‘Super passionate’ people are the key to success

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Mike Berger, chief commercial officer of Ohio-based leading provider of air cargo transportation and related services, Air Transport Services Group (ATSG), considers there is more to the success of a company than its bottom-line. He says: “Our success is a true reflection of the teams of super passionate people we have working at all great companies. Our focus is simply to exceed our customer commitments. For ATSG it is not about being good but finding out how good we can be. There is a difference!”

His confidence is being repaid in spades in a competitive and opportunistic market.

He says: “The current market dynamics are driven by available feedstock and conversion slots. Companies that have them are controlling the market and will be the winners. While the industry has capitalised during the pandemic, the market will normalise in the next 12-24 months. That’s when you will see who really took advantage of what has transpired since 2020.”

Significant player

As the world’s largest lessor of freighter aircraft, ATSG is ahead of its rivals in terms of fleet numbers, notes Berger. If the reader focuses on the medium widebody freighter market “our leasing company, Cargo Aircraft Management (CAM), leases twice as many aircraft as the next four competitors combined. The gap gets closer when you analyse the overall freighter market, but we still lead GECAS, VX Capital Partners and Titan Aviation Leasing,” he says.

The average age of the aircraft in ATSG’s current fleet of 112 aircraft is surprising to many industry outsiders.

Berger says: “Our business model has provided us the expertise to keep aircraft well maintained during their service through our airline maintenance operations and our MRO locations in Wilmington and Tampa. We are always looking for opportunities to extend the life of these aircraft especially throughout the pandemic when freighter capacity was needed to deliver necessary items to consumers across the globe.”

The growing e-commerce business around the globe is proving a bonanza for ATSG. He says: “This is a substantial portion of our business due to the growth in that market segment over the past five years but most recently the pandemic acceleration. However, our business is much more diverse than just e-Commerce facilitation; many don’t realise that our largest customer segment is the US government/Department of Defense. There are many emerging markets around the globe where we continue to grow our freighter leasing footprint and we are seeing a surge in cross-border e-Commerce which is consumer driven growth for e-tailers. Consumer expectation is also the driver for their focus on air cargo. Their customer has a delivery expectation and to consistently meet that expectation e-tailers depend on air cargo. So, facilitating e-Commerce will continue to be a substantial part of our business.”

Fleet numbers

ATSG’s main aircraft in its fleet are Boeing 767-300s but recently it announced that it would be adding A330 freighters with a 20-slot agreement with EFW. There is also a joint-venture

with Precision Aircraft Solutions which has developed the STC (supplemental type certificate) for an A321 converted freighter. Have ATSG had any issues moving from a Boeing-based operation by introducing Airbus products?

He says: “We are just starting to make this move with our first induction of an A321 at our Pemco Conversions facility in Tampa. We do not anticipate any issues because even though our fleet doesn’t currently have any Airbus aircraft our MRO business has been performing maintenance on Airbus. This provides us with a unique set of insights and capabilities during the conversion process and later during maintenance checks. We are also looking forward to future opportunities to operate A321 and A330 freighter aircraft for customers due to the cockpit continuity between the two aircraft; this transition should be seamless.

“The A321 is a very important part of our future. The joint venture with Precision that we entered a number of years ago is validation of just how important this aircraft is to us. The A321 is a natural replacement for the ageing 757 and is a great upsale to the 737-800. The aircraft is very efficient and provides our customers flexibility during the most critical seasonal peak periods. The commonality with the A330 is also something that will bring value to ATSG. Both Airbus aircraft complement each other very well.”

Next five years

In terms of general business confidence, how does ATSG think the next five years will treat the company? Berger says: “We are very bullish on the next five years. We have told the markets we have 70 conversion slots over this period and plan to utilise every one of them. The 70 is made up of 767s, A330s and A321s. Our balance sheet is excellent, and we continue to be able to fund our growth through our free cash flows. Our business model and go to market strategy is very unique. Our ability to lease airplanes through CAM, maintain them through AMES, have ABX, ATI, or Omni fly them if needed, and then do any other needed services through our LGSTX business separates ATSG from anyone else.”

Can belly-hold ever return to its pre-pandemic volumes, robbing main-deck of its current commercial advantage? He says: “The latest numbers on trans-Atlantic belly capacity show it is close to 2019 levels with the changing US sanctions. However, with the Omicron surge the recovery could be slowed which makes it very difficult to predict a full recovery. We believe that the demand for full freighter capacity will remain strong even after recovery due to the growth of e-commerce and the delivery expectations of the e-commerce consumer.

“Due to our fleet containing medium widebody freighters that serve e-commerce integrators the impact of the decline in availability of belly cargo has been minimal on our business domestically or internationally.

“We have grown all our companies over the last two years. I am not saying that it hasn’t been challenging but I believe the opportunities for growth that we offer have kept our pipeline full. The ATSG companies offer new employees the opportunity to learn from industry experts who have been in their roles 20+ years. That type of interaction and on-the-job training makes roles at our airlines, maintenance, and leasing companies a great way to quickly expand your skill set.”

Future for AI

Berger notes: “We are already using AI powered predictive software for our airline operations. The amount of data that is being collected must be analysed for our maintenance and procurement teams to react and the best way to the analysis is through programming that utilises AI insights. I see this evolving over time as we have a deeper understanding of how it can be used. I believe AI will be a part of every position and task across many industries soon.”

Despite the rise of technology such as Smartphones, in Berger’s opinion some ‘old fashioned’ business values and transactions survive.

He says: “In fourth quarter, we returned to attending some shows and meetings in person. I will say that after a year-and-a-half of not being able to meet it was great to be back out with our customers and peers in person. From my point of view, face to face will always be a part of the transaction process. ATSG has become the global leader in freighter leasing by delivering value to our customers and part of that value is trust. Trust is developed first through personal relationships and second by delivering on your promises.

“I don’t believe it will ever be business as usual again. The pandemic has changed consumer buying and expectations. We will someday reach the new normal, but I don’t believe it will ever be quite like the old normal.”

Social media

What importance does a social media presence hold for Berger and ATSG? In his opinion, can a company generate real, profitable business using digital media? He says: “I believe it is part of the toolbox to generate business and recruit top talent. Your brand integrity and promise are important factors in how people perceive the service and quality they will experience during the leasing process and social media is a perfect tool to communicate that message. It drives leads and inquiries through our website and at in-person exhibitions because it has become the first source of information for many.

“We have 35 different social media profiles that allow more than 100,000 people to interact with our message. Each one of those interactions has the chance to be a customer or an employee. We believe that all digital marketing channels are important to our future growth and expansion.”