The Asia-Pacific's major airlines are trying to convince overnight express freight operator DHL Worldwide to modify plans to introduce 12 of its own Boeing 727 freighters into the region, apparently fearing the move will rob them of critical cargo income.
Until now DHL has used only commercial uplift for its Asia-Pacific business but earlier this year indicated changing market conditions were forcing it to bring in its own dedicated freighters.
The first four B727s are due to enter service before the end of 1995, operating through the Manila hub, with the remaining eight following over the next three years as part of a $725 million regional investment programme. Express freight is growing an average 40 per cent annually in the region, with the rise in areas such as China and India exceeding 100 per cent.
Although income from overnight freight is a relatively small part of airline revenue at present, the majors are well aware of the potential danger in allowing it to slip through their fingers. 'With the explosion in the passenger side of the business, many of these airlines have taken on a major passenger focus,' says Charles Longley, DHL's chief executive for Asia-Pacific. 'They don't fly in the middle of the night necessarily, so we have been almost forced to look at supplementing our commercial uplift with some dedicated uplift.'
As DHL has no route rights in the region, it will dry-lease the B727s to Guam-based Continental Micronesia which will wet-lease them back, operating them from Guam through Manila to other Asian capitals. But Longley says he may not need to put all 12 freighters into service, as talks are underway with a number of the region's major carriers after they approached DHL with offers of extra flights or adjusted scheduling, since the plans were unveiled. And Longley says he would much rather bring in no new planes: '. . . If a commercial airline will [uplift the freight] on our behalf, all the better because that's a variable cost.'
Other freight companies are also moving to strengthen their market position and pump development money into Asia-Pacific. UPS announced plans in June to invest $130 million in new facilities and services in the region over the next five years.
The freight market in China, where DHL has operated for nine years in a joint venture with the state-owned distribution and transport group Sinotrans, is set for rapid expansion. DHL will take the number of offices in China from 10 to 16 before the end of this year, followed by a further 10 outlets in 1996.
UPS also signed a memorandum of understanding in May with Sinotrans to establish a joint venture in Beijing as well as a letter of intent to set up a similar venture in Guangzhou.
Source: Airline Business
