A 1963 Aston Martin like the one James Bond drove in "Goldfinger" began its journey from Frankfurt to New York by being maneuvered into the hold of a Delta Air Lines Inc jet.
The tires of the $450,000 coupe were lashed to a standard freight pallet. Its gleaming chrome bumpers extended over the sides, so workers adjusted by putting slimmer cargo nearby. The bill for the trans-Atlantic trip: More than $10,000.
Delta flies about 100 cars a year, putting it in the vanguard of a new front in US airlines' quest to widen profit margins with premium services for wealthy fliers. That strategy drives the lie-flat seats and multi-course meals lavished on full-fare travelers. The payoff from freight, a $4-billion-a-year industry for North American carriers, is even bigger because passenger operations largely cover flight costs.
"The higher the value of the goods you're shipping, the higher the margin, and a lot of these cars are almost irreplaceable," said Helane Becker, an analyst at Cowen Securities LLC in New York who recommends buying Delta. "Most of that is going to flow to the bottom line."
Profit margins on Delta's $1 billion-a-year cargo business can top 50 per cent, the airline has said, compared with a forecast operating margin of 10 per cent companywide this quarter. It's a reliable profit contributor because costs for aircraft payments, crew and fuel are largely covered by fares from passenger ticket sales, the airline's main business.
Delta growth
"By definition, if it's something people are shipping by belly, they need it fast and they're willing to pay for it," said Savanthi Syth, an analyst at Raymond James Financial Inc. in St. Petersburg, Florida, who rates Delta market perform. "Not just anybody off the street can do this. It requires special training and handling."
Delta's current automotive cargo compares with a few dozen vehicles a year in the past, said Ray Curtis, vice-president of worldwide sales for Delta Cargo. The airline recently handled a $250,000 Lamborghini and a $150,000 Porsche 911 GT3 in addition to the vintage Aston Martin favoured by Bond, the fictional British spy also known as 007.
The carrier's shipments still lag behind European carriers such as Deutsche Lufthansa AG, which leads passenger airlines in automobile deliveries, and British Airways parent International Consolidated Airlines Group SA.
Stock returns
Delta fell 1.7 per cent to $18.64 at the close in New York as most US carriers declined. That pared the shares' year-to-date gain to 57 per cent, the second-biggest return among 10 carriers in the Bloomberg US Airlines Index. That outpaced advances of 48 percent for United and 16 per cent for the Standard & Poor's 500 Index.
Lufthansa has climbed 10 per cent to euro 15.74 this year, while IAG increased 50 per cent to 276.7 pence in London.
American Airlines, which, like Delta, handles about 100 cars a year, recently flew a restored red 1948 Ferrari from London to Chicago for a customer who had purchased it in Monaco, said Tristan Koch, managing director of cargo sales in Europe for the Fort Worth, Texas-based carrier. The car sold for euro 1.1 million ($1.4 million), according to RM Auctions, which handled the sale.
'Newest Bentley'
"Some people want to be the first person in Los Angeles with the newest Bentley, so $10,000 on a $250,000 product isn't important," Koch said of the typical cost, which can top $13,000. "If you stick it on a boat, it's out of your sight in a 40-foot container for weeks. Or if you have a race in Argentina this week and need it in Switzerland tomorrow, you need to put it on an airplane."
One constraint is that American mostly uses Boeing Co 777 jets on trans-Atlantic routes and loads cargo pallets horizontally, which means it can't handle cars that are longer than 4 meters (13.1 feet), such as modern Rolls-Royces, he said.
"We can't physically load them," Koch said.
Lufthansa, based in Cologne, Germany, transports about 1,400 vehicles per year and also has a fleet of dedicated freighter jets. "For our employees, the transport of exclusive and rare sports or luxury cars is always a special highlight," Brigitta Ebeling, product manager at Lufthansa Cargo, said in an e-mail.
British Airways parent IAG said it handles "hundreds" of cars per year, declining to be more specific. Recently the London-based carrier flew a dark-coloured Pagani Huayra, which starts at euro 850,000.
Achieving perfection
Even with volume growth at the passenger airlines, airfreight specialists such as Cargolux Airlines International SA and Deutsche Post AG's DHL retain an edge.
In addition to flying Formula 1 cars, DHL also flies Bugatti sports cars, which have an average sale price of $2.5 million, around the world for customer delivery, said John Hill, director of sales for the Americas for the Molsheim, France-based automaker.
"It's the best way to ship a car because it is safer," Hill said in a telephone interview. "Everything is geared toward perfection. There's nothing we do that's trying to cut costs, and that continues through the delivery phase."
Some Bugatti owners fly their cars in the bellies of passenger jets to high-end collector car shows at Pebble Beach, California, and Amelia Island, Florida, or to races and driving events, he said.
"Some people like golf," Hill said. "This is a hobby that these individuals like to do when they get away."
