MENA Cargo takes off from Bahrain to the world

MENA Aerospace was keen on adding the vertical of cargo to its portfolio with reach not just in the Middle East or Noh Africa, but in South Asia too. For that, it entered into an alliance with Air Cargo Network (ACN) with which its vast connectivity in South East Asia and beyond is going to provide the best of springboards for growth.

ENA Cargo was born in 2020 in Bahrain during the height of the pandemic as a brand under MAE Aircraft Management WLL which is part of MENA Aerospace Enterprises WLL.

MENA Cargo got its Air Operator’s Certificate (AOC) by Bahrain’s Ministry of Transportation and Telecommunications’ Civil Aviation Affairs (CAA) department in 2021. And since then, it has been steadily growing, providing scheduled and charter air freight services across underserved markets in the Middle East, Africa and South Asia.

Its assets and operations are structured to afford maximum flexibility at minimal costs. A key feature of MENA Cargo’s operations is its efficient Smart Booking System for registered agents.

MENA Aerospace was keen on adding the vertical of cargo to its portfolio with reach not just in the Middle East or North Africa, but in South Asia too. For that, it entered into an alliance with Air Cargo Network (ACN) with which its vast connectivity in South East Asia and beyond is going to provide the best of springboards for growth.

In this Q&A with Air Cargo Update, MENA Cargo’s Managing Director-Designate, Iman Marco, a lawyer who specializes in corporate laws, gives more insights on the company’s expansion and growth plans.

Were you in the right place and at the right time to launch MENA Cargo, considering that the pandemic helped cargo business, particularly pharma and humanitarian relief?

MENA had on good authority received strong recommendations that ACN were steady and successful cargo airline operators, and when we met, it matched their expectations. Their ambition to build a successful cargo airline in Bahrain and the MENA region, and our ambition to grow our business is what binds us together.

It is being one year since you received the air operator certificate (AOC), could you give us an overview of your business in this one year?

MENA Aerospace’s initial year was always going to be an establishment year where it was going about getting a footing in the market. Its growth plans were hampered by multiple reasons that are now history and we are looking forward to more positive growth.

 

Is it a sustainable business?

I think sustainability in the cargo airline business will be dependent on three key drivers – firstly the capital structure of the business; the presence of a strong existing demand for cross-border movement of goods (trans-shipments, imports and exports) within its region of operations; and finally, the experience and ability of its management team to manage, maintain, and to conduct operations smoothly and cost-effectively.

Today, an airlines sustainability remains challenging and is a niche skill. Asia Cargo Network brings to MENA Cargo its vast experience to compete in the air cargo market, and to manage the business in a versatile manner to adapt with the ever-evolving industry with asset-deployment and cost-management strategies. This type of management would ensure the sustainability of the business regardless of the global economic challenges we now see.

Your plans are to serve underserved markets as well, could you tell us which these markets are, considering the operational challenges these would throw up?

I think that this was a phrase used by MENA Cargo prior to ACN joining. We are taking the lead here and with this new partnership formed, we will be coming in strong to serve the growing need of the regional Middle East and North Africa market demands with additional freighter operations. There will also be more markets that we will be operating into in the near future including West Asia, Eastern Europe, Pakistan, India and Bangladesh.

Operational challenges are common. We have had vast experience operating in various challenging areas like Bhutan or even Papua in Indonesia (for example, terrain challenges or destinations with under-developed infrastructure), MENA Cargo will have an experienced management team that will undertake a more tailored and hands-on approach to face potential operational challenges.

Where are your scheduled freighters to and from?

We will be operating out of Bahrain and Sharjah (UAE) to various markets mentioned above.

What is your fleet size, tonnage capacity? Is the fleet owned or leased?

Our fleet deployment will be over the next 18 months a total of six aircraft which will include a B737-300F, B737-800F and B767-300F. These will be a combination of both owned aircraft and leased aircraft.

The first of six is due to arrive within the next two months, and will begin operations immediately. In terms of tonnage capacity, the B737-300F has up to 17tons of payload capacity; the B737-800F has up to 21tons; and the 767-300 approximately 50tons.

What is the arrangement with Asia Cargo Network and what synergies do you both bring to the table? 

Asia Cargo Network (“ACN”) is Southeast Asia’s leading air cargo charter services provider and a parent company to three regional airlines (World Cargo Airlines, Asia Cargo Airlines and RGA Airlines in South East Asia) with daily freighter operations across Asia.

Whereas MENA Aerospace WLL’s subsidiary MAE Aircraft Management WLL was awarded an AOC by Bahrain’s Ministry of Transportation and Telecommunications Civil Aviation Affairs (CAA) department in 2021. In a newly signed strategic alliance partnership, ACN will be a shareholder with a 49% stake in MAE Aircraft Management WLL (brand name MENA Cargo), bringing to the table investments consisting of capital, asset deployment, management expertise. It is a perfect synergy between both parties enabling immediate strategic market expansion of air cargo operations covering the Middle East, Asia and Africa altogether.

There are so many players in the air freight market in the Middle East competing for the huge pie that exists in the region and beyond, how are you going to distinguish yourself in this competitive market?

Marco: While it is true that that there are many players in the air freight market, these are mainly passenger aircraft operators which carry cargo in the lower deck of their aircraft, albeit with various limitations to the type and size of cargo it can carry. There are much fewer full-freighter aircraft in this region and the existing ones are mainly wide-body operators flying mid to long haul routes.

Dedicated narrow-body freighter services remain scarce and there is still considerable market demand (in the Middle East, Northern Africa and Indian Subcontinent region) to consolidate cargos to a full freighter operation with less reliance on inconsistent passenger operations.

We will also offer Middle East connectivity to Southeast Asia and China via our ready network of operations through World Cargo Airlines, Asia Cargo Airlines and RGA Airlines which will be receiving cargos from India as a mid-point and feeding it into our network.

Why did you choose Bahrain as your hub?

Bahrain is already strategically positioned within the Middle East, Northern Africa and the Indian subcontinent for regional flights. On a larger scale, because it sits right between Europe and Asia, it can act as a trans-shipment hub for continental cargo movements, even to the Americas.

Bahrain has immense untapped potential ready and waiting to be unlocked. Its ground logistics infrastructure and capability to facilitate a trans-shipment hub is developing fast, as it already possesses the right technology and facilities, with land space still readily available for development. Integrators like DHL and FedEx are also focusing their base of operations to be in Bahrain.

This is in comparison to Dubai, for example, which is now a busy and saturated transit hub which can pose various challenges to both airlines and logistics companies alike in terms of regulations and competition.

Bahrain has all the right ‘ticks’ for it to be the next big hub, but of course it will take time.

There are 24 airlines which transit Bahrain compared to 84 from Dubai International Airport, does that in a way limit your growth plans

Marco: As our immediate plans are to offer regional feeder network flights within the range of our B737s, the difference in number of transiting airlines would not have an immediate impact on us.

More importantly for an airline like MENA Cargo, Bahrain is surrounded by other nations with ‘Open Skies’ policies including the UAE, enabling us to also conduct immediate air cargo operations from there.

Getting talent here must be a challenge, considering that most of them will be expats, adding to the costs? How cost competitive will you be?

I don’t think that expats necessarily add to the costs as compared to hiring locals. Either way, the real challenge is if you do not have the right experience to assess individual hires or to build a solid team which brings the prerequisite experience required to running a full-freighter operations.

MENA Cargo is now able to tap into ACN’s vast resource of skilled manpower. In cargo airlines management, effective costmanagement comes from entering into the right aircraft deals and managing the aircraft and engines correctly. That is where we will put our focus on to ensure no cost leakages to remain cost-competitive in the market while maintaining a lean yet fully experienced team.

As MD-designate what strategies have you decided upon to take the company to the next level?

Our strategy will be to play on our strengths. MENA Cargo must penetrate the regional markets mentioned and at the same time leverage on the existing flight network that Asia Cargo Network has into the various ASEAN countries, China and India. It will need to offer customers connectivity which may not be readily present.

Coming from a family which has been in the cargo / logistics business for many years, was it easy for you to move into this line?

Marco: Interestingly, I had meant to further my career in law (corporate law as a specialty). But there were several golden opportunities that came along my way which simply could not be ignored. This was before Asia Cargo Network Group had acquired a majority stake in World Cargo Airlines (formerly known as Pos Asia Cargo Express) and before it had set up its third airline (RGA Airlines). I guess you could say the opportunity came like a full powered train and I hopped onto it without hesitation. The transition into the cargo airline business, however, was not without major challenges and life changing

moments. It required my full dedication and resilience to understand all the nuances and technicalities of operating an airline while having to manage and compete for profitability of the business in a consistently high-risk high-reward environment.

What challenges do you see in the air cargo business and as a next gen entrepreneur what are you going to invest in to overcome these challenges – will it be human capital, technology or something else you bring to the table?

Marco: Naturally, the current volatile state of global affairs remains a deep concern in the air cargo business. We can be adversely impacted from a global incident that occurs many continents away. The impact on the global supply chain, and the inconsistent rising costs of goods (e.g., fuel) sets an ever-changing direction which can cause imbalances in supply and demand. This can be very disruptive to air cargo businesses.

Investing in technology is not as easy as it seems and I have not seen any game changing technology to-date that can be applied by cargo airlines. Perhaps there are some out there, but they are geared more towards ground logistics (e-fulfilment or tracking) technology. An interesting alternative would be to look at Cargo-carrying UAVs (Unmanned Aerial Vehicle) which are not fuel dependent. We have begun to explore this, but I think it will be some years to go before safety of its operations can be guaranteed.

Ultimately, I would say investing in human capital and expertise remains forefront (at least for the next few years). With the right people and skill, there are various ways to overcome or mitigate these challenges.

What will be the USP of MENA Cargo? 

Marco: MENA Cargo operates a more niche type of narrow-body freighter aircraft and will facilitate more regional feeder access and opportunities to various direct shippers, integrators, aggregators, consolidators and forwarders. This may include access to untapped markets and onward connectivity into Southeast Asian cities.

What are the goals you have set for the company by 2030?

Marco: MENA Cargo aims to be the region’s leading cargo airlines offering both global long-haul freighter flights across continents and regional feeder flights by 2030. We are also enthusiastic over the developments of electric UAVs (unmanned aerial vehicle) used for cargo deliveries which is, of course, still being tested at the moment. Electric UAVs or electric aircraft as cargo carriers will be another big transition which we aim to achieve towards in the next ten years.