Cargolux partners with Emirates — what about China?

Today, at the Air Cargo Europe event in Munich, Europe’s largest all-cargo carrier, Cargolux, and Dubai-based Emirates SkyCargo announced an MoU for an expansive “strategic operational partnership”. The deal between the all-cargo and combination carriers includes reciprocal block space and interline agreements, joint handling at each other’s major hubs (Dubai and Luxembourg), and, for Emirates, access to Cargolux 747Fs for heavy/outsized cargo requiring nose loading or cargo otherwise unsuitable for Emirates’ own 777F fleet.

The deal immediately explains how Emirates plans to deal with outsized cargo after it ends 747-400ERFs ops of its own this year. In March, Emirates announced it would end an agreement under which it has ACMI-leased two 747-400ERFs for nearly ten years (at first from TNT Airways, and later from ASL Airlines Belgium following FedEx’s acquisition of TNT and ASL’s subsequent acquisition of TNT Airways). Although Cargolux is not ACMI-leasing any 747Fs to Emirates, the freighters will be available on an ad-hoc basis as required by SkyCargo.

Another notable outcome of the MoU, will be the reinforcement of Luxembourg’s Findel Airport (LUX) and Dubai World Central (DWC) as key hubs, from the expanded presence of SkyCargo and Cargolux at each other’s home airport. Beginning in June, SkyCargo will launch freighter service to LUX. Similarly, Cargolux will add additional frequencies to its three-times weekly service to DWC. The two carriers will also begin joint cargo handling operations by Luxair Cargo at LUX and Emirates SkyCargo at DWC, facilitating seamless transfers for all-types of cargo, including pharmaceuticals for which both carriers are GDP-certified.

As part of the deal, both carriers will expand their networks by implementing block space and interline agreements on non-overlapping routes, without having to open new gateways. Emirates’ widebody passenger flights serve nearly 150 destinations in 83 countries, while Cargolux offers Emirates access to its 747Fs on scheduled frequencies throughout Europe, Asia, Africa and North America.

For Cargolux, this is not the first time it has eyed greater connections to the Middle East. Back in 2011, Doha-based Qatar Airways acquired a 35% stake in the Luxembourg-based carrier. Two years later, with cooperation between the two carriers not proceeding smoothly, Qatar solid its stake back to the Luxembourg government. Shortly thereafter, the government resold the stake to China-based Henan Civil Aviation and Investment Co. (HNCA).

With HNCA involved, Cargolux shifted much of its focus into establishing a second hub at Xinzheng Airport (CGO) in Zhengzhou, China, and laying the groundwork for an all-cargo airline joint venture with HNCA to expand trans-Pacific freighter operations. The jv airline has now been delayed for more than a year, and its status is now questionable. Qatar Airway meanwhile, has expanded its presence at LUX, independent of Cargolux, while continuing to benefit from the fifth-freedom rights between Qatar and Luxembourg negotiated as part of the original stake agreement.

Looking ahead, the alliance between Cargolux and SkyCargo should reinforce each carrier’s ability to counter emerging goliath Qatar Airways’ expanding freighter presence in Europe and the Middle East. But as for how China and HNCA will factor into Cargolux’s long-term strategy, that for now remains to be seen. During the signing ceremony, both airlines stressed there would be no financial stake involved, so there is no reason to expect the transfer of HNCA’s stake to Emirates. As for Cargolux China, perhaps block space on Emirates’ passenger widebodies will reduce the need for a full-fledged jv airline. Or, perhaps Cargolux is moving towards a triple-hub strategy between LUX, DWC and CGO. Cargo Facts will continue to follow this development.