Overcoming Challenges and Driving Innovation in Australasia's Air Freight Industry

Transcript

Jeff Pan:Hello everybody, welcome to the last panel of the day. This is going to be Love Island Australia Cargo Edition, and we've got 3 lovely singles here with one shared passion: air cargo. So we'll start with you, Nigel. Tell us about yourself.

Nigel Chynoweth:Nigel Chynoweth, I'm with Cathay Cargo. I'm the area head for Australia and New Zealand.

Jeff Pan:And how long have you been with Cathay?

Nigel Chynoweth:37 years and 15 years in this position.

Jeff Pan:Very cool. And Kim?

Kim Rasmussen:Kim Rasmussen, CEO Tasman Cargo Airlines. I've been with Tasman Cargo Airlines 5 and a half years but have 44 years of air cargo industry experience.

Jeff Pan:Kim also speaks 7 languages as well.

Kim Rasmussen:Yeah, try me.

Mariette Ebersöhn:I'm Mariette Ebersöhn. I'm with Texel Air. I'm the Chief Commercial and Strategy Officer. I've only got 1.5 years' worth of cargo experience, but before that I've been in South Africa working for South African Airlines, a full-cost carrier, starting up Mango Airlines, a low-cost carrier, then working for a Pacific airline and now a cargo airline. Cool.

Jeff Pan:My name is Jeff. I'm the former Chief Product Officer at AirAsia Cargo. If you've recently flown AirAsia, I apologize, it wasn't my fault. And now I'm a founder of a VC-backed startup building cargo software for airlines like Emirates and Etihad. So I just want to warn everybody in advance, this is going to get a little risqué. You're going to hear some stories about horny animals. So we'll try to keep it safe, child-friendly. So maybe, maybe since most of the people in the audience are probably familiar with passenger operations but not not necessarily cargo. Maybe what are some of the craziest things that you've shipped at Cathay?

Nigel Chynoweth:When I was asked this question by Jeff, this, this one came directly to mind, and it was Henry the polar bear who was at SeaWorld, and he was 2 years old and started to get a bit frisky with his mother, so they had to move him out, but they wanted to keep him in the breeding program. So we knew he had to travel, but SeaWorld had to find a suitable place. So they were looking in Japan, they were looking in Canada, and other parts of the world. So we were planning these various flights. In the end, we don't fly a freighter to Vancouver, but we did fly a freighter to Vancouver to make sure that Henry got to where he needed to go. But it's quite interesting. He was only 2 years old. He had a handler and a vet. And he was in this big cage. And I didn't know he liked Kit Kats. He ate whole chickens. feed them fish, I was surprised. And as he left, he was on his back and he had this big tub of yoghurt that he was eating and he was just sucking on like a big bottle. So he was very content. But he's happily in his place and hopefully in the next couple of years when he's mature enough and is needed back in SeaWorld, they'll bring him back for their breeding programme.

Jeff Pan:And I think you've also shipped a lot of horses, right?

Nigel Chynoweth:Yeah, I think we all have, haven't we? Yeah, yeah, we ship them every week like, uh, like, uh, TCA or whatever the various, um, DHL organisations are. Yeah, so horses are a great one, but I think, uh, you've probably got better stories for us.

Kim Rasmussen:Yeah, so we last year we moved more than 2,000 house— horses, sorry, and, um, one was Noteworthy item is that when we load horses, you never load male horses behind female horses, ever.

Mariette Ebersöhn:Well, Texel Air, we, we move horses to smaller places. So we did a horse charter to Tahiti out of Auckland, and it was the first breeding stock that they got in 5 years after COVID, which was quite special as well.

Jeff Pan:I think statistically, on any given day, there's actually 200 horses that are shipped via air freight. So I think maybe what are some of the other interesting stories that you have from cargo? I mean, you've been several decades now. Nigel?

Nigel Chynoweth:Well, I think the most recent one has got to be the impact of COVID and how we changed all our— a lot of our passenger aircraft, not all of them, into cargo aircraft only passenger flights. And in that, there was quite a bit of work that we had to do with entities like the Hong Kong Civil Aviation Department to get the aircraft certified for the seats to be taken out and for cargo to be loaded there. But I think that epitomises the flexibility that cargo can provide an airline, and at the time, it certainly saved Cathay from extinction, really.

Kim Rasmussen:It was—

Nigel Chynoweth:it kept us going, and actually—

Kim Rasmussen:Yeah.

Nigel Chynoweth:We were able to benefit from that experience as well.

Jeff Pan:Maybe, I mean, most people might think that it's just a matter of taking seats out and then tossing some shipments in. Is it more complex than that?

Nigel Chynoweth:Yeah, well, we, in everything we do, we are guided by various entities. And as I said, the Hong Kong Civil Aviation Department won't let us touch any part of the aircraft. If we make a change, they have to certify something. So to get that in place was quite a deal. But it was a cooperation, a collaborative effort, and it really ensured that we, we were able to do that safely and efficiently. But every airline has that sort of— it's not a Cathay thing.

Jeff Pan:We actually all just learned an hour ago that an empty cargo aircraft actually weighs more than a full passenger aircraft.

Kim Rasmussen:Yep, despite all the seats in a passenger aircraft. When they're empty, a cargo aircraft actually mostly weighs more because of the reinforcement of the floors and all the locks in the aircraft.

Jeff Pan:And Kim, maybe what are some of the other interesting stories or things that you've shipped?

Kim Rasmussen:Well, many years, many moons ago, I was a commercial manager for DHL Aviation in the Benelux for DHL. And many of, some of these airlines in this room will be moving human remains. That have to be repatriated, and it's a very specific traffic. But we were approached by a, um, by an undertaker in Brussels who specialises in international movements of human remains. I tried to sell it to the operational team, but there's a lot of sensitivity, and, and, you know, you have to be very careful of what you do. And the DHL business model is it's all about speed— safe, but it has to be fast. So The operations team were kind of dragging their heels on this, and I met up, had several meetings with the customer, and a couple of months later he then asked me, Kim, are we going to do this or not? Because the season is starting. And this guy, he really looks like an undertaker with a sad dog face and everything, and I just, I couldn't get my head around the season is starting. Sorry, what do you mean? You know, Belgian people going on holiday, renting a motorcycle, getting killed, needing to be repatriated. Oh, that season.

Jeff Pan:So, and Mariette, I think you've had some more.

Mariette Ebersöhn:Well, one of the rewarding charters we've done was sometime last year there was a landslide in Indonesia and we had to do a very urgent short-notice charter take a remote-controlled excavator from Brisbane to Timika, and we had to stand it up in a very short notice, dealing with all of the authorities to land in a domestic port, making sure that we have equipment to offload it. So that was quite rewarding. That was quite nice.

Jeff Pan:And I think a lot of, a lot of people take for granted how their iPhones get to, get to where they are. There's actually a lot of complexity with cargo So maybe, Nigel, what's the toughest part about your job? What keeps you awake at night?

Nigel Chynoweth:Well, nothing really keeps me awake. I'm a good sleeper. But I just think that there's— aviation's wonderful, and that's why we're all here. We all love the challenge. I think there's a lot that happens that doesn't eventuate, but you have to plan for. A lot of the work that we do, and certainly this year is no different than others where there's been a lot of uncertainty in what happened, and we don't need to go into what it is, but so we're continually planning on what are the what-ifs, and that happens a lot because in the end we're a scheduled cargo airline. We've got 20 freighters, but we don't charter very much because our success is on really on-time schedules. scheduled shipments, which move around. And so any disruption really does impact on what we're doing, because we're committed to going to various destinations. So it's quite a struggle in terms of if all of a sudden you find there's somebody playing up in the States, which does correct—

Kim Rasmussen:does—

Mariette Ebersöhn:Yeah.

Nigel Chynoweth:impact on what we're doing in other parts of the world. There's a lot of work that goes in, so I'm always impressed with the amount of discussion that goes on, but ultimately we still do what we do, but we've got to work out ways of trying to maintain some sort of sanity and making sure our key customers are looked after.

Jeff Pan:And cargo's the only mode of logistics in which there's a time constraint, and so ships will wait by a dock for weeks sometimes, Trucks will wait by a warehouse for hours, but air cargo is extremely time sensitive because if you miss that sort of 30-minute, 40-minute window, that it's gone forever. And by the way, an interesting fact that I learned 5 minutes ago, at AirAsia, on our fleet of A320s, cargo revenue was about maybe 5 to 10% of overall top line. I think I've seen it get as high as 24% for Etihad, but For you guys, it's— what is it?

Nigel Chynoweth:Yeah, it's at least between 30% and 40% a year. It depends, depends on the year. But because— and we get that benefit by being where we are, where our home base is Hong Kong, which is the largest cargo airport in the world, so by throughput. So that's our benefit. It would be difficult for us to have that sort of a mix of business if we're in, say, Bali. So we are fortunate where we're home, where our home is.

Jeff Pan:And Kim, what is, what is it that keeps you up at night? What's the toughest part about your job?

Kim Rasmussen:Well, sometimes being a cargo operator, you feel like the poor cousin at the airports, handlers, etc., etc. And, but we're having— DHL is 49% shareholder of our company and by far our largest customer, and DHL Express have high expectations of service and performance. So it's been an ongoing issue getting everybody up to speed on where we, we need to depart on time. We've got very tough on-time performance targets and we generally meet them, but it is an ongoing struggle. Likewise, sometimes at the airports we feel that, you know, when, when the crisis is on, like, like COVID or post-9/11 even, freighters, you know, have a high profile. But we afterwards we drop down in importance again and we're kind of being pushed a little bit aside and we can feel that when we are, when we are looking for slots, when we are looking for airport support. We are operating on the 2 major airports in Sydney and Melbourne simply because that's where DHL is and they need us, need us there. Right. And being limited to how long we can be there and have nowhere to do maintenance is forcing us away from Australia to have maintenance and engineering done, which, which is a shame. We're an Australian airline and we've been operating for more than 30 years under an Australian AOC. So probably the biggest challenges we're seeing.

Jeff Pan:He touched on 9/11, and I think one of the most— one of the toughest parts about air cargo, one of the most predictable parts about it, is that it's incredibly unpredictable. When there's a A ship that crashes into a bridge in Baltimore, when there's pirates in the Red Sea, when Donald Trump opens his mouth, when there's a war happening, like all of these things dramatically change an entire industry. When Temu launches in Europe, all of these things dramatically change flight networks, cargo rates, and by the way, they're all good for the air cargo industry.

Mariette Ebersöhn:Yeah.

Jeff Pan:And then for you, Mariette, what's the, what's the toughest part about you?

Mariette Ebersöhn:I think the toughest part for me was when we've— we are a very young airline in this part of the world, and we've got some established businesses, but we wanted to grow the airline with limited resources and to scale up the airline in such a way that it's still cost-effective and making the best use of the resources. So needless to say, we've got quite a lot of multiskilled people now. And just, we recently started building our cargo charter business with a lot of specialised type of skills to diversify revenue streams. So this is most probably a challenge to say, how do you scale up with additional resources and what can you do with your current resources to grow in a good way?

Jeff Pan:And we've been pretty successful so far, but the next steps obviously will be to So for a passenger airline, obviously the bigger you get, you start getting economies of scale. For a cargo airline, is it an advantage or a disadvantage of having a limited fleet?

Mariette Ebersöhn:Yeah, so for example, we've got a little bit more flexibility. We are agile, so if an opportunity comes along, we've got some capacity to respond to that. Within our schedule that we can respond quite quickly. For example, on the west coast of Australia, we had a lot of damage to some of the turbines. We were able to, for example, set up charters very, very quickly with the, you know, with the resources that we had, whereas in a passenger airline or in a very limited, you know, airline where they've only got fixed services that they cannot necessarily make use of these opportunities. So in one way, we are a bit agile, more agile than others.

Nigel Chynoweth:Cool.

Jeff Pan:And so cargo, cargo is probably about 25 years behind the passenger side of things. It's very common to walk into warehouses and they're still running on paper airway bills and spreadsheets. Maybe if we, if we kind of look forward, How do you actually see cargo changing over the next 5 years?

Nigel Chynoweth:Yeah, that's a good question. When I first started, I think we were probably 15— 15 years ago, we were probably 15 years behind the passenger side. I think we're probably 5 years behind the passenger side now. We've really come up, but we have adapted a lot of the passenger products where Manage My Booking, which a passenger can do, go on board and go on the website and change their bookings. Well, we've now got that extended to agents. So there's a lot of things that we've learnt from the passenger side that's coming in on the cargo side, which is good. I just wanted to sort of touch on your other point about airports. And I think one of the things I don't think everybody would appreciate, but 30% of our business is perishable business going to Hong Kong and China, we being the food basket for Asia.

Kim Rasmussen:Mm-hmm.

Nigel Chynoweth:Uh, and we have a cutoff time of 2 hours before departure for that business to be all locked up. So we have 3, 4, and 5 hours for other cha— other general businesses in 3 hours. But to have, you know, nearly, uh, up to a 12-tonne, um, on, on your passenger flights 2 hours before departure ready to be checked in. So I, I, I will say that we are efficient, and I think that the terminals are becoming efficient, but that access for, uh, us to get access for the trucks to and from the airports is really critical. And I think just taking on the other thing, it is important for people to realise that we are an important driver of business for, for, for the Australian economy. That's our plug for the cargo side. But in terms of the, the next thing, I think as much as we hated COVID, COVID pushed us right along in terms of all our digitisation. So we've got a lot to be thankful for, for that. Um, and as an aside, Cathay had its 3 worst years, uh, during COVID and since COVID came out, we've had our 3 best years. So it's an incredible turnaround, but we've also changed the business, uh, a lot, and we've been able to do that, um, during the COVID time. There's a lot of spare time for people to do, um, uh, new planning. And so a lot of the things we're talking about with digitisation was done during that period. But when it hit, we've really been able to improve how we operate. But I think what we're finding is the normal business-as-usual things where governments and consolidated governments like the EU keep on putting in new requirements on shippers, which then ultimately comes to us because the documentation has to be right. So these things are sent to try us, but we do work with our shippers, our agents, and how we operate and make sure that we're facilitating that information and providing the best, best possible and the most efficient way that they can get their shipments through to the destination. But I'm sure there's plenty more examples of—

Kim Rasmussen:Yeah, well, you mentioned COVID. Those were the best years of our lives. We were a cargo operator. We had to manage, of course, our pilots especially and, and our staff for COVID itself, but our flights were full and we never flew more than we did during COVID So, so, but, but looking forward, I do believe that there's room to grow in the, in the cargo industry. And I think track and traceability for, for, for, for, for the agents, for people to be able to follow up, I think can be improved for the, for the general, general freight. I know you are, you're working on that. I also think that, I mean, sustainability was flogged today. Yesterday and today, but it's, it's high. And TCA is one of 3 airlines in Australia that are part of the Corsair program, ICAO program, and we do take this very, very seriously and have programs in place to see how we can limit our footprint. And it's not just in the air, it's also on the ground, and WSI, so Western Sydney Airport, has a very very interesting concept of all that, most of their GSE being electrified and not using diesel. That's going to be interesting to see how that, how that works out and what savings can be made for that on that area.

Jeff Pan:Maybe just to double-click on that. So Kim mentioned track and trace visibility. For those of you who don't know, basically airlines actually have a surprisingly limited amount visibility into where shipments are at any given time. We rely on something called EDI messages, which are manually sent in many cases. And so sometimes it's sent hours late, sometimes it's not even sent at all. And so literally on interline shipments between 2 airlines, airlines literally have zero visibility into where specifically their shipments are. And I think something like 5% of all interline shipments, it will miss its handoff on the connecting flight, and the airline actually has no idea, no alert from the ground handler, and it just creates this whole bunch of chaos. And then I think you mentioned that you had invested a lot on the digital side of things. Maybe what were some of the biggest breakthroughs that you guys had over the past couple of years?

Nigel Chynoweth:Oh, as I said, a lot of it where everything— again, when I started, But everything was controlled by, by the airline. Now we're giving control to the agents and the shippers.

Jeff Pan:It's—

Nigel Chynoweth:we are certainly trying to balance out. So there's a lot of requirements, certainly what the shipper does, that the agent does for the shipper in terms of documentation. But, you know, as was talked, they want visibility, they want to understand that transparency of information. So I want to know where my, my, my shipment is, and everybody, everybody does online shopping, and they'll go and track where their where their shipment is, and that's just become a common thing. So we do have that ability for— on our flights. So you just punch in your airway bill and you can see where your shipment is. We've got a 24/7 help desk where people are monitoring, especially the farmer shipments, the animal shipments. So anytime, any— they can ring Hong Kong and find out how their shipments are going. So this is all really important things, but— I suppose it gets back to the— it's still a very— it's still the same business that it was when it opened up, you know, 100 years ago. It's still shipments getting on board. It's just there's a lot more and the margins are less and we've just got to get more efficient and there's more requirements on us to comply.

Jeff Pan:And to just sort of highlight how challenging it is, 90% of airlines today don't even have a booking page for their cargo. So there's the same way that you would expect to just go on an airline website, search for a flight, book a flight, check in for a flight. Most airlines don't even have that.

Nigel Chynoweth:Well, 3 days before flight, if you looked at it, there's nothing booked.

Mariette Ebersöhn:Yeah.

Nigel Chynoweth:And then it goes out full. So it's just— there's a hell of a lot of trust. And we've— it's a closed user group, 2/3 are agents. They haven't changed. There's not a lot of movement in the agent world.

Jeff Pan:So there's a great deal of And then, um, on the sort of the booking side of things, which you guys have heavily automated, a single airway bill, which is like a boarding pass for, for a flight, a single airway bill will pass through close to 40 or 50 different systems, spreadsheets, paper processes before it actually gets into the warehouse. So it is significantly streamlined now. And Mariette, sort of how do you implement that?

Mariette Ebersöhn:So one of the main problems for cargo is one-way. There's always one-way traffic for cargo, one way, and then it's empty air flying back. And we are currently doing quite a bit of work to try and understand how we can change some of the behaviour. For example, a good example is fish travelling from Darwin to Sydney. It still goes by truck, takes 40 hours, can go 5 hours on an aircraft, but The cost associated with all the services and all of the infrastructure and everything around the air freight is much more expensive than the air freight itself. So I think there's a lot of room for improvement of totally streamlining and rethinking policy, screening processes, and people working together to actually make use of the opportunities that's pretty much available but not I think we were talking about this.

Jeff Pan:So, I mean, maybe are there hidden complexities in shipping fish?

Mariette Ebersöhn:Yes.

Jeff Pan:Do you just load it into the aircraft?

Mariette Ebersöhn:We did a bit of a trial just to— we actually did a trial to send, I think it was about a tonne of fish on our aircraft and then a tonne of fish on road freight to see what is the quality of the fish when it arrives at the Sydney fish market. Now, obviously, the quality of the fish was significantly better, most probably a 30% increase in the value that the fish can get, you know, as a selling value. However, yeah, the cost associated with that was just massive. For example, if you take a tonne of fish and you put it in a single container, that's not a problem. You can't scan a single container, it's too dense. So you have to pack it in small containers of like 100 kilos, package or 20-kilo packages, automatically it becomes non-viable. So it was just all these small learnings and saying, this, this is not going to work clearly. You know, there is better ways to do things. So we are still on our journey to, to, to get improvements in that regard.

Jeff Pan:And I guess this— I guess it also means that you've got really cheap flights from Sydney going back to Darwin on your freighters, right?

Mariette Ebersöhn:Yes, you will have very, very cheap capacity. But yeah, there is a lot of opportunity. That's what I will say.

Jeff Pan:And Kim, I mean, obviously with you guys, DHL is probably doing a lot of stuff. How do you see the air cargo industry changing over the next couple of years?

Kim Rasmussen:Well, one of the biggest challenges globally, I think, is there's plenty of conversions taking place for narrow-body aircraft. We've heard 3 presenters earlier at least mentioning the delays in delivery— deliveries of the wide-body aircraft, and I know Nigel mentioned that as well earlier today when we spoke. It's a challenge, but it's a double whammy for the cargo operators in the sense of not getting the deliveries of the production freighters coming out, but not having the passenger aircraft being delivered means that the airlines are— passenger airlines are holding on to their aircraft. that were actually planned to go into conversion. So there's a double whammy. And if you consider that 50% of all air cargo today is actually moved on freighters, it's a big, it's a big hit. And we're probably years away, maybe even 5, to being up to where the demand actually sits today on a global level. So yeah, that's a, that's a real challenge.

Jeff Pan:It's the last panel of the day. We'll take some questions at the end. So if anybody has any If anyone has any weird questions about cargo that they'd like to ask, here's your chance. And maybe to kind of wrap this up, we'll kind of touch a little bit on AI and tech. When you started, it was all probably all paper.

Nigel Chynoweth:Yes.

Jeff Pan:Fax machine, landlines.

Kim Rasmussen:Yes.

Jeff Pan:Sort of how do you— how has that changed what you do now?

Nigel Chynoweth:Well, AI is certainly starting to be used in a lot of the processing that we're doing, and that gets of course, validated. But a lot of the work we've done, we've— just to give you some stats, 100% of our bookings are online bookings. We don't take anything over the phone now. 99% of our shipments are lodged with e-documentation. We don't accept paper documentation anymore. 70% of our bookings to Hong Kong are auto-confirmed. Our staff don't even have to touch them. It's just automatically confirmed. And beyond Hong Kong, it's as high as 60%. So a lot of the work, a lot of the shift in terms of what our resources used to do, they've moved to much more— instead of what I used to say, they used to be operators and they used to be just tapping things. Now they're checkers and they're now becoming educators. They're now changing the way that they do and educating the agents about how we want them to contact us to try and improve the shipment integrity, the messaging integrity, so that we can become more efficient. So the change is quite a— and AI to me is not the big issue. It's the fact that our staff have to change to accommodate the AI. And you can't just do it the way you did your job previously, no matter what it is. You've got to make those adjustments. And yeah, it's— some of the things that happen are are subtle, but they make a big difference. So previously we've had staff that have been quite frustrated that they've lost control or they're doing a job that they didn't want to do. So we've got to try and help them through those sorts of things. But that's where I see AI is still very important, but it's more about the people thing is always the key piece.

Jeff Pan:He touched on messaging just to kind of illuminate how I think that's a really good point. I think that's a good example of how tough of a pain point it is. When I took over my last airline, our per-month messaging costs on EDI were a quarter of a million dollars. And for those of you who don't know, an EDI message is just— it's almost like a text message between airline systems, and it's only like 20 or 30 characters long. I was quite shocked that the entire industry was still running on that. Kim, so maybe how has technology, AI changed Your day-to-day?

Kim Rasmussen:Um, we, we are mainly using AI as, as a management tool. Um, uh, so apart from basic elementary information seeking, we're, we are basically using it to, to, uh, if we want to change something, um, and we then, you know, do a script or a search, um, we, we download. But AI is not the be-all end-all. You need to check, you need to, uh, AI takes no accountability. That's up to us to take accountability for what we do. But we do see huge benefits in time saving. I don't see us saving any staff, which we've got a small overhead anyway, but I definitely see us winning. We've recently changed one program we have from one department to another, and it was set up in a matter of hours, where in the past, if we had to do it the hard way, the old way, it would have taken us probably a couple of weeks. So yes, we're using it in traffic, but we're also very, very cautious. We tread carefully and make sure that we— AI doesn't just provide, it also takes. So you don't want to provide any sensitive information to AI that it can pick up and use against you, so to speak. So yeah, we use it, we use it carefully, but it is definitely part of the future. Absolutely.

Mariette Ebersöhn:On our side, we obviously are a smaller airline. We don't have the major budgets like a Qantas and a Virgin has. For us, on-time performance is absolutely key. So we've actually used our own data quite effectively using some AI tools to do some predictive forecasting on what spares we need to keep, what type of maintenance, the things that we can do better. So that was something that was positive. I think another example where we used AI very recently was we've got a Bahrain office and we operate in that geopolitical environment that is very fluid. And during this process, we've collated quite a lot of information and put it through an AI model to understand where we can fly, what we can do, and use that also to make decisions on a on a real-time basis. So that was a lot of people and a lot of parties working together, which was quite interesting as well.

Jeff Pan:Should I start looking for— like, am I going to have a job in 5 years?

Nigel Chynoweth:I'm worried about this whole area.

Jeff Pan:But she also mentioned Bahrain. Bahrain is actually very famous for sending falcons, and they actually will fly on the passenger side, and they give them these little hoods so that they can't see and they don't get anxious. And the crazy thing is they'll even fly the Falcons in first class for some odd reason.

Mariette Ebersöhn:Absolutely.

Kim Rasmussen:Yeah. I don't know.

Jeff Pan:We'll take a couple questions from the audience. I don't know if you want to flash the Slido. We've got a microphone. I know cargo is an extremely interesting topic. Yeah.

Nigel Chynoweth:Andrew from Aero South Pacific. Um, Western Sydney Airport, Texel, you're there. I talked to you this morning, Kim. Nigel, um, got any plans for Cathay Cargo? I think they fly to Sydney. We can fly there tomorrow. Right, are you going to, or— No, not tomorrow. Uh, yeah, look, we've, we've, we're ready to, we're ready to go. Our, um, cargo terminal operator Menzies, the is approved and ready to go, so we can operate there tomorrow. We've just got no need at the moment. Cathay's focus is on other parts of the world, so our 2 freighters that come in here on a Monday and Tuesday are quite happy at the moment in Sydney. But if things change, and we've got another airline, Air Hong Kong, which is work that we do with DHL, that's expanding and probably will do some e-commerce shipments, so—

Kim Rasmussen:Yeah.

Nigel Chynoweth:Whether that goes through Sydney or Western Sydney, we'll just have to wait and see. But definitely we can fly to any airport in Australia if there's business there. We're ready to go. So if the numbers stack up, if we've got aircraft, if we've got crew, we'll do it. And the business is there.

Jeff Pan:If anybody else has a question? I like the live deal-making.

Kim Rasmussen:Maybe we should mention that somebody has already started operating on WA.

Mariette Ebersöhn:Yeah, no, I think our owner might know no secret that he's pretty vested in Western Sydney. So we had 2 aircraft operating there yesterday at the launch.

Jeff Pan:Congratulations.

Nigel Chynoweth:Yeah.

Jeff Pan:Maybe, I think, is it very easy to set up with a new airport, or is it just extremely strict?

Nigel Chynoweth:It takes us 3 months.

Kim Rasmussen:Okay.

Nigel Chynoweth:Yeah. So again, Hong Kong Civil Aviation Department have to be approved. Our engineers have to be approved, everything like that. So there's a lot of backroom.

Kim Rasmussen:Cool.

Jeff Pan:I don't know if anybody else has any other questions.

Nigel Chynoweth:There's a couple there on the floor. Oh, oh, oh.

Jeff Pan:Ooh, A350F. Do you guys have any orders in for the new freighter?

Kim Rasmussen:We don't.

Nigel Chynoweth:We do. It's not going to be a game changer, but it's going to be— we're really— it hasn't flown yet, so— but we're sure that it'll operate efficiently. For us, the A350, the way that we operate at the moment, we've got Boeing freighter fleet of 20 fleet, and that's a different fleet of crew than the Boeing passenger fleet. With the A350, it provides a flexibility that the same crew can operate a 350 freighter as a as the A350 passenger variant. So for an operation like Brisbane, which is for us as an Airbus port, we operate an Airbus and a Boeing freighter. We can switch that to an A350 freighter so that we can get efficiencies of operating the crew. They can switch off the packs to the freighter crews. That makes it much more efficient for us. So there is— we are, you know, quite excited about that. We've got 20 of these, 7 have been confirmed and 13 on order subject to confirmation. So I think we're quite bullish about it as an aircraft.

Jeff Pan:By the way, cargo doesn't— isn't just high-end cargo with A350 freighters. There are small turboprops in the Caribbean that just do little parcels at the check-in counter. Uh, and that's actually how they get their main distribution of e-commerce and sometimes seafood. Um, uh, let's see, our next question is, how can the industry improve CTO throughput for e-commerce customers? I don't know if any of you guys cover— well, you obviously, yeah.

Nigel Chynoweth:Yeah, this is a big one, and it's, it's certainly, I think, as, as you mentioned, the, the— for us, it's the, the airport infrastructure prevents us or sometimes impacts us, and I think some of the bigger airports need to prioritise cargo because they've built low-cost carrier terminals in the middle between a passenger flight and a cargo terminal. So we're often— and it's a safety issue for us, but they, um, most of the airports couldn't, you know, they're falling over us to talk about us after COVID saying that, that freight was important and, and, um, we haven't heard from them since. So it's just disappointing that these sorts of things, and we've got a, depending on the Um, e-commerce shipments, we've got a 1-hour and a 2-hour delivery, uh, from the time that the aircraft arrives on bay. We've got to have that ready for the, for the truck to pick it up. So it's critical that the airport infrastructure works for us. We can do it, and it does work most of the time, but it does, it really does put pre— most of our flights, we've got 4 flights into Sydney, the first 2 flights are full of e-commerce and mail. So they are critical, but it's the busiest time that the airport operates. So there's a lot of congestion, there's a lot of activity that happens around. So it's a big issue for us, but it's such big business that we want to make sure it works as well.

Kim Rasmussen:Well, now you touched on it, um, yeah, infrastructure and, and, and trackability by scanning, uh, Digitalising is the way forward. DHL Express, their tracking tool is probably the best of them all, right? And that should be the target for any of cargo shipments going through systems.

Jeff Pan:And just to put some numbers on e-commerce, 60% of our cargo revenue back at the previous airline came from one single Chinese e-commerce customer that didn't even exist as a company 2 years ago. So it's phenomenal just what that has done for the industry. Sorry, I wasn't even paying attention to the time. Okay, please join me in putting our hands together to thank our Love Island Australia cargo edition.

Kim Rasmussen:Thank you.

Nigel Chynoweth:Very good.

Mariette Ebersöhn:Thank you.

Copyright policy: All transcripts on this site are the copyright of CAPA - Centre for Aviation. Our reproduction policy is as follows: you may quote up to 400 words of any transcript on the condition that you attribute the transcript to CAPA - Centre for Aviation and link to the original video page. All other use is prohibited. While we aim for 100% accuracy in the transcript, there may be some minor transcribing errors.