Despite much hype since Cargolux unveiled an ambitious global strategy that would see Zhengzhou-based Cargolux China launching new routes across Asia, the trans-Pacific, South America and Africa within the next three years, the carrier appears to be struggling to make the ambition a reality, pushing back its official operations to Q4 2018.
Originally scheduled to take flight in early 2017, then a more larger 2017, the joint venture between Cargolux Airlines International and Henan Civil Aviation Development and Investment Co (HNCA), where the Luxembourg-based maindeck specialist holds a 35 per cent stake – 10 per cent more than originally planned, for an estimated EUR 77 million. HNCA holds a 49 per cent stake with the remainder held by other Chinese investors.
The JV airline will start with three B747-800s and will add another two B747s as the routes develop with all aircraft being based at the Zhengzhou hub which is already Cargolux’s largest China hub, with 100,000 tonnes of freight uplifted to and from CGO in 2016. Currently the airline operates more than 100 weekly flights into China, Hong Kong and Taipei.
Cargolux Airlines International president & CEO, Richard Forson, has blamed both China’s ongoing anti-corruption platform and unclear foreign investment criteria for the delay. “China is undergoing a major anti-corruption drive at the moment, which has made partners over there cautious,” he said.
French news site Paper Jam reported following the financial results presentation, that delays have also been caused by China’s foreign investment rules.
“Chinese legislation is not very clear regarding the participation of a foreign company beyond 25 per cent,” Francois Bausch, Luxembourg’s Minister of Development, Sustainability and Infrastructure, was quioted by Paper Jam as saying.
Additional air rights are also a key issue, with Cargolux currently holding a market share of 10 per cent of the volumes transported by air through the province of Henan, according to figures from the Minister of Sustainable Development and Infrastructure.
Cargolux believes China will be the biggest airfreight market by 2020, worth a projected USD 1 trillion, both domestic and international.
And in a related development, Malaysia-based low cost carrier, AirAsia has signed a joint venture agreement in China to establish a low cost carrier (LCC), with its hub in Zhengzhou, citing the city’s “strategic location and importance as a logistics hub” and China’s One Belt, One Road strategy. More on this here.