Horses, rhinos come to air cargo's aid in recession
FRANKFURT (Reuters) - Milano de Flore, waiting dozily at Frankfurt airport for a flight to Buenos Aires after competing in the London Olympics, had no idea how important he is to the air freight business.
That is because he is a horse - one of the many millions of live animals whose transport by air has helped operators cushion the ups and downs of the air cargo sector in the past few years with lucrative specialty freight business.
"It's stayed relatively constant throughout the crisis. There's hardly any volatility like with usual freight. People just love animals," Axel Heitmann, head of Lufthansa Cargo's Animal Lounge in Frankfurt, told Reuters.
And like other kinds of speciality freight - such as pharmaceuticals that have to stay cold, perishables like flowers or valuables like gold - animal cargo is more profitable than general freight.
Larger animals in particular - such as dolphins bound for a water park in Dubai, giant pandas on their way to a new home in Paris or thoroughbred race horses - offer carriers hefty margins.
Lufthansa Cargo, the freight arm of Germany's leading airline Deutsche Lufthansa transports around 100 million live animals per year, almost as many as the number of passengers served by parent Lufthansa.
That number does however include 3,000 tonnes of worms to be used as fishing bait and a lot of tropical fish, Heitmann said.
At around 30 million euros in annual sales, Lufthansa Cargo's live animal business is still small, compared to its overall sales of 1.4 billion. But it's "absolutely a profitable business," Heitmann said.
Lufthansa invested at least 10 million euros in a new 4,000 square metre animal facility, the Animal Lounge opened in 2008, when its old facilities reached capacity and it was having to turn down business.
Lufthansa Cargo expects its animal business to grow revenues by about 3-4 percent this year, Heitmann said. That compares with a fall of 9.2 percent in volumes for Lufthansa Cargo's overall business in the first six months of the year.
Animals have been transported by air since the early 1930s.
In Germany, the demand for moving pets via planes was driven in the early days by army personnel, who wanted to take their dachshunds back with them to the United States.
Nowadays few airlines transport live animals because there are very strict regulations on the facilities they need to offer and how animals should be treated to keep them safe and well.
GIRAFFES RISK HEART ATTACKS, RHINOS NEED SEDATION
Zoo animals are often especially challenging because they may be especially large, fragile or poisonous. Rhinoceroses, unsurprisingly, have to be sedated throughout the flight.
"You don't want such a large animal lumbering about in flight," Lufthansa's Heitmann said.
And giraffes are so sensitive and at such risk of heart attacks that they have to gradually get used to rising noise levels on the plane before taking off.
But the dangers of transporting animals are worth it for those cargo carriers that are willing to make the investment.
KLM Cargo, part of Air France-KLM, which ships animals ranging "from bumblebees to giraffes and from guppies to horses", says it has seen no declines in demand for animal cargo in the crisis.
Industry-wide, demand for overall air freight meanwhile declined by 2.8 percent in the seven months through July this year, according to airline industry body IATA.
Horses like the 12-year-old stallion Milano de Flore, who placed 64th at the London Olympics, are a particular growth area for cargo carriers. This is due to the popularity of events such as the Spruce Meadows show-jumping in Canada and relatively new tournaments, including the Dubai World Cup.
Data from the Federation Equestre Internationale, the international body governing equestrian sport, shows a marked rise in events over the last four years. Since 2008, the start of the financial crisis, the number of annual events has jumped 34 percent.
"Given the growing popularity of equestrian sport worldwide, we expect the number of FEI competitions at all levels to continue growing," a spokeswoman for the federation said.
Cargolux , a freight-only carrier that flies up to 3,000 horses a year, recently invested in new horse containers that allow it to carry as many as 78 horses per flight on its Boeing 747-400 freighters, or 90 on the new 747-8F.
PRICE NO OBJECT?
Growth of animal cargo "is not necessarily linked to economic factors," Hiran Perera, Senior Vice President - Cargo Planning & Freighters at Dubai-based Emirates , said.
Animals flown on cargo aircraft can be very valuable, and owners are much more concerned with safety and reliability than with how much the trip will cost.
Air freight is generally more popular for transporting valuable goods such as gold or pharmaceuticals than ships or trucks. Air cargo accounts for just over a third of goods transported around the world by value but only about 0.5 percent of the tonnage, according to data from IATA.
It can cost anywhere between 5,000-8,000 euros to transport a horse from Europe to North America, compared with around 800 euros for a medium-sized dog.
Unlike pets such as cats and dogs, horses do not fit in the hold of regular passenger planes, which are only 1.60 metres high, and so have to fly on freight aircraft and require special containers that can fit up to three horses side-by-side.
If no horses are booked for the return trip, the container has to be flown back empty, which the cost of the shipment needs to cover as well.
Emirates has been transporting horses since 2001 and in April this year brought 70 of them from Oman to Britain for the Queen's Diamond Jubilee, a record number for the company.
"Pet and horse transportation has increased. It's partly because of the aircraft that we have and the fact that we've invested in all of this. It's beginning to pay off," Perera said.
Perera said Emirates has worked with aircraft maker Boeing (BA.N) to ensure the 777 freighter planes it was buying would be suitable for the shipment of animals as well as other cargo.
Such planes may require, for instance, heating as well as seats for grooms that travel with the animals.
On one of its 777s, Emirates flew thoroughbred horses from Sydney to upstate New York in 2010 - its longest non-stop cargo flight ever at 17.5 hours - and says the horses may have been worth more than the aircraft on which they were travelling.
A 777 Boeing freighter is worth $280 million at list prices, while a thoroughbred racehorse can cost hundreds of thousands or even tens of millions of dollars. (Additional reporting by Peter Maushagen; Editing by Anthony Barker)