AIR France-KLM is set to take full commercial control of CMA CGM Air Cargo, which is restructuring its fledgling business - but has only until December 1 to form a full cargo agreement, reports London's The Loadstar.
The shipping line announced a long-term strategic partnership with the airline group in May, but a month prior to that, it appointed Mark Sutch, Cathay Pacific Cargo veteran, to head the airline's commercial team.
Observers welcomed the news. Some in the market had expressed concern over CMA's lack of experience in air. One executive noted that its Air Belgium-operated A330F routes, which at times involved multiple stops, would struggle to make a profit.
He said: 'The original route plan was a disaster. It would have been lousy revenue, with large costs and terrible planes.
'Mark Sutch would give CMA the experience it clearly needed,' he added.
However, after just three months at the new airline, during which time it received its AOC, redeveloped its A330F routes and took delivery of two 777Fs, Mr Sutch left the carrier.
A knowledgeable source said that, following the proposed tie-up with AF-KLM, Mr Sutch would no longer be managing the commercial side of the airline and had decided to leave.
'He was employed on the understanding that CMA was building a standalone all-cargo airline, but following the JV announcement, the goalposts moved. In the new joint-venture, it is AF-KLM that will assume the commercial lead, at least for the first couple of years, thus the scope is very different.'
And now, two experienced executives have expressed doubt that the AF-KLM deal is the right way forward. One insider said: 'I understand the strategy to create the JV, but I think it's a great shame that the standalone airline project was not taken forward. It effectively makes CMA CGM a capacity provider to AF-KL, which has a very established brand.
'Once the JV is up and in place, really AF-KL is in the driving seat. CMA has a very small team and will find a place in the bigger structure.'
While CMA now has its own airway bill and flight numbers, the plan is for it to be metal-neutral and sold by AF-KLM; it will not be expanding its global sales team. CMA will use all AF-KLM's systems, including revenue management and pricing, and day-to-day work will be dominated by AF-KLM.
Another seasoned observer added: 'This sounds like a backdown in strategy by CMA. It was naive in thinking it could just start up without proper advice or planning. This places af in charge - and that means more of the same old-school thinking which eventually leaves the likes of DHL and Maersk as the winners.'
But the move towards complete control by AF-KLM widens the possible forwarder customer base.
One insider said: 'It was actually a real challenge that CMA was associated with Ceva, as the forwarder community at large assumed Ceva got access to space and cheaper prices, and generally didn't like the fact that CMA was a customer and a competitor at the same time.
'The reality is that Ceva will just be another customer of the group, which couldn't afford to alienate its huge customer base.'
While giving commercial control to AF-KLM has brought out the sceptics, the deal isn't yet set in stone.
According to Air France, the pair have until December 1 to conclude a deal on air cargo, or see changes to CMA's shareholding agreement in the airline.
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The shipping line announced a long-term strategic partnership with the airline group in May, but a month prior to that, it appointed Mark Sutch, Cathay Pacific Cargo veteran, to head the airline's commercial team.
Observers welcomed the news. Some in the market had expressed concern over CMA's lack of experience in air. One executive noted that its Air Belgium-operated A330F routes, which at times involved multiple stops, would struggle to make a profit.
He said: 'The original route plan was a disaster. It would have been lousy revenue, with large costs and terrible planes.
'Mark Sutch would give CMA the experience it clearly needed,' he added.
However, after just three months at the new airline, during which time it received its AOC, redeveloped its A330F routes and took delivery of two 777Fs, Mr Sutch left the carrier.
A knowledgeable source said that, following the proposed tie-up with AF-KLM, Mr Sutch would no longer be managing the commercial side of the airline and had decided to leave.
'He was employed on the understanding that CMA was building a standalone all-cargo airline, but following the JV announcement, the goalposts moved. In the new joint-venture, it is AF-KLM that will assume the commercial lead, at least for the first couple of years, thus the scope is very different.'
And now, two experienced executives have expressed doubt that the AF-KLM deal is the right way forward. One insider said: 'I understand the strategy to create the JV, but I think it's a great shame that the standalone airline project was not taken forward. It effectively makes CMA CGM a capacity provider to AF-KL, which has a very established brand.
'Once the JV is up and in place, really AF-KL is in the driving seat. CMA has a very small team and will find a place in the bigger structure.'
While CMA now has its own airway bill and flight numbers, the plan is for it to be metal-neutral and sold by AF-KLM; it will not be expanding its global sales team. CMA will use all AF-KLM's systems, including revenue management and pricing, and day-to-day work will be dominated by AF-KLM.
Another seasoned observer added: 'This sounds like a backdown in strategy by CMA. It was naive in thinking it could just start up without proper advice or planning. This places af in charge - and that means more of the same old-school thinking which eventually leaves the likes of DHL and Maersk as the winners.'
But the move towards complete control by AF-KLM widens the possible forwarder customer base.
One insider said: 'It was actually a real challenge that CMA was associated with Ceva, as the forwarder community at large assumed Ceva got access to space and cheaper prices, and generally didn't like the fact that CMA was a customer and a competitor at the same time.
'The reality is that Ceva will just be another customer of the group, which couldn't afford to alienate its huge customer base.'
While giving commercial control to AF-KLM has brought out the sceptics, the deal isn't yet set in stone.
According to Air France, the pair have until December 1 to conclude a deal on air cargo, or see changes to CMA's shareholding agreement in the airline.
SeaNews Turkey