 for which data are available and revenue of Cargolux was more than 10.1 percent, volume was 9.9 percent and traffic was above11. 2 percent. IAG, which controls the British Airways and Iberia ended its long-lasting agreement with Atlas air for three carriers 747-8Fs last year. IAG stated that it would emphasis on the bellies of its passenger airlines, its current contract with DHL express for feeder support inside Europe. This contract looks to be working. IAG does not show data of EBIT for its cargo operations and not for its load factor.

But the current data reveal the rise in revenue in spite of a small drop in traffic and cargo group division’s statements show a new hopefulness. Lufthansa airline has answered the last year ‘s challenges starting again its deal to a main area operation.

The Cargo division of Lufthansa Group stayed profitable in spite of dropping demand, and it was clear that things were not going well, at least they were not working critically.

The Lufthansa group did not openly reports the decline  in its report but did describe that competition on worldwide airfreight markets remains extreme. The Middle East and Turkey airlines are showing a rise in their cargo capacities due to their new passenger airlines. Air France-KLM is careless of any plan and its cargo department shows a continuous operating failure or increase in loss. It shows a drop in revenue, volume, traffic and in load factor. AF-KLM continue to cut down its cargo fleet and planning to go only two 777F and three Boeing 747-400ERFs by sometime in 2016.

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