The airlines have been bound together in an alliance now more than a decade old, but until now the KLM-Northwest cargo love knot has not been tied very tightly. Despite annual promises to combine their cargo businesses, it seems to have taken years to wring anything meaningful out of the trans-Atlantic relationship. The only tangible realization has been Northwest's agreement to take on the KLM "Select" branded time-definite service. But since then, there has been a distinct cooling in the affair, particularly when KLM Cargo turned its attention to its new amore, Alitalia Cargo.

Under the terms of a greater alliance between the two European carriers, Alitalia, it was agreed, would head-up the integration of the passenger operations of the two carriers, while KLM Cargo would spearhead a joint cargo effort. The guys from Italy then brought their cappuccino machines up to Amsterdam.

A few months later it was suddenly all over. Alitalia's protracted privatization and the failure to develop Milan's Malpensa airport into a fully-fledged hub were listed as the prime reasons for the fall-out. Others pointed to a fundamental cultural difference between the two carriers.

All that remains at KLM Cargo's headquarters today is the residue of scalded milk. "If we learned one thing from our time with the guys from Alitalia Cargo, it was how to make good coffee," quipped a KLM Cargo manager.

A visit to KLM Cargo's headquarters a year after the debacle gives the clear impression that it has taken most of that year for the Dutchmen to recover their composure. Certainly, having seen failure on one front, they are clearly intent on not letting it become habit forming.

Hence, serious efforts appear underway to fire up the cargo alliance with Northwest.

Northwest Passage

Michael Wisbrun, executive vice president of KLM Cargo is fully-enthused about the "new" relationship with his "old" friends across the North Atlantic.

"We have been looking closely at our networks, particularly in relationship to Asia," said Wisbrun. "We believe that together we can really make important gains on some of the major traffic lanes."

Better still, it is happening already, he insists. KLM operates daily 747 combi capacity out of Europe to Bangkok with onward connection to Taipei, a sector on which it has full traffic rights. It is an ideal opportunity for the Dutch carrier to use the 50 tonnes of capacity on each flight to piggyback U.S. traffic between Bangkok and Taipei. In Taipei, the cargo is cross-docked onto a 747 freighter operated by Northwest to Japan and the United States. "It also provides us with the opportunity to move cargo out of Japan using the same connection," added Wisbrun.

It gets better. Both carriers have suddenly discovered, after all this time, that all their freighter operations fly through Anchorage. Why not then, mesh their respective freighter timetables so that flights meet in Alaska?

"Again, this is something which we have already started to make happen," said Wisbrun. "By creating connectivity with KLM and Northwest's freighter operations over Anchorage cross-docking has become a reality."

In fact, "connectivity" is very much the buzzword at KLM Cargo at the moment. "Our focus is clearly on connectivity," said Wisbrun. "This calls for operational excellence at the interfaces with shippers, forwarders and partner carriers."

KLM Cargo has just rolled out a product line clearly intended to be the basis of its future business approach. That portfolio includes the Select four-option, time-definite product. Around 80 percent of all of the airline's general cargo shipments now move as Select 100 shipments - booked on the first flight with available capacity, with six-hour delivery and pickup times. The rest of the product range is aimed at specialized perishables, pharmaceutical and high value traffic.

In some respects, KLM Cargo appears to be going back to basics and aiming to give the customer a simple choice of products and services. "We do not want to be the first or fastest mover in this business, but we do want to be the smartest," says Wisbrun. "We do not want to be in a position where we dictate standards, but we do want to be in the position where we make them work."

It is a message he has clearly gotten across to his staffers, who are under strict instruction to keep inter-office memos down to one page. But he certainly appears to have inspired respect for his management approach from his relatively new team.

Boubby Gone

Wisbrun had the tough task of following in the footsteps of the enigmatic Jacques Ancher at KLM Cargo. He seems to have achieved that with some success on the inside, although his profile in the industry at large remains relatively low.

Few of the old Ancher people remain, certainly in the upper echelons of management. Boubby Grin, Ancher's right-hand man, departed a couple of months ago. Others, such as Oliver Evans, who headed the short-lived integration with Alitalia Cargo, have also left.

One of the few to stay is Frank de Reij, now in the right-hand seat as senior vice president air cargo. "After all that has gone on at KLM Cargo in the last couple of years, Michael Wisbrun has succeeded in putting us back on track," said de Reij. But he still pays homage to his old master.

"All that is happening now in terms of completing our product range and making sure our customer approach is right is directly the result of the groundwork and vision of (Jacques) Ancher."

The results are certainly showing up in KLM Cargo's returns. The airline reported US$1.26 billion in cargo revenue in its fiscal year ending March 31, a 17 percent gain over the previous year. KLM even showed a 13 percent gain in cargo revenue in a March quarter that was troublesome for most air cargo operators.

The sharp revenue increase came on just a 4 percent boost in traffic, so KLM's yield was up 13 percent for the year.

Lufty Labors

It's hardly the sort of gain that airlines trumpet, but Lufthansa German Airlines did improve its strike-over-strike performance by 50 percent last month. That meant the airline got some 300 of 1,100 possible flights in the air during the second one-day strike in as many weeks as a simmering contract dispute with pilots finally reached the boiling point.

That was hardly great news for the airline's customers, although the union's agreement to go to arbitration cooled tensions last month.

Officials at Lufthansa Cargo said the cockpit confrontation had little if any impact on freight business at the world's top cargo-carrying combination airline. Lufthansa Cargo operated all of its scheduled long-haul freighter flights, spokeswoman Bettina Stock said, using a combination of management and non-union pilots.

She said the majority of Lufthansa's long-haul passenger flights also took off, giving the carrier the use of most of its cargo capacity despite the cancellations.

With most of the impact felt on intra-Europe routes, the airline turned to trucks for some of its freight linehaul. To replace lost passenger belly lift on the canceled flights, Lufthansa moved freight within Europe by truck, some starting the night before.

The strikes come after Lufthansa Cargo posted its best full year performance in 2000, with profits rising from $48.5 million to $201.2 million. The carrier increased capacity 8.7 percent and demand rose 8.4 percent. Revenue grew 23.1 percent to $2.3 billion. Cargo Chairman Jean-Peter Jansen attributed the growth to time-definite products that were launched in 1998, a strong world economy and favorable currency movements.

Still, the world economy started to hit the airline this year. The $7 million profit in the first quarter for the carrier as a whole were $23.8 million less than the first quarter of 2000. Overall revenue grew 8.6 percent to $531.7 million.

... Briefly

The European Commission may outlaw a 55-year-old International Air Transport Association agreement that permits cargo operators to coordinate their prices because the EC believes it restricts competition. … Traxon Europe upgraded its information on Air France Cargo service to include proactive status messaging and more detailed flight schedule data. … British Airways World Cargo awarded Transcendasm, an alliance of ARINC, Cargo Community Network PTE, Cargonaut and Icarus e-Com, a three-year contract to provide a global messaging gateway for BA's worldwide trading partners. … British aviation and rail service organization Securicor, won three-year contracts to provide hold baggage screening at Manchester and Stansted airports, while Norwich Airport outsourced its entire security operations to the company for seven years. ... Israel Aircraft Industries increased profits 26 percent in 2000 to $84 million on $2.18 billion in sales, an 8 percent gain.