The traditional low-cost carrier model is relatively simple: focus on transporting passengers at the lowest possible price. But some in Asia-Pacific are diversifying their operations — and revenue base — by transporting cargo, either in the belly hold, in empty preighter cabins, or on passenger seats. It’s all driven by the growth of e-commerce, logistical challenges at seaports and, ironically enough, the COVID-19 pandemic.
While IndiGo of India announced plans to acquire up to four Airbus A321ceos for conversion into freighters, AirAsia Group has a wholly-owned logistics arm named Teleport, described as “a venture under AirAsia Digital, building out the logistics ambitions for AirAsia” by its parent company.
Teleport’s very nature has evolved quite significantly, with its positioning evolving too. It was first established in March 2018 under the name of RedCargo Logistics, described as the “exclusive provider of cargo capacity for AirAsia and AirAsia X airlines”. Later that same year, RedCargo bought out logistics affiliate Redbox Logistics, before rebranding as Teleport in April 2019.
Just as AirAsia Group is moving beyond its background as an airline group into businesses that rely heavily on the use of digital tools and new technology, such as e-commerce and fintech, Teleport is changing too. Beyond digitalising its business and operations as well, it is moving beyond its previous pure play logistics positioning with own-operation freighters and preighters.
Chief operating officer Adrian Loretz tells us that the company is “constantly pushing” for digitalisation of its processes, noting that “much of the process” in the cargo industry has historically been paper-based and completed manually.
This change is aided by Teleport’s own IT development team, which provides the relevant technological developments, he adds.
Echoing Loretz’s comments to us, Teleport says it “revolutionised” the way cargo is transported by converting from “using paper and pencil” to a “fully digital infrastructure,” a process that took two years for it to perfect.
Complementing the cargo business, Teleport established a blockchain-based cargo platform by the name of Freightchainin April 2020, which allows a freight shipping company or forwarder to book and confirm cargo space quickly without the need to seek out a salesperson.
Freightchain’s chief technology officer Vishal Batra tells us that the company envisages itself as a “digital interlining platform for the airlines,” which “allows airlines to combine their flights with other airlines to transport cargo from one destination to another.”
Despite the affiliation with AirAsia Group through Teleport, Freightchain does not compel anyone to exclusively use the AirAsia-branded carriers for their cargo transporting needs.
Batra explains: “With Freightchain, there aren’t any requirements for other airlines to only align with flights by AirAsia. We provide a space to align with any airline that provides the best routes to deliver cargo at a faster and more effective rate.”
Nevertheless, he feels having AirAsia as one of the interlining carriers on Freightchain supports the company’s future goal.
“The listing of AirAsia on Freightchain supports our goal to be a formidable and reputable digital cargo distributor in the region, providing customers the best services through our comprehensive flight network at the lowest possible cost,” says Batra.
Meanwhile at Teleport, the company introduced cargo-only flights by starting off with two AirAsia A320 preighters that were stripped of their seats in mid-2021. The carrier’s group chief executive, Tony Fernandes, also laid out Teleport’s plans for growth, with an eye for six narrowbody freighters.
Teleport’s Loretz explains the six-aircraft figure “is a conservative assessment of the future demand that Teleport can see” in the markets that it operates, such as Malaysia, Singapore, Thailand, China and India.
He expects demand for freight capacity on key markets to “increase beyond the belly space of AirAsia,” and that having dedicated freighters would support its growth.
After taking its first dedicated freighter in November 2021, a Boeing 737-800 acquired through a multi-year agreementwith Thai express carrier K-Mile Air, Loretz expressed an openness for Teleport to take more 737 freighters, as the type is “widely available” and is a “quick way to increase capacity.”
When it comes to the A321P2F (passenger-to-freighter), Loretz believes the aircraft “is a cost-efficient option and caters very well to the e-commerce needs”. Airbus’ website indicates that an A321P2F is capable of carrying up to 27 tonnes of payload.
Loretz also doubts that Teleport will rely on preighters to transport cargo in the future: “this is increasingly less interesting due to the economics, and we expect that most of the industry will cease to fly these kinds of planes by next year.”
Detailing its performance for the third quarter of 2021, the group company notes Teleport’s revenue “tripled” on a year-on-year basis and will complete its first ever fundraising by the end of 2021. Looking ahead, parent AirAsia Group sees a strong performance for Teleport, partly due to a gradual return of passenger flights.
The acquisition of the 737-800 freighter will also “accelerate Teleport’s shift from pure air freight logistics to a complete multi-modal operator,” says AirAsia Group. With the freighter now based in Bangkok, it has the capability to fly into the key Chinese and Indian markets.
With Teleport turning four years old in 2022, operating chief Loretz believes it has the right ingredients to create disruption in Southeast Asia’s cargo industry.
“With direct access to the unrivalled AirAsia Group network in Southeast Asia, best-in-class technology and a commitment to enabling last mile, door-to-door commerce anywhere in [Southeast Asia] within 24 hours, Teleport has put in place the right foundations to truly disrupt the cargo industry in [Southeast Asia],” says Loretz.
Author: Firdaus Hashim/Singapore
Published 24th February 2022
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