April 12 (Bloomberg) -- An African white rhinoceros peers through the bars of its Frankfurt compound, while across the floor a Madagascan chameleon inches around its vivarium and an Andean alpaca plucks hay from a bale.
It’s not a scene from the city’s zoo but from Deutsche Lufthansa AG’s Animal Lounge, a state-of-the-art complex that’s at the center of the German carrier’s plans to dominate the most specialized part of the $66 billion air-cargo industry.
Lufthansa, Air France-KLM Group and Dubai-based Emirates, which transports thoroughbreds for Sheikh Mohammed bin Rashid Al Maktoum, horseracing’s leading owner, are competing in a high-stakes market. Premium profit margins come with the risk of an in-flight death involving a beloved family pet, top-ranked stallion or priceless panda.
“It’s not like pharmaceuticals, where your main concern is the temperature,” said Animal Lounge Director Axel Heitmann. “If a bag of fish leaks it needs replacing with the right kind of water and the right oxygen. And if something goes wrong you can’t just hand a customer $1,000 and tell him to buy another pet. He wants the dog or cat he’s had for 10 years.”
Lufthansa’s Frankfurt facility handled 110 million creatures of various varieties last year, four million more than the number of human passengers carried by the airline and its units, though the total was swollen by 80 million tropical fish and 300 tons of worms, including live bait for anglers.
Dogs to Detroit
Among larger guests, the Cologne-based company’s annual roster typically includes 14,000 dogs and cats, 8,000 pigs, 2,000 horses and about 150 zoo animals. So far this year the latter have included a pygmy hippo, half a dozen penguins, two pancake tortoises and a pair of beavers, as well as five rhinos.
While animal freight makes up only 1 to 2 percent of Lufthansa’s total cargo revenue, the margins on carrying beasts make it worth the risks, Heitmann said.
Lufthansa will fly three horses from Frankfurt to New York for about 4,000 euros ($5,335) per beast, or a dog to Detroit for 800 euros, according to Heitmann, who has been in charge of the company’s animal transport business for six years. That compares with 675 euros it can cost for a standard transatlantic shipment of a similar weight to a racehorse.
“This sort of niche business is more profitable than commoditized air cargo, but you need to invest a substantial amount in specialist facilities to get the returns,” said John Manners-Bell, an analyst at Brinkworth, England-based Transport Intelligence. “They’ll be looking at a much higher margin.”
Emirates cargo chief Ram Menen said in an interview that the sector is a “competitive” part of the air-freight market.
“We do go after this business,” Menen said in Seattle after the Gulf carrier added a route there. “It’s lucrative and the number of airlines that can actually do it is pretty small. The horses we move are worth more than the plane itself.”
Equine flights have included one from Sydney, Australia, to Stewart airport in the Hudson valley, home to the Department of Agriculture’s New York Animal Import Center, which was the longest flown by Emirates at 18 hours 15 minutes, Menen said. Operated by a Boeing Co. 777 freighter, the service carried 16 horses for breeders, earning “hundreds of thousands of dollars.”
Other animal cargoes have included numerous pet tigers, a plane full of dogs and cats evacuated from the Lebanon after a missile strike, and zoo relocations that Menen calls “Noah’s Ark” flights since they usually involve two of each species.
Lufthansa, the top freight carrier among passenger airlines when its Swiss and Austrian subsidiaries are included, typically gets bookings six to eight weeks in advance, with injections and other procedures taking up half that period. Animals are also examined by 24 vets at the Frankfurt center before flying.
The bigger the animal and more specialist its requirements, the better the margin, Heitmann said. Species such as tropical fish are fruitful on both counts, traveling in water heated to between 24 and 28 degrees that Lufthansa also charges to carry.
Horses travel standing up three to a container, strapped in on both sides “so they can’t get up to any funny business,” said Heitmann. All are watched over by their grooms or attendants, the executive said, adding that incidents with equines are very rare, with the animal trade generally boasting “ever-decreasing” mortality figures.
“It unfortunately does happen occasionally, but we have built a lot of mechanisms in to prevent it,” he said
Emirates can maintain four different temperature zones in its freighters, allowing it to carry a mixed load of horses and penguins on one flight from New York, with the birds bound for Ski Dubai, the Middle East’s first indoor winter-sports resort.
Lufthansa’s main markets include flows of tropical fish from South America and Southeast Asia to buyers in Europe and North America, live fishing bait from Asia and horse exports from breeders in South America and Europe to the U.S. and Middle East, where some owners also now send their mounts to cooler climes each summer to escape blistering local temperatures.
Germany is also a pet exporter, with some owners preferring a Doberman or Rottweiler sourced from the breed’s original home. European small-animal exports have experienced growth as high as 15 percent over the past three years, with the rest of the market expanding no faster than 3 percent, Heitmann said.
Air France-KLM is a key competitor, as is Luxembourg-based Cargolux Airlines International SA, Europe’s No. 1 freight-only operator, which with a fleet of Boeing 747 jumbo jets says on its website that “large herds of animals” can be accommodated. Gulf carriers are not so much of a threat because locations like Dubai are too hot to hold animals for long, even fish, since warmer water holds less free oxygen, said Heitmann.
At the most rarified end of the market, FedEx Corp., the world’s No. 1 cargo airline, has been transporting giant pandas around the world since 2000, when it brought a pair from China to Washington. The most recent trip saw two arrive at Edinburgh zoo aboard a “Panda Express‘‘-liveried 777 on Dec. 4, with health checks every 30 minutes during the 10.5-hour flight.
There are some creatures that airlines won’t handle. Large fish and cetaceans such as dolphins are no longer carried by Lufthansa because the volume of water required could destabilize the plane, or flood it in the event of a leak, according to the executive, though Cargolux transports killer whales. Poisonous reptiles are also ruled out because of the risk of escape.
‘‘We could fly very exotic animals that make the eyes light up when you see them, but it’s not worth it,’’ he said. ‘‘It would be a nightmare to find you only had five of an original six poisonous snakes, and that one might be in the passenger cabin. You’d have to gas the plane if you couldn’t find it.”
Wild-caught creatures are also precluded unless permitted under the Convention on International Trade in Endangered Species of Wild Fauna and Flora, or CITES, which protects 35,000 animal and plant species, said Menen at Emirates, who has run the carrier’s cargo unit since its foundation in 1985.
The Frankfurt animal lounge opened four years ago and cost more than 10 million euros to set up. While operated by Lufthansa, it handles all animal freight which passes through the airport.
While Lufthansa is aware of what’s coming “95 percent of the time,” the animal-cargo industry is never dull, according to Heitmann, who spoke after agreeing to take charge of a water monitor lizard found stowing away in the hold of a rival freight carrier and which is destined for life at a local zoo.
“We get little surprises, such as a box marked ‘Live Harmless Reptiles,’ -- which is sort of subjective,” he said. “At least when I’m late home there’s always a story to tell.”
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