A 1963 Aston Martin like the one James Bond drove in Goldfinger began its journey from Frankfurt, Germany, to New York by being maneuvered into the hold of a Delta Air Lines 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 U.S. airlines’ quest to widen profit margins with premium services for wealthy fliers. That strategy drives the lie-flat seats and multicourse meals lavished on full-fare travelers. The payoff from freight - a $4 billion-ayear industry for North American carriers - is even bigger, because passenger operationslargely 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. “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 percent, the airline has said, compared with a companywide operating margin that is forecast at 10 percent for the quarter.
“By definition, if it’s something people are shipping bybelly, 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, Fla. “Not just anybody off the street can do this. It requires special training and handling.”
In the past, Delta flew a few dozen vehicles a year, 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.
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.
American Airlines, which also 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-based carrier.
The car sold for $1.4 million, according to RM Auctions, which handled the sale.
“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 toput it on an airplane.”
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-colored Pagani Huayra, which starts at $1.1 million.
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.
Some Bugatti owners fly their cars in the bellies of passenger jets to high-end collector car shows at Pebble Beach, Calif., and Amelia Island, Fla., 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.” Information for this report was contributed by Richard Weiss, Robert Wall, Seth Lubove and Brian Welcher of Bloomberg News.
Business, Pages 67 on 05/19/2013