A4E: Cargolux is Europe’s biggest all-cargo airline. What challenges are you currently facing — and how do they differ from the A4E passenger airlines?
RF: While 2017 and 2018 were exceptional years for the airline, 2019 has been a completely different kettle of fish. International demand for air cargo services has declined, leading to excess capacity in the markets, which in turn drives our yields down. This demonstrates the volatility of the air cargo industry. Being an all-cargo carrier, we must ensure that we can weather these periods until the markets improve. Our colleagues in the passenger industry have been experiencing solid growth in their volumes, but I believe that their profits are also falling, putting them under the same pressure. Maintaining customer satisfaction is key, also in the air cargo industry, with a B2C-type experience taking hold in the B2B relationship. Consequently, we need to continuously focus on innovation and improving the customer experience in order to make interactions seamless and information readily available for our clients.
A4E: How important is Europe in your business, and how can EU policymakers best support the air cargo industry going forward?
RF: The major trade lanes in the world today are Asia/North America and Asia/Europe. So yes, Europe is an extremely important part of our business both from an export and import perspective. Based in Luxembourg, Cargolux has built up an extensive road feeder system allowing cargo to be brought to Luxembourg and distributed from Luxembourg to many other European destinations. We also have direct flights to other cities in Europe. In this context, EU policymakers play a key role in developing a regulatory framework that centres on seamless and efficient EU trade with the rest of the world.
Policy areas of specific interest include the implementation of new EU customs electronic systems that communicate with economic operators, to allow the safety and security of goods for the protection of EU consumers as well as to support the Common External Border customs protocols.
The EU also implements policies aimed at securing high levels of security for goods imported into the Union via air. EU Policy makers could help the cargo industry by taking security initiatives that are risk based but more critically, they should ensure these are operationally viable and uniformly applied between Member States.
Finally, there should also be a structure of incentives, taxes and duties that reflects the EU’s sustainability objectives without disadvantaging EU airlines with regard to competitors and other transport modes. Cargolux, along with other EU cargo airlines, is a driver and an enabler of the EU’s high value-added export industry, and we should be supported in this role.
A4E: How important is digitalisation in your future success?
RF: We are in the midst of an intensive transformation program in which digitalisation plays an important part. The key issue with digitalisation is to determine exactly what we want to achieve at the end of the day and what value it will bring to the organisation. There is no doubt that there are huge benefits through digitalisation, but we must have the end goal and processes clearly defined at the beginning — to ensure that the investment we make results in the expected benefits. Digitalisation will play an important role in the way we interact with our customers and other third-party service providers to the airline, e.g. operations, customs, airports and others. Digitalisation will also enhance our ability to analyse huge amounts of data more quickly and efficiently. With artificial intelligence and machine learning becoming more commonplace, such analyses will continuously improve our ability to interpret the data.
A4E: How is Cargolux contributing to enhanced sustainability efforts throughout the industry?
RF: We are mitigating our impact on the environment in a number of different ways, with a key focus on fuel efficiency, a reduction in CO2 emissions, waste reduction and ethical practices. As an example, between 2009 and 2018, Cargolux more than doubled its fleet size while reducing its overall CO2 footprint by close to 10%. We have also adopted IATA’s short- and long-term goals to reduce CO2 emissions with the aim to eventually achieve carbon-neutral growth.
Corporate Social Responsibility is central to our philosophy. We strive to establish and maintain a social, environmental, and economically viable organization. As a signatory of the UN Global Compact, our airline is committed to upholding its 17 Sustainable Development Goals and weaving these initiatives into our daily activities.
A4E: How will the international CORSIA agreement and new national environmental taxes on aviation affect your business?
RF: Environmental protection is a key element of our corporate social responsibility program. CORSIA, or any similar agreement that is put into place will have a cost impact on the aviation industry. The question is: Are customers prepared to pay more for our services? Or is the expectation that the airlines absorb these additional costs? Until now the cost has always been on the airlines. In addition to this, airlines are also investing billions of dollars in the purchase of more environmentally-friendly aircraft on a continuous basis. Such investments will be jeopardised in the face of increasing taxes or fees on aviation.
A4E: What is the one thing you are most proud of during your time as CEO?
RF: I’m really proud to have launched the intensive transformation process currently underway within Cargolux, to prepare our airline for the future.