PODCAST: SmartLynx talks A321Fs, plus other news from Cargo Facts LATAM 2023

In this week’s episode of the “Cargo Facts Connect” podcast, Cargo Facts Editor Jeff Lee and Associate Editors Andrew Crider and Robert Luke discuss the first Cargo Facts LATAM conference , which took place this week in Panama City. Cargo Facts made its debut in Latin America with groundbreaking news, developments and insight from industry leaders in the region. At the event, Lee and Luke caught up with SmartLynx Airlines Vice President of Sales & Development Edvinas Demenius to talk about the airline’s strategy and plans for its A321 freighters . Meanwhile, during the panel discussions, stakeholders heard from executives such as Mas Chief Executive Luis Sierra, who expanded on the carrier’s e-commerce strategy , and Cargo Three Interlines Director Rodrigo De Narvaez, who took attendees inside the executive boardroom and shared details on the airline’s decision to acquire ex-FedEx MD-10-30Fs . LATAM Cargo Chief Executive Andres Bianchi joined the event for a fireside chat and provided a glimpse into how the airline established its presence in the region and what the future holds for Latin America’s largest cargo operator. Tune in to the podcast for a recap of the inaugural LATAM event and more for the week ending May 19, 2023. A transcript is available below. This transcript has been generated by software and is being presented as is. Some transcription errors may remain. Andrew Crider 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 your host Andrew Crider, associate editor of cargo facts. Robert Luke And I'm Robert Luke, just the co host and associate editor at cargo facts. Jeff Lee And I'm Jeff Lee, just the editor of cargo facts. Andrew Crider I don't understand why you're begining with prepositions with just because you two had a huge week. I know last week we were all busy with the AUSVI conference, but this week was cargo facts latam. How was it guys? Robert Luke Well, first before we begin, I definitely gotta give a shout out to all of the panelists. They were wonderful. I will just give out a few names but all of them had you know significant roles in making this event a success but you know, Luis Ramos of awesome cargo. Thank you, you got you were great gel pita over at the Sao Paulo airport. Very, very, very, very informational and fully exposing great things to come at that airport down there. I definitely gotta give a shout out to Carlos Kok over at extreme holdings. Thank you for joining my panel. I appreciate you. I look forward for greater things to come forward from you and can't wait to see you guys at the next event again, Jaime Alvarez, man, you were the highlight of the shell Copa has got a truly talented executive manager of the cargo, excuse me, Senior Director of the cargo, and I just love the personality, he definitely represented the region very well. And Frank Diaz, I'm looking forward to seeing great things coming forward with Sky Kana and with your partner at Venus Comenius, over at Smart Links airlines. And also I can't forget Mario Fernandez, you were truly, truly a great representation of the logistics sector and how important of a role that's going to play in emerging market down in Latin America. That being said, it was a really great experience. For the first time we felt the presence of the region, we felt the Unison behind all the operators and the lessors. And all of the other key stakeholders that attended the sessions, we came away learning so much more than what we thought we would actually be able to bring, you know, just listening to our colleague, amo Chobot, and all the information that he provided in his in his sessions, and the marketing trends analysis he provided. I think this region is on fire, not just because, you know, it's been a long time coming emerging market, but I can really sense that these guys are hungry to make their presence felt in the industry as a whole and collectively come together to overcome a lot of the obstacles that they're facing in the region. Jeff, do you want to kind of pick up and chime in here on some of those challenges that they may be facing Jeff Lee yet? Um, I was gonna say, definitely true with all the speakers. But yeah, there definitely were some great characters at this event. I think it was just I got the impression that people were happy that we finally brought our event to this region, it's suddenly in a very interesting one with new players and new new developments. Fleet renewal. So it's just a very dynamic market. And there's, I mean, everybody agreed, I think that there's a lot of potential untapped potential. So yeah, we look forward to, to returning to the region, wherever that may be. And you also mentioned Edie, Vanessa SmartFlex. So we were able to sit down with him for a more detailed chat on their e 320. ones. So it was good to hear from Him and ask a few more questions about because they are the biggest operator of that type. And they are looking to expand out of Europe. And of course, Latin America is one of the regions when they're looking to build up a footprint and they've started doing that. Hi, Ed. So nice to see you here in the Latin American region, region. I know SmartLink says keen to grow and expand into let's just get your views on the ACI what the demand for ACI frita services in this part of the world. Edvinas Demenius Yep. So hello, once again, really, really pleasure to have this conversation to be here. First time in the LA Tom Carper facts and represents margins here. So in general, this is one of the biggest unserved regions I think so on the both a CMI and also live in Come to annatto buddy 3.1 for either side. So definitely for the SmartThings is looking quite quite positive on the opportunities and also the development of the business. So we know that it's still a lot of work to do to introduce ourselves as an operator and also Airbus, like a product for the market. So I believe this is this is quite challenging with very interesting things, what we need to follow and what we need to do. Jeff Lee And what about specifically for the e 321? Why do you think that aircraft type is particularly suitable for this region. Edvinas Demenius So one another way, we will see that 321 is like more volume based with 800, let's say, but we even try not to compare these two units. But seven, five, as the biggest competitor, one another way is phasing out step by step from from the market. And definitely the reliable technology and also the technology which is saving money, we can simply say that 30%, almost 30% difference on the direct operational costs compared to seven five definitely do have a big impact. Because the distance is quite, quite long built within the between the cities, and in general is definitely giving the best economics what we can achieve from that, from that airport. So one another way will be see that new technology should replace the old one. And we wouldn't we would like to be the one who was doing that and taking that that part from the very beginning. Robert Luke Obviously, when you entered into the market, you did some type of research and study in the region respectively. How do you see the A 321 freighter being able to perform in the high altitude areas like Quito or Bogota, for operational purposes? Edvinas Demenius I think so. It's, it's not really, let's say, depends on the on the frequently on as a freighter, so if the passenger aircraft can operate there, so definitely, freighters also can do that. So it's all as per my understanding depends on the pilots qualification on the some of the additional trainings, what needs to be done, it's nothing like more. It's nothing different what we do in some specific airports in Europe, in other regions, so things of the preparation and fully understandable your customer, where are they need to serve what exactly they they're going to bring this again, is it like more restrictions on the payload or the wallum, sometimes the wall might be much bigger than the payload. So this definitely the performance will not be so restricted, even in some of the areas, let's call it Robert Luke okay. Now, as you have obviously started with Sky Canyon, under COBRA and Dominican Republic, you also do have an existing relationship with with an express integrate, would that be something that you're looking to continue in this region as well with that similar partner or even another Express integrator that may have interested in or in the market? Edvinas Demenius Definitely, the market is very, very big. And we I think this was still quite specific, because some of the regions they again, going from the SMI perspective, it requires some of the different infrastructure, either traffic rights either AOC, either anything what might be, let's say, needed for that region. So definitely Express carriers. As we started to the DHL in Europe, it's becoming our launch customer for the program itself. And we started the Caribbean region with the sky Ghana, we also have some some of the leads, let's say in in Latin and North America with whom we're working. So I cannot say that it's very, very specific to work with one customer On another hand, together with Skyscanner, we're opening these doors. And we definitely we should work together as much as we can to develop that market. And not to have only two years but maybe deliver even more in the very near future. So it's all depends on the various factors, how we can serve that on the maximum level of what we want to achieve and what our customer needs. Jeff Lee So let's just to expand the reach, going back to Europe, where you're at 321, most of your 320 ones are fine, but then you're correct. What's How's their performance? Have you? Have you been satisfied? How satisfied Have you been with the performance? Edvinas Demenius Well, the time knew that we'll face some more challenges than other operators being the first lounge customer let's say to some of this to see and be in the second on another sec. So of course, we had the very beginning. The beginning was quite challenging, especially on the on the stock on the on the spirits and Europe support let's say, but we are the biggest HDMI IN THE WORLD operator in the world and you know we have more than 40 aircrafts on the fleet when the family which is also given us. I mean, much easier, letting us to operate that much under a much easier way, because not the big difference what we have on the freighter or the passenger fleet is the same aircraft in general, we just do not have cabin crews on the on the freighters, it symbolizes. Robert Luke During our discussion panel on Session Four, it was mentioned that the A 321 would have to prove itself over the next two to three, possibly four years. Do you see that as being one of the first operators to operate the friend of tight as an advantage or a disadvantage? Edvinas Demenius You know, I believe that it's more advantage and especially when we selected that program is, is the best cargo narrowbody existing in the market, that's absolutely clear for us on the reliability performance, and we knew that they occur from the passenger fleet. So it's nothing, let's say which is surprisingly surprising as positively or negatively. Looking from the overall product, I think so this giving us the huge opportunities because we're holding the majority slots for the next two years, we have the best, let's say opportunities to convert them from the from the assets were acquired during that COVID time which is giving us the best economics and not only for us is giving the best economics for our clients. So definitely being the first year you can part of the of the bad things What the What comes together with an STC or the some of the regulation or some of the new type for the authorities or new type for the A Aza and etc. But on another hand, definitely we feel that that's an advantage and being the biggest free 21 freighter, let's say operator in the two years, we're reaching 22 airplanes in total, definitely giving us quite a big, quite a big reach and good ground to develop that even more. Robert Luke Now with that being said, depending on the you know, success in your adventure into this region, would you be would you Are you already looking at going beyond that number or are you pretty comfortable just staying right there for now, Edvinas Demenius you know 321 program, one day will become something like 7378 Hundreds, right, when you have many SDCs you have many conversion houses, just you need the feedstock with you all the time can can get us a lot to convert that area of looking into into the our program, definitely we're looking for the for the bigger play fleet. For now, maybe the ramp up will not be so high as we're still spreading them through the years. But we're still keeping our initial plan to reach in the 2020 for around 20 to 24 years depends on the deliveries. Plus we're integrating the free 30 program on the full freighter, which is like giving us close to 1930 aircraft even a bit more till 2025 Which is quite exciting. And I believe this is this is definitely where we definitely are becoming one of the main players especially on on that kind of product Jeff Lee sujood operating both the E FW conversion and the precision conversion for the 321 What's that like having two different SDCs? And how would you compare the two? Edvinas Demenius You know, it's a million dollar question that says all the time people asking me and we're still keeping our strategy and we still have let's see almost 5050 Continuing with precision and continuing with U of W why because both conversion have pros and cons for for the end customer and from the SmartLink perspective it doesn't matter if cargo or passenger you all the time caring about the customer and they have a chance to select what exactly fits their needs right on the density on the range on the bit lower DLCs and probably this is the critical to have that portfolio and in general after a few years when when the program will be let's say on the bigger scale maybe some of the customers will select with precision some of the customers will select the of wn will still have a chance to relocate these units because most of them they're either whitetail either specific with the day with their with delivery but even our existing customer they have to have each right so it's also showing that that trend that still both of the conversions let's say in this disease still work with a certain routes or customers Robert Luke so keep all options open Edvinas Demenius yep that's that's the our goal and you know, you still want to be let's say very united on the some of the specific stuff, but it's the same with engines we all the time for that. Okay on the on the freighters. We need to keep one engine type. But the specific on the special on the noise certificate was the lucky one of the huge challenge we have now on the special on the CFM powered engine that Europe is requiring these chapter for noise certificate right and B type engines they already have it for CFM you need to innovate was quite a big amount of money to reach that. So it's still, let's say like, also 5050. Looking in the all opportunities, what we can achieve. Jeff Lee You talked about the 330s coming next year. What can we expect? On the wide body front? From smart things, you already have a very ambitious plan for the 320 ones. What more can we expect? On the 330? side? Edvinas Demenius You know, this, we started 330 program during the COVID. On the passenger side, still carrying the boxes in the in the cabinets without without the seats. That was kind of nice. Try. You know, from the smartens perspective, we started 321 program, we're continuing with 330 program, looking at the most of the similarities, what the types have, between I mean, doing each other right. Now, we're still it's very, very easy, let's say to accommodate two types. And first is quite obvious to continue that program and to take another segment, which is also growing on the midwife wide body side, right. So we've already seen quite a big interest on on the 330s. The biggest part already was allocated for the integrator. So for some other carriers, so probably will be one of the first also the company which will have both types, and then we can serve even the same customer with the two different types. Jeff Lee Look forward to seeing that. And good luck for the rest of your growth plans. Thank you so much. And Edvinas Demenius thank you very much. Jeff Lee And thanks again to add at Smart Links. Andrew, you had a question. Andrew Crider My point my question was going to be Asia is a area of growth in Asia and Latin America are both out there as far as regions of the world where the overlying theme is growth, growth growth. How do you see that playing out in Latin America? I know in certain other developing markets, there's a emphasis on regional freighters and regional connectivity? Well, in Asia, you have the emphasis on wide body growth. What? How do you what was the takeaway from this event? Where do you think you're gonna see the largest sector like growth pour out? Jeff Lee Yes, I think that's an interesting question, because they, the growth, similarities are there. But the when you think about the geography of these two different regions, and I think at least one or two panelists actually mentioned this, but you have some pretty long distances between major cities, and then you have some high altitude regions as well in Latin America or South America. So I think the we will see probably more of the newer generation narrowbody is entering the region. In fact, undress blankie. At that time, was he was pretty seem pretty convinced that large white bodies are, it's hard to make large why the bodies work for this region. And we of course, know, that's not the case for Asia. In fact, many most carriers are expanding with large wide bodies. So there are differences between these two regions. But the growth portion, and yeah, that's definitely true. And part of that is the the recurring theme of E commerce, although that's not the only Robert Luke factor. Now, in addition to that, you know, just to piggyback off what Jeff was saying, you're going to see a lot of growth in the narrow body segment in the Latin American region, you are looking to see the growth take place where there's already established infrastructure and commonality and import export trade regulations and tariff rates, until the rest of the continent or the region rather gets up to speed and establish it establishes a uniform approach to how to handle Import Export and customs. You're going to just basically see a lot of it, you know, coming out of the typical places like Sao Paulo, Quito, Panama City, Bogota, just to name a few places Mexico City until those issues are addressed and governments kind of realigned their open skies and trade and import export agreements to make it easier to move a lot of the E commerce and payload volume cargo in and out of the region. Andrew Crider Well, that's, that's all extremely exciting and certainly a lot for us to process. But that's going to be all the time that we have for today. For more multimedia coverage like this Search cargo facts connect on iTunes and Spotify and search cargo facts.com. Thank you very much for tuning in. And join us again next time. Subscribe to Cargo Facts Connect on iTunes or Spotify , or download the episode on Transistor .

PODCAST: SmartLynx talks A321Fs, plus other news from Cargo Facts LATAM 2023

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