Lufthansa Cargo and Shenzhen Airlines agreed at a signing ceremony in Beijing in late October to set up a joint-venture cargo airline to fly on intra-Chinese and intra-Asian routes.

Initially, the new carrier is expected to operate two A300-600 freighters and will be headed by a German manager. Lufthansa will have a 25% stake and Shenzhen Airlines 51%, with the rest held by a German financial institution whose parent, KfW Bankengruppe, is 80% owned by the German government.

The deal gives Lufthansa Cargo access to the world's fastest-growing air cargo markets. The joint venture is also part of a strategy by Lufthansa to expand its cargo business without having to invest in its own aircraft or rely on expensive German pilots. Sources within Lufthansa Cargo says its recent deal to manage the transatlantic cargo capacity of US Airways, as well as the activities of its subsidiary Cargo Counts, which provides a similar service for other carriers, should be seen as part of the same approach.

The new airline takes advantage of a recent relaxation in rules by the Chinese authorities to allow local carriers to form joint ventures with foreign airlines - a further sign of China's determination to have enough capacity to serve its booming exports. The country has also been generous with cargo rights for foreign carriers in recent bilateral talks.

One question that hangs over the new deal is what it means for Lufthansa Cargo's existing partners in the region. WOW, Lufthansa's cargo alliance with Singapore Airlines, SAS and Japan Airlines, seems to have no part in the new venture. Air China and Cathay Pacific, with which Lufthansa shares freighters, say they have been consulted, but are non-committal. Li Jinlin, president of Air China Cargo, says only that it is "looking at how we might make use of the new joint venture".


Source: Airline Business