Lufthansa Cargo aims for more South American expansion

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Lufthansa Cargo is interested in further expanding its operation in South America after the successful launch of service to Manaus last week.

The carrier began serving Manaus in northern Brazil on 21 January with two weekly Boeing MD-11F flights. Manaus becomes Lufthansa Cargo's sixth freighter station in South America, joining Curitiba and Viracopos (Campinas) in southern Brazil, Bogota, Buenos Aires and Quito.

Lufthansa Cargo VP Americas Achim Martinka says the carrier now operates 10 weekly freighter flights to South America and is looking to further expand this operation as part of an effort to better balance its global network.

"We still have a lot of white spots [in South America]," Martinka told reporters at a Lufthansa Cargo briefing this morning in New York City. "We don't have Chile in our portfolio. We don't have Rio."

Martinka adds Lufthansa Cargo is closely monitoring "movements" in the South American cargo market, including the impact of the pending LAN-TAM merger. He says Lufthansa Cargo believes there is a lot of opportunity for further growth in South America. "The first step is Manaus and we'll see how this develops," he explains.

Speaking to ATI after the briefing, Martinka says he does not expect any new gateways to be added in South or North America this year. He says Lufthansa Cargo will initially focus on adding frequencies to some of its existing destinations in the region and will later examine possible new gateways.

Martinka points out adding gateways in Latin America can be challenging as airports such as Manaus lack infrastructure, including security infrastructure, compared with airports in North America or Europe. Setting up stations such as Manaus requires Lufthansa Cargo to be "creative" and appointing managers with a "pioneering spirit".

Lufthansa Cargo is the first European cargo carrier to serve Manaus. Its flights to Brazil originate in Frankfurt and en route to Manaus stop at Viracopos, a mini-hub of sorts for Lufthansa Cargo as it hosts all 10 of the carrier's South American frequencies. On the return leg, the new Manaus flight stops in Bogota and Quito before heading back to Frankfurt.

Martinka says most of the cargo heading to Manaus originates in South Korea. The service was launched partially at the request of Korean shippers who have large manufacturing facilities in Manuas. Martinka says Manaus is a fast-growing cargo market that is mostly supported by Korean companies including electronic manufacturers.

While Lufthansa Cargo continues to look at further expansion in Asia, the traditional growth market for most cargo carriers, expansion in South America is in some respects more appealing. Martinka points out the relative small size of Lufthansa Cargo's South American operation and how expanding in South America balances out its much larger network in other regions. "We need that mixture," Martinka says.

He adds competition is also less fierce across the South Atlantic compared to the North Atlantic given the limited number of cargo carriers operating between South America and Europe.

While Lufthansa Cargo is potentially open to working with Latin American cargo carriers in further developing its South American network Martinka says for now its strategy "is to do it on our own".

In addition to its six freighter stations in South America, Lufthansa Cargo handles belly cargo in Sao Paulo and Caracas. Lufthansa operates passenger aircraft to four South American cities - Sao Paulo, Caracas, Bogota and Buenos Aires - providing belly space to supplement Lufthansa Cargo's main-deck capacity.

In North America Lufthansa Cargo has seven freighter and 22 passenger aircraft stations. This includes Mexico City, which is served by both freighters and passenger aircraft. Lufthansa Cargo in the second half of 2009 also launched service to Guadalajara in Mexico but Martinka says this service was quickly dropped due to poor performance.