Podcast: Pacific Air Cargo’s Janfruechte on Hawaii ACMI market

Jeff Lee
Hello and welcome to this episode of cargo facts connect, the podcast of cargo facts, the newsletter of record for the air cargo and freighter aircraft industries for over 40 years. I’m Jeff Lee, editor of cargo facts and it’s Friday, the 1st of December. Joining me this week is Tanja Janfruechte, CEO of Pacific air cargo, which wet leases freighter capacity from a couple of operators including 747s with Kalitta Air and 757s with Asia Pacific Airlines .

Jeff Lee
Hi, Tanja. Thank you for joining us here on the Cargo Facts podcast. First of all, how are you doing? And how is it going in LA?

Tanja Janfruechte
It’s thank you Jeff and thanks for having me. It’s it’s quite warm and sunny, so we’re waiting for winter to hit, but it hasn’t quite up.

Jeff Lee
So we’re interested in how things are going at Pacific Air Cargo and perhaps, you know, specifically talk about some of the major changes that have taken place in the past year. We’ve had, you know, several significant events, let’s say, in Hawaii.

Tanja Janfruechte
So at Pacific Air cargo. We’ve, you know, it just seems that you know one thing after never another with the you know Everybody’s being impacted. First it was COVID and high fuel prices, and specifically to our market. The devastation in Lahaina, which we were fortunate, at least to be able to assist with some help there, but all in all the changes this year, you know we’re experiencing, I guess what we’re calling the new normal now with the the markets returned a little bit as I guess is the new normal pre COVID and capacity on the passenger lift is definitely this year has come back quite strong at least to Hawaii. So we’re feeling some of the additional capacity in our market, but the LA to Honolulu route historically including this year has been quite steady for us. The biggest change this year, I would say. Is the Honolulu Los Angeles I mean, when COVID hit that completely went away 100% and we are reset actually in the last couple months really seeing the Asian market come back via Honolulu and helping us with some of that backhaul. Which is significant for us.

Jeff Lee
Right.

Tanja Janfruechte
And but one of the changes we made and we were. You know we’re pretty nimble and can make some very quick changes which which is an advantage especially with our long time ACMI partners working with us. But we outsource, we continue to outsource the flight once a week to Asia to help with the lack of the backhaul. And we’re actually planning to continue that next year, mainly to help with the uncertainty of the fuel prices. So that along with, we’re really excited. We kicked off a road feeder service late last year. We’re growing at this year and what that does it’s it’s providing a visibility throughout the lower 48, connecting everything you can ship something to Hawaii from pretty much anywhere in the United States on on a Pacific air cargo airway bill, umm, kind of like a one stop shopping kind of concept and we’re growing that slowly. So that’s one of our biggest uh changes. And then, along with interline agreements, we have, uh, historically, you know traditionally had Always focused on Asia. Eastbound interline agreements and it’s those agreements and partnerships are still valuable to our success. But this year, we’re focusing on trying to in align with other airlines, not necessarily out of Asia, but Europe and Canada as well. And looking into Mexico, really just trying to to see if we can, you know, provide some more tail to tail options in and out of Hawaii.

Jeff Lee
Right. Interesting. And what about the market within Hawaiian within the islands?

Tanja Janfruechte
What we’re what we’re noticing is, you know, Hawaii is just one of those locations that that is always in demand for product. And in Los Angeles is a steady gateway for Hawaii. So, I mean the the and it seems like Hawaii itself is growing as far as they know, there’s quite a bit of construction going on in Hawaii. I don’t know if, umm, the last time you were there, Jeff, but there’s there always seems to be the building of something. And more and more. Interestingly enough, more and more restaurants and and you know supermarkets, so we’re still moving quite a bit of perishables. Obviously, and we see this that you know, there’s a lot as far as Maui is concerned, we with what’s gone there, we’ve handled, we flown several charters into Honolulu and connected. Into Maui with smaller aircraft. But, providing relief supplies during that whole devastation. But we’re expecting, you know, long term, you know, a rebuilding of Maui’s that we’re looking to be, you know, hoping to be part of helping with that, that whole situation.

Jeff Lee
Right.

Tanja Janfruechte
And and tourism is coming back to Hawaii. So the biggest thing that we’re we’re seeing now is the Asian carriers are passenger carriers are returning back somewhat to capacity, pre COVID, we see that growing and that’s that’s probably, you know, the biggest thing. So Tourisms coming back and that’s helping with the overall market right now.

Jeff Lee
Now you mentioned uh, you know, specifically Honolulu to LA and some Asian markets. What we’ve also seen from talking to a number of other people is that traffic from to and from Latin America, South America, has also been growing. Have you seen that? And are you seeing, you know, traffic coming through Hawaii and and heading down to South America? Or the other way around.

Tanja Janfruechte
Yeah, it it is interesting how a lot of we’ve always kind of seen and and what’s always interested me is how many flowers are flown to Hawaii, many of them coming from Latin America. You know, when you think of Hawaii, you think they all the flowers grow there, but it still interests me, but we don’t. And that’s one of the things actually we’re looking at because Latin America is they’ve always had somewhat of a market into Hawaii and the a lot of the Asia product that we carry into Los Angeles does go umm down to not only you know Latin America, but Mexico.
So we yeah, I would agree with that. We we don’t interline directly in those markets, but it is something we’re keeping an eye on and we hear is a a growing market.

Jeff Lee
Now you mentioned the long term ACMI arrangement and that is with Kalitta and a 747 4 hundred freighter, right?

Tanja Janfruechte
Yes.

Jeff Lee
How would you describe the state of the the wide body ACMI, freighter market right now? And how has that changed over the course of this year?

Tanja Janfruechte
You know from Pacific airs, from our experience, the ACMI agreement just works really great for us because it, you know, Kalitta has such a a deep pool of aircraft and crew and they, they actually do their own maintenance. So we don’t, we don’t have to worry about that so much. If our contract, you know basically says we have a plane and it has to operate the schedule so. We. Our it’s we get the advantage of a lot of tail swaps. So one of our aircraft is down or if it needs to be pulled for maintenance. We get it swapped out with another aircraft and and that’s been I would say the biggest advantage for us and with the ACMI you know, agreement. We also, yeah, we’ve been with kalitta for, gosh, almost 25 years. We have a long term contract with them and we just renewed our ACMI with Asia Pacific Airlines 757 as well.

Jeff Lee
Right.

Tanja Janfruechte
They operate the Samoa market for us and it also gives us a lot of flexibility to operate charters on demand, specifically in the Pacific and and the market that we are so close to.

Jeff Lee
And obviously the latter is a major operator of the 747, but they are, you know, on the horizon is a transition to the newer 777, specially the 777 conversions which I just saw at the Dubai Airshow. But how would that aircraft change things for you? You know, with this you’ve had operations that 747 for a long time as you say.

Tanja Janfruechte
Well, I I think the biggest change. Well, let me first I have to say we I love the 747. I mean the 747 I know is a pretty thirsty airplane and, you know does require a lot of fuel to operate. But at the same time you get to it’s so you know, forgiving when it comes to weight and balance and you can really pack it and and just a terrific plane for us it’s it’s work. So we know we know that it’s not gonna be here forever. And it we will be transitioning to the 777. The good news? Obviously what we’re all excited about is the fuel savings that we will be you know, expecting on that aircraft and you know there’s several types of the 777 kalitta they’re the launch customer of the new one that’s coming up.

Jeff Lee
The triple seven 300er conversion,

Tanja Janfruechte
Yeah. And you know, it’s obviously a different aircraft than the 747, but other than and you know, like I think the giant exceptions it pretty much hold can hold what the seven, four does and payload wise it’s it it it won’t be a factor because we usually.

Jeff Lee
Because I believe you’re umm, mostly, if not entirely using their 747 conversions right? Not the nose loading version.

Tanja Janfruechte
Yeah, we do have the nose load in our system. Maybe every six weeks we’ll get it. Or if we if we do need, if we require it, which?

Jeff Lee
How often do you are you needing that nose door?

Tanja Janfruechte
Ohh 4 to 6 times a year.

Jeff Lee
Hmm, OK.

Tanja Janfruechte
We actually ask we you know it if it’s something that just can’t fit through the side door and kalitta usually you know they they operate several flights on the West Coast now that it’s pretty easy to to swap a nose loading our system, but it it doesn’t happen often.

Jeff Lee
Interesting. And so I guess that’s where the triple seven 300 conversion comes in, is where the nose door capabilities not required on the 747 that that type is you know is targeted at replacing those kinds of operations with the 747 conversions so sounds like that would be and that wouldn’t be too difficult a transition for you except those four to six times a year.

Tanja Janfruechte
Yeah. And and that’s that’s you know that’s specific, it wouldn’t be, it wouldn’t be a big impact the, the fuel savings we’re gonna get and the other advantages of being a newer plane and and whatnot is is far you know exceeds exceeds that and what we learned what I didn’t know you might be aware as are the big 777 engines we understand are going to be able to be moved in and three pieces so they’re even making that umm the 777 capable of carrying their own engines which it in the beginning we thought that wasn’t going to be able to do, but we’re happy to hear that they figured it out, you know.

Jeff Lee
Yeah. No, it’s impressive. I saw I went inside that aircraft and it’s pretty impressive. So I mean, would Pacific air cargo kind of always stick to the ACMI model or would would you potentially look at you know getting your own AOC and operating your own aircraft?

Tanja Janfruechte
I wouldn’t right now. I mean, we’re open to, We’re always open to ideas, but the ACMI model works so well with for us that right now, at least in the near future we’re not looking to move away from that kind of model.

Jeff Lee
I mean, there’s it’s much less risky, isn’t it?

Tanja Janfruechte
Yeah, the crew and the maintenance that specially the crew we prefer the that being someone else’s responsibility.

Jeff Lee
Hmm yeah. No, that makes sense. OK. Well, yeah, we look forward to seeing you continue to grow your operations and expand your network and as well as your ACMI partners. So good luck with everything you know and good luck next year as well. But in the meantime, thank you so much, Tanja, for joining us.

Tanja Janfruechte
Thank you, Jeff.A cargo Facts is a is a fantastic publication and a source for this industry. So thank you very much for the opportunity and talking with you.

Jeff Lee
Thank you.

Jeff Lee
That was Tanja Janfruechte, CEO of Pacific Air Cargo. And that’s it for today. For more multimedia coverage like this search cargo facts connect on iTunes and Spotify and visit cargo facts.com. Thank you very much for tuning in, and join us again next time.