From the Cockpit with Asia Cargo Network’s Isaak

Singapore-based Asia Cargo Network (ACN) is the parent company of Asia Cargo Airlines, Raffles Global Angkasa (RGA)-Black Stone Airlines and World Cargo Airlines (WCA), and has flown 737 Classic freighters in Southeast Asia since 1990, when it started its first airline, Tri-M.G. Intra Asia Airlines. WCA more recently became the first operator in Southeast Asia to add the 737-800BCF platform to its fleet, and in May the carrier took delivery of a second unit on lease from BBAM as the group seeks to modernize its freighter capacity with younger Boeing and Airbus airframes. [caption id="attachment_56725768" align="alignright" width="420"] ACN CEO Marco Isaak. (Photo/Asia Cargo Network)[/caption] Cargo Facts recently spoke with ACN Chief Executive Marco Isaak about his company’s vision for all three of its carriers, and its plans to remain at the forefront of the air cargo market in Southeast Asia. Cargo Facts : What led to ACN becoming the primary investor and obtaining a majority ownership stake in the government-controlled Pos Asia Cargo Express in 2020? Marco Isaak: I was called up by Pos Malaysia’s board members and I was offered to take over the airline. Prior to that offer, ACN was leasing an aircraft to them it had purchased from Avmax and converted. Pos Malaysia saw our potential to lease aircraft to them and offered us the opportunity to take over since they needed somebody to run the airline and knew I had Tri-M.G., an established airline in Indonesia. Now, the deal was to ensure an immediate stoppage of the bleeding of the airline, minimize expenses and manage the operation. We were paid one lump sum for this deal. We agreed to take on full liability and assume the portfolio risk and exposure because we are experienced in this line of work. That’s our forte. We knew we could turn the company around. We took over the management of Pos Asia Cargo Express in November 2019, and were offered the option to acquire a majority stake in the airline in six months if things were done well. And within six months, we turned the airline around because, unexpectedly, COVID came at the right time and there was a surge in cargo. We bought the 51% for approximately $10 million and secured a ten-year contract to provide Pos Malaysia this freighter service to East Malaysia. CF : Your group continues to add 737 Classics to the fleet. How long do you plan to continue to operate these Classics and why do they benefit your operation model? MI: The Classics may come to an end, just not so soon — probably within the next decade. We know the aircraft can last for forty years or even forty-five years depending on the number of hours flown. The youngest of our Classics were built in 1997 and 1998, and if the lifespan is forty years, we still probably have around twenty years to go. But aircraft operations are limited by the flight hours; the 737 Classic can last up to 100,000 hours, so we can operate them as long as we do not exceed that limit. Market sentiments may not agree with our maximum flight time for the Classics. People want better and newer aircraft so we need to keep moving forward with newer fleets, and that’s why we have added two 737-800BCFs to WCA. In Indonesia, the ideal aircraft is still the 737 Classic. [Indonesia] is a huge archipelago with 17,000 islands and the domestic range is still three to four hours. We put two more 737 Classics with RGA-Black Stone Airlines because it’s still in high demand for domestic and regional operations. CF : Will you strictly stay with 737s, or are you also considering opportunities to add A320 or A321 freighters ? MI: We have actually verbally agreed to take two A321s but we’re still contemplating whether it’s the right time at the moment to move into that aircraft. The A321F is a suitable replacement for the 757s and will be the ideal mid-range aircraft. The only reason we are holding back is because of the fuel price and what is going on between Russia and Ukraine. We, like everybody else, are holding on to our decisions for a while, and will wait and see if the situation stabilizes and the market is able to adapt, even with increased fuel prices. The two units are supposed to be delivered later this year, so we’ll see what happens in the next month or so. CF : Do you foresee ACN entering the medium-widebody market? MI: Without disclosing names, we are in serious talks and have signed NDAs with a very large operator in Asia which intends to acquire Asia Cargo Network equity to partner with us for international growth. That’s where we look at widebodies as the future for ACN’s growth. If we partner with this major operator, we will also be acquiring A330s, which are relatively cheap now in the market with prices ranging from $20 to $30 million at the moment as compared to $50 to $60 million previously. So there are two areas we're now looking at: one is the partnership with this very strong operator in Asia and the other is to move into widebody operations for International sectors. But with or without the partnership, we will still be going into the widebody market, depending on the need and the timeline needed for conversion. CF : You have plans to launch the EHang 216 pilotless drone to conduct unmanned cargo flights. Could you provide more insight as to why you selected this drone over other potential candidates? MI: Again, Indonesia is vast, with 17,000 islands. My interest in the drone is mainly because Indonesia will need the short-range dispatch of time-sensitive cargo and expensive items, instead of moving by truck or being flown from one small island to another. EHang is a Chinese company which is in close coordination with the government of Indonesia, and the Department of Civil Aviation approved its operation a year ago. That’s why we look at EHang as the pilot program for our drone activities. I personally have ordered one unit which I plan to convert for cargo operations. There are some challenges and we need to understand the endurance, range and other operational capabilities of the drone before we introduce it for cargo delivery. We are not stopping at EHang; if there are other operators or manufacturers that propose better units, we are still open to bringing them to Indonesia. This story originally appeared in the June 2022 issue of Cargo Facts.

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