From the Cockpit with Challenge Group’s Zak

The Challenge Group recently became the latest 767 freighter operator when it took redelivery of the 1996-vintage unit 25588 (ex-Air Canada) this month and almost immediately put it to work, flying it under its Maltese AOC, Challenge Airlines MT. Equipped with PW4000 engines, the aircraft was the first conversion at the Jat Tehnika facility in Belgrade (BEG), where Challenge’s second 767-300BDSF conversion is already underway. [caption id="attachment_56865084" align="alignright" width="450"] Unit 25588 was redelivered this month. (Photo/Jat Tehnika)[/caption] The group, which until recently operated just four 747-400Fs, will soon also begin its large-widebody expansion with four 777-300ERSF conversions . Cargo Facts caught up with Challenge Group Chief Commercial Officer Or Zak to discuss the introduction of medium widebodies to the group, its broader fleet strategy and growth. What follows is an edited version of the conversation. Cargo Facts : How has your first 767-300BDSF been performing so far, and how is a medium-widebody freighter fitting into your network and fleet of 747-400Fs? Or Zak: We’ve been waiting for quite some time for the aircraft to join the fleet, so it was a very pleasant and happy day when its initial flight took place. I have to say it’s going quite well. Of course, it’s a new aircraft type since we’ve operated 747-400s only and there’s quite a big difference compared with the 767. I think we had enough time to prepare internally, whether that’s dealing with all the logistics behind the operational procedures and getting our people comfortable and familiar with it commercially as well. So, in that respect, I have to say that although we had some commercial buffers in terms of what we are willing to take on the flight to begin with, it’s been operating now for just over two weeks and it’s been quite successful. All our flights have been operating full, in and out, so there’s nothing to complain about. Our network is quite diverse in the sense that it’s a mix of short- and long-haul flights. Most of our flights operate in and out of Liege, but at the same time we operate trans-Atlantic, to the Far East, the Middle East and into Europe. The 767 is a very natural fit into our fleet. It’s taking out the 747 on the shorter flights, so predominantly between Europe and the Middle East, but this week, we are happy to operate our first trans-Atlantic flight with the 767, which we are very excited about. It’s complementing our network and freeing up some of the 747 capacity to operate on the longer-haul flights, so in that respect, it’s quite an easy transition. CF : What is the latest timeline for Challenge’s other three 767-300BDSF conversions? OZ: I’m happy to say that the door-cutting for our second 767 will be next week. The conversion is already underway so hopefully everything will go as planned, and we expect to have it by the end of this year. [caption id="attachment_56865088" align="alignright" width="308"] Or Zak, chief commercial officer of Challenge Group. (Photo/Challenge Group)[/caption] Our expectation is to have all four converted in Belgrade and joining by the second quarter of next year. We don’t have the exact date at the moment and it’s something that we are working on together with IAI. But our main focus now is, of course, on the second aircraft. Once that finishes, the third one will go into conversion, and after that, the fourth. CF : How long had the group been thinking about adding the 767 freighter type? OZ: One thing I can say is that the expansion plan of our fleet is not something that was initiated by COVID. The slots were booked well in advance so that was a long-term plan of ours. For us, it was an obvious and natural step in our global expansion plan. We’re very proud to be the first airline to convert using the Jat Tehnika facility in Belgrade. We have a very close relationship with them, and we have people on the ground supervising the conversion process. The initial discussions took place four years ago. When you want to plan ahead for the future and when you want to have a strategic plan, those are the timescales that you’re looking at. So that’s internally when we started to have this conversation. By the way, we booked our slots for the 767 and the 777 conversions at the same time, so it was all part of a grand plan of how our fleet would look like over the course of the next ten years. What we envisioned was having the four 747s complemented by the 767s for the short haul and having the 777s joining us so we can get familiarized with them as soon as possible to support our expansion as a global player. CF : How is the acquisition of feedstock for the four 777-300ERSFs progressing? OZ: We have slots already booked for 2025 and 2026, in terms of the metal itself, we have already acquired three aircraft and we are now looking out for the fourth one. Don’t get me wrong, the 747 is the backbone of our operation. It’s the aircraft that we’ve been operating for many years, and like many others, we love it. It’s a great aircraft and we plan on operating them for many more years or as long as we can, but we need to acknowledge the fact that there are some changes globally, whether it has to do with sustainability, noise restrictions or CO2 emissions, and we need to start planning for the future. At some point — it’s not going to happen in the immediate future — but at some point, we’ll need to phase out at least some of our 747s. They're not getting younger, of course, and that’s something that we would like to be ahead of in terms of having the 777s joining the fleet way ahead of starting to phase out the 747s. There’s still many more years to go, but at some point it will happen, and ignoring the issue won’t make it go away. CF : How challenging has it been to hire all the extra pilots to go with your fleet expansion? OZ: Luckily, our Maltese AOC was set up around November last year, which meant that we had enough time to recruit to ensure that once the aircraft were airborne, we would have enough pilots to support our operation. At the same time, as I mentioned, with the first aircraft, as much as we would like to go full steam from the first moment, we did take at least a couple of weeks to get to know the aircraft and not put a lot of pressure on it. We want to utilize it commercially as much as possible, but at the same time, we need to be sensible about it. Later this week, we will start ramping up our operations as we go into September. But I would say we had enough time to make sure that we have enough pilots joining both the Israeli AOC and the Maltese AOC for our 767s. CF : Is Challenge looking at any other types like narrowbodies and other AOCs? OZ: If we look at our DNA, the 747 is a very specific aircraft with very specific commodities and customers which we target. We always say that our DNA is an end-to-end product: that’s what we would like to offer our customers. That’s why, as the Challenge Group, we grew along the supply chain so we’re not only an airline. We have our own logistics team, logistics company and handling business. So, looking into the future, if it makes sense, we are not going to rule it out, but I think with the type of commodities that we are targeting at the moment and what we’ve been doing for the last forty years, our main focus is on the widebody platform and special, out-of-gauge cargo that requires a lot of attention, knowledge and experience. But saying that, who knows? Considering that our latest AOC was established last year and setting up an AOC is not an easy or inexpensive task, I think for the time being, we’re not looking to add another one in the near future. What the future will hold is not for me to say and we could decide to do so, but looking at our current plans, I think we have enough on our plate to deal with for the next few years before we will consider adding another AOC. Saying that, if the opportunity comes around and it makes sense, we won’t rule out anything. But for the time being our main focus is on utilizing our three AOCs, incorporating the new aircraft into our fleet, and expanding our network and our market offering to our customers, and making sure that everyone is happy. Cargo Facts Symposium, taking place Oct. 25-27 at the Omni San Diego, is the essential event for stakeholders in the freighter and air cargo industry. Learn more and register today to take advantage of our early-bird sale.

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