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Cargolux China set for 2018 launch

Cargolux China set for 2018 launch

2017 06 22

2017 06 22

by Will Waters 

‘Henan Cargo Airlines’ to begin operating three B747 freighters from Zhengzhou hub late next year on intercontinental routes

Cargolux affiliate Henan Cargo Airlines (HCA) is set to begin operating three B747 freighters from late next year on intercontinental routes to and from the world’s fastest-growing cargo airport, Zhengzhou in central China, following the formal signing of the airline’s Joint Venture Equity Contract earlier this month.

Europe’s largest all-cargo airline Cargolux will hold a 25% stake in the new carrier, which will operate under a Chinese air operator’s certificate (AOC). The remaining 75% will be held by the Henan Airport Group (HNCA) – which also owns 35% of Cargolux – and the Xinggang Investment Group, responsible for the 400 sq km Zhengzhou Airport Economic Zone 30km southeast of downtown Zhengzhou.

Cargolux CEO Richard Forson told Lloyd’s Loading List that the carrier would initially operate three aircraft, all of which will be B747s to maximise synergies with the Cargolux fleet, from the fourth quarter of next year, with two further freighters of the same type joining within the first four years of operations. He said the two airlines would work together, for example with block-space agreements on each other’s aircraft, but as a minority shareholder, Cargolux would not have control of HCA.

Forson declined to reveal the routes HCA would serve but said the parties had been working over the last two years to optimise the airline’s route network. Nevertheless, he said all of the initial flights would all be intercontinental, with the airline looking later at the potential of intra-Asian services if the market required it. Transatlantic routes to the US are understood to be an initial priority.

In terms of what HCA could offer that Cargolux currently could not, Forson said operating with a Chinese AOC would open up a whole series of traffic rights available to China’s carriers that was unavailable to a European airline. And full hub operations at Zhenzhou by a Chinese airline with these traffic rights would allow it to serve markets more efficiently that may have unsustainable directional cargo imbalances for a Europe-based carrier.

He gave the example of Australia, which as well as simply being much closer to Zhengzhou than Europe also had better opportunities for directionally balanced traffic, for example due to strong and rising food exports from Australia to China.  

Forson said there were no plans for HCA to operate domestic flights in China. He said Cargolux was currently able to cover most of China’s domestic population via road feeder services, which from Zhengzhou could reach 1 billion of China’s 1.2 billion population within a two-day transit.

This already included significant volumes of air freight to and from major east-coast markets such as Shanghai and Beijing, especially during the fourth-quarter peak season “when Shanghai and Beijing are not allowing any charter flights”. But Forson said a price differential between direct flights from Shanghai and those operated via Zhengzhou meant some customers also choose to route slightly less-urgent Shanghai shipments via Zhengzhou at other, non-peak, times of the year.

But Forson said the Zhengzhou market itself, with a population 8.7 million in the city and 95 million in the province of Henan, was growing and developing rapidly, thanks in part to national and regional Chinese government policy to develop industries in areas outside of the coastal cities. This is being accomplished, in part, by creating an international air logistics hub at Zhengzhou and developing surrounding clusters of high-end manufacturing and high-value business services – such as in the Zhengzhou Airport Economic Zone (ZAEZ).

Among these is the world’s largest contract electronics manufacturer, Foxconn, which reportedly employs around 120,000 people at its Zhengzhou manufacturing plant, producing up to 80% of the world’s iPhones. But in addition to Foxconn, ZAEZ is said to be home to 14 other smartphone producers, who together account for more than 12% of global smartphone production, along with various large IT, biomedicine, aviation, and e-commerce firms.

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