LanChile blazes the trail

LanChile now derives something like 40 percent of its total revenue from the air freight sector of the company's activities. In part, this success has been due to forging alliances with other carriers, thereby allowing LanChile to add both capacity and schedules to its own timetable. Much of the cargo expertise came into the company with the take-over of rival Chilean all-cargo carrier Fast Air. However, nowadays, the Fast Air brand has become absorbed into the LanChile organisation.
However, relationships continue with a number of other carriers, with cargo space bought from them via LanChile subsidiary South Florida, an indirect carrier which concentrates on commercial activities in a variety of markets.
In Brazil, for example, LanChile works closely with ABSA (Aerolinhas Brasileiras).
According to Claudia Silva, Lan Cargo's vice president, North America, the two carriers co-operate in the area of handling and sales.
"In Guaruihos, Viracopos and Rio de Janeiro, ABSA represents us in these two activi-
ties and we do the same for them in both Miami and Santiago," he explains.
LanChile also has equity stakes in Miami-based US carrier Florida West as well as
Mexico's Mas Air, where its holding is as much as 25 percent. In the case of Florida West, aircraft are hired by the hour whenever a special need arises, while LanChile and Mas Air function as GSAs for each another in their respective countries.
In Ecuador, LanChile also has a commercial arrangement with the country's lag-carrier Ecuatoriana, whose perilous financial position has resulted in the Chilean carrier undertaking passenger flights on its behalf Although cargo does not yet form part of the overall agreement, there are future possibilities in this area.

LOCAL FRANCHISES

In fact, taking LanChile as a whole, the company is looking to open local franchises throughout Latin America. It already has a 49 percent holding in LanPeru, for which it undertakes cargo sales on flights linking Lima with Miami, while further opportunities are also being sought in the Central American states of Panama and Honduras.
Miami remains LanChile's main international hub; it currently operates the largest cargo terminal of any carrier at the airport. While Silva concedes that the slowdown in the US market has resulted in falling traffic at Miami, he blames much of the decline in cargo on Latin American economies. "Tonnage out of Miami has come down by between 10 and 20 percent, depending on individual markets," he notes, adding that other US gateways with strong Latin American links have suffered similarly. LanChile has responded by reducing capacity and combining destinations, such as Buenos Aires and Montevideo.

PERISHABLES

"Right now we do not have a balanced north/south flow of cargo due to the continuous growth of perishables exports to the US and the slowdown in exports to countries in Latin America. The US market for perishables is huge and we do not see any reason why that should change in the future. The only hurdle that we envisage is one of a lack of capacity due to fewer
freighters flying into Latin America given the current difficult economic conditions," Silva says.
LanChile Cargo, however, is not only retaining its current freighter fleet, but
is also adding new aircraft. At present, the company owns three B767 freighters and wet-leases another two from Atlas Air. Three more B767Fs are due to join the company later this year.
"Some of these aircraft will go to affiliated companies and not necessarily fly under the LanChile branding, this is because our partner airlines have interesting development programmes," Silva reveals.