There’s always a place for charters
As a pilot’s son Chris Leach was born into aviation and, according to him, the only thing that he knew was chartering aircrafts. Leach founded Air Charter Service (ACS) in 1990 from the basement of his home in Kingston Upon Thames, UK. Twenty five years later, recalling the journey of ACS in an elegantly made film, the founder chairman says that his first charter was not even a charter but was a lease of an aircraft to the United Nations. “At that time I was pompously describing myself then as air charter service,” Leach reveals in the corporate video. With its first international office in Moscow opened in 1995 Leach led the growth of ACS organically through reinvesting profits rather than borrowing and made it into the world leader it is today with offices around the globe, spanning North America, South America, Europe, Africa, CIS, the Middle East and Asia. It works with thousands of clients and organise almost 7,500 charter flights a year. It is a rags to riches story for ACS, but what makes ACS unique is its commitment to customer service that never wavers. “When we won a client it was exhilarating,” says Leach. Certainly, exhilaration continues! With more than a decade of experience as a charter expert with many big names on his client list, Justin Lancaster became the group commercial director for ACS in 2013. Lancaster talks to Reji John on the future of cargo charters and how ACS creates a winning strategy for expanding to newer markets. What is the short term and long term future for air cargo charters? There is always going to be a place for cargo charters. It is not simple as passenger charters. Cargo is lot more complicated. I think the charter market completely changed over a period of time. Twenty years ago a charter broker would not be able to charter a one year old aircraft. Now we can charter quite a range of new aircrafts. In old days charter brokers used old aircrafts that might have come either from passenger fleet or have been retired and then been converted to carry cargo. Now we are seeing brand new production freighters with leading airlines of the world and a rather young fleet of cargo aircrafts. Bigger airlines are seeing the importance of cargo and of charters in their business models. What is your assessment of the way in which the cargo charter market is evolving and how do you evaluate this market’s maturity? It is a tough question to answer because until probably 12 year ago we were very Europe centric which, according to me was and is a very mature market compared to others. As for ACS, we are growing in most regions of the world. We are not restrained like scheduled passenger carriers are. We can adapt to varying market conditions and our 25 years of experience is a proof of that. For instance, oil and gas industry, a crucial sector for cargo charters, has been under stress. Secondly, commodity prices are down for some time. So those industries are not going to give us business. However, we believe that those businesses will come back; may not be this year or next year; may be the year after. On the other hand automotive has been buoyant. The world population is on the rise; middle class is increasing across the world and these people will consume a lot. Industries will spring back to normalcy sooner or later. Therefore, there is always a place for charter market. How do you create a winning business strategy in a new market which is complicated and not mature? We learnt the hard way. In the beginning it was a case of regions, like India and China where there is huge demand and the opportunity is really big. But soon we realised that it is tough operating in such markets because of the complicated regulatory environment. Therefore, it is our considered view that we are not just going to open our business in a market or a region just because that country or market is part of G20 or something like that. What we tend to do now is that we spend a lot of our resources to study the market; looking at what’s going on in that market; and often trying to build up that market from another office. A lot of your business comes from industries that are directly impacted by geopolitical issues and global economic prospects. Therefore, are there any specific regions that you are really bullish about? It is very difficult to answer. There is no point in following trends that scheduled carriers come out with. There is huge potential in Asia, particularly in China. However, the challenges are far too many. Perhaps governments in Asia need to do a lot better to make it easier for air charter business to grow and mature. What is the point of doing a charter if it takes five to seven days to move cargo? You might as well move cargo in scheduled carriers even if it is urgent. So if changes happen, may be in the coming years, the opportunity certainly is huge, particularly in countries like China, which is so large. Far East is close to my heart. Africa is another region that is really exciting, though not much has changed for quite a long time. Infrastructure need to be built in Africa, so much investment need to be done. Apart from perishables coming out of Nairobi there isn’t much coming out from a continent of that size. It is quite amazing. So the future of that continent is very exciting. South America has vast potential, but I don’t think the region is fulfilling its potential. We are heavily investing in the US market, which is really growing and the market is very mature.