From the Cockpit with AirExplore CEO Stulajter

AirExplore Chief Executive Martin Stulajter has been with the Slovakia-based combination carrier since its inception in 2009, shepherding its expansion for the past 15 years. The carrier altered its business model during the pandemic to expand ACMI services into the cargo market. In 2023, AirExplore was acquired by Ireland-based Avia Solutions Group (ASG), the largest ACMI provider. The carrier began operating its first 737-800BCF in 2022 , when it started flying for United Arab Emirates-based RDS Cargo Group on an ACMI basis. [caption id="attachment_56869087" align="aligncenter" width="1582"] AirExplore has grown its fleet to include both 737-800BCFs and -800SFs. (Courtesy/AirExplore)[/caption] Since joining ASG, AirExplore has grown its fleet to include eight 737-800BCFs and -800SFs, and became the largest operator of the type within the group after BBN Airlines Nordic stopped operations with its freighter fleet in May. Stulajter sat down with Cargo Facts to discuss the airline’s acquisition, market demand in Eastern Europe and the carrier’s role as an air cargo ACMI service provider. What follows is an edited version of the conversation. Cargo Facts : How did you became CEO of AirExplore? Martin Stulajter: Myself and a couple of other guys came up with the business plan for the company AirExplore … in 2009 and we started to work on this like a startup project, but then back in 2010, we obtained our AOC and up to 2024, we’ve been experiencing different ups and downs in the aviation sector, growing the fleet gradually, mainly concentrating on the passenger transport. But then during COVID — which applied excessive heat on the aviation sector — we started to look at cargo as one of the pillars of our business. We had integrated the first 737-800BCF into our fleet and then brought in another unit and during that time, we also agreed with the largest ACMI capacity provider in the world, Avia Solutions Group, to acquire AirExplore from the shareholders. Once this deal was concluded in June of last year, we experienced amazing growth, adding multiple aircraft — mainly cargo — into the portfolio. Now, the airline, which started with nine to ten units, operates seventeen, with nine cargo and eight passenger aircraft. CF : What was it like going through the pandemic, the Russia-Ukrainian war and the Avia Solutions Group acquisition? MS: The war was not really a driver for us entering the cargo market; rather, it was during the pandemic that we discovered that it is not wise to only concentrate on the passenger side of aviation but also to look at different opportunities. An opportunity came our way during that time which resulted in us eventually accepting the cargo aircraft into our fleet. And, as this was actually pretty good business back then, we accepted a second one. It was not really connected to the war, as everybody knows cargo was booming during the pandemic. We took the chance and looking at it from a distance now, it wasn’t a bad idea. I know part of the strategy of ASG is to acquire or to consolidate ACMI providers in Europe, and not only in Europe, but also enter markets outside of Europe in Asia and the Middle East to educate these markets that ACMI is actually a long-term solution. And why is that? It’s because of the seasonality in the markets, where you don’t want to take long-term liabilities. For example, during six months of making profits, you may decide as a long-term strategy to use players like us to increase your revenues and profitability during the season instead of having the additional aircraft as a liability in the wintertime. With that strategy, we have been a good fit for the ASG business model and given the thirteen-year history of the company, naturally, we were at a point in time with AirExplore to have it taken over by larger players. The limited possibilities of the ex-shareholders will not block the growth potential of the airline, as we expand into different sectors and increase our fleet size. [caption id="attachment_56869082" align="alignright" width="360"] Martin Stulajter, CEO of AirExplore. (Courtesy/Avia Solutions Group)[/caption] CF : Given your role as an ACMI operator, will AirExplore transition its fleet to other markets when peak season begins to meet the demand for your services globally? MS: The passenger market is a very peak-oriented business; that’s where you can really see the difference between the peak and outside of the season while cargo is more, let’s say, stable, but of course has its peaks as well. In passenger transportation, ACMI, that's really the ultimate goal: To make the best of what you can from the season wherever it is, while looking for opportunities outside of the European season, where the season can be in the opposite direction. With cargo, that’s more flat. There are some months which require more capacity, but it is more about finding strong clients with long-term plans. It is more about operational on-time performance and especially now when we can feel that the requests and demand for narrowbodies in cargo have dropped, it is of utmost importance that you actually perform the flights that you do. Based on that, you are able to place your aircraft with integrators or large companies that need it. Passengers are always the same, while in cargo there are thousands of different things that you can be transporting and each requires a different approach, and you really have to have an experienced team to be able to comply with all the market requests. CF : You mentioned the narrowbody freighter demand is a little low in Eastern Europe. Will you add freighters to your fleet before yearend? MS: Well, that’s about the cyclicality of cargo, the million-dollar question. We all like to hope and say that, yes, it is just one downturn of the cycle and hopefully we are all right and it’s going to increase as time passes. Nevertheless, we believe that the not-so-optimistic situation right now will change for the better later, but for us as an ACMI-oriented company, we are able to look for different opportunities all around the world. So, this gives us a little bit more chances to be effective even during the downturn. With this being said, at the moment we are not planning to increase the portfolio of narrowbody airplanes in our cargo fleet. Of course, on the passenger side it’s a different story. There is huge demand right now in passenger transportation and we would love to increase the passenger fleet, but now the problem is that there are not enough airplanes available. CF : Will the decrease in market price for narrowbody freighter types like the 737-800F benefit your operations in the long run? MS: Of course, the number of planes available in the narrowbody segment in cargo configuration is now higher than needed. Therefore, the price and rent are naturally pushed down. On the other hand, to convert an airplane is not a cheap exercise, and of course you know the investment that the owners had to put into the plane needs to be returned in some way eventually. So, I think taking planes now in cargo configuration would be cheaper than if I was doing that two, three years ago. That’s clear. From our experience, it can change given the cyclicality and if the overall economical situation improves in Europe there will be more demand for cargo transport and then the market will react again by increasing the prices. What we feel is that the combination of passenger and cargo aircraft is a good fit because, firstly, cargo does better than passenger sometimes. These days, the engines are not very expensive to rent, so if you have an airplane which doesn’t have much work in cargo configuration, you can use the engines in the passenger fleet and therefore cover the costs that are connected to the cargo aircraft, even if the plane is not flying so much. When you combine all these things together, I think that’s a long-term, sustainable business plan. CF : How does being a combination carrier help AirExplore with its engine support and inventory? MS: Having a pool of engines firstly opens up a lot of different possibilities to maneuver with them. It is no secret that passenger airplanes are operating a lot more cycles hours than cargo aircraft usually. So once you have, for example, weaker engines on the passenger side, you can use those on the cargo aircraft and swap them for engines with a longer life on the passenger aircraft. Having those two types of airplane and operation from the perspective of optimizing engine utilization gives you a great advantage. Also, the size of the company gives you different negotiating power with the MROs and parts providers. So, the economies of scale work in this regard too. And really, right now I would probably not complain if I had seventeen passenger aircraft instead of a combination of freighters and passenger. But then if I had seventeen and it was the pandemic, I would probably be shutting down the company. The 30th Cargo Facts Symposium will take place Oct. 14-16 at the Omni Hotel in San Diego. Gain valuable insights, success strategies and networking opportunities at this special anniversary event. Learn more and register today to take advantage of our early-bird sale.

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