Global Crossing Airlines, a startup charter airline still trying to establish itself in the U.S. market, joined forces with a private equity group in Asia to establish an airline in Australia that intends to provide dedicated cargo and passenger transportation.
The joint venture entity, which has yet to be named, will apply for an Australian air operators certificate to offer both charter and contracted flying for other airlines or large businesses within Australia and to key Asian markets. It intends to use standard-gauge Airbus A321 passenger aircraft and converted freighters, as Miami-based Global Crossing Airlines does in the U.S.
Executives are targeting late 2025 for the start of operations, pending regulatory approval, and a fleet of 10 aircraft by 2030. The initial fleet will consist of two leased aircraft, Ryan Goepel, president and CFO of Global Crossing, told FreightWaves.
ATB Investment & Partners, a fund established in Vietnam in March 2023, is backing the Australian venture. The partners said the new airline is designed to capitalize on rapid air transportation growth in Asia and Oceania, where the charter flight market is estimated to reach $6.8 billion per year, according to a market research report they cited. A major opportunity is flying for regional carriers that require extra capacity during peak travel season.
“The APAC market has embraced the capabilities of the Airbus A321 passenger-to-freighter platform and many of the global operators of this aircraft type are concentrated there,” said Goepel, in an email response about the business case for cargo. “We see this as a strong opportunity to provide supplemental airlift to existing A321 freighter operators in the region, as well as cultivating a strong ad-hoc and scheduled charter business.”
The narrowbody A321 freighter, which provides up to 25 tons of capacity, “is well suited to APAC cargo flying needs, which makes the client pool vast,” added Goepel.
Airlines in Asia that operate A321 freighters include Japan Airlines, Sichuan Airlines, Qantas and Teleport (part of AirAsia Group).
The A321 competes against the Boeing 737-800 converted freighter in the small freighter category. Although it can accommodate small containers on the lower deck and the 737-800 can only accept loose shipments below deck, it’s not clear how many airlines are using that option. Repair shops that specialize in modifying the A321 passenger variant for main-deck cargo transport tout the aircraft as a natural replacement for the Boeing 757, but so far there have been few – if any – cases of airlines swapping older 757s for the A321.
ATB Investment & Partners relocated its headquarters to Melbourne, Australia, this year. It was founded by Eric Dang, who led Bamboo Airways from 2016 to 2022 and will serve as chairman and CEO of the new joint venture in its initial phase. Bamboo Airways, which commenced operations in 2019, recently resumed regional international flights after a one-year suspension implemented as part of a fleet restructuring to help address a financial crisis.
In the charter business, customers usually make arrangements closer to the time of flying and pay an all-inclusive price that includes fuel and landing fees. Under long-term transportation agreements, companies like GlobalX provide the aircraft, crew, maintenance and insurance while the customer pays for fuel and assumes the risk for selling the cargo space. The carrier is paid based on the number of hours flown each month.
GlobalX operates a fleet of 18 A321 passenger jets, including four cargo aircraft that were modified from a passenger configuration, in the U.S., the Caribbean and Latin America. It is the only North American operator of the A321 converted freighter.
Goepel said GlobalX will likely transfer existing aircraft from its fleet to get the Australian carrier going but would replace any aircraft to the venture with additional leased aircraft.
GlobalX entered revenue service three years ago with A320-family passenger jets providing charter flights for airlines, cruise lines, casinos, sports teams, concert tours, and hotel and resort destinations. It began dedicated cargo service in the summer of 2023. The company originally planned to have 15 A321 passenger-to-freighter aircraft by 2026 but early this year paused expansion of the freighter fleet because of challenges attracting new customers so it could focus on lucrative passenger flying.
Freighters could be first on the transfer list considering the state of GlobalX’s cargo business. The establishment of an Australian entity would allow GlobalX to redeploy underutilized cargo jets to a market where they could be in higher demand while the company develops a book of business in the United States.
GlobalX copes with thin cargo business
The continued underperformance of the cargo segment was a drag on third-quarter earnings. In addition to challenges picking up regular customers and excess narrowbody freighter capacity in North America, GlobalX was hurt by the loss of a U.S. Postal Service contract, part of the letter carrier’s massive cost-cutting campaign that includes shifting key routes to cheaper ground transportation.
Utilization of cargo aircraft was down 77%, from 450 hours to 101 hours during the quarter due to the cancellation of Postal Service flights. In response to the slow cargo activity, GlobalX said it elected in the second quarter to take two A321s from lessors as passenger aircraft rather than freighters and deferred two other freighter deliveries to 2025.
GlobalX has seen cargo business pick up this quarter, Goepel said in a brief interview last month.
It gained temporary work from Miami-based Amerijet while one of its Boeing 767s was out of service for a heavy maintenance check. IBC, a Caribbean interisland carrier, is subcontracting more flights to GlobalX when shipments exceed its capacity. And in mid-November, GlobalX added a fourth weekly flight for Airblox between San Juan, Puerto Rico, and Chicago. Airblox, an airfreight capacity wholesaler for medium-term contracts, began its charter service with GlobalX in October with the aim of giving pharmaceutical and other shippers a direct transit option that eliminates the need for long-haul trucks to relay products between the Upper Midwest and air hubs in Cincinnati or Miami.
GlobalX is still confident the A321 freighters will prove out in the North America, Caribbean and Central America market once some of the excess capacity is eliminated.
“We’re going to retain the option until this market returns because we’re the only ones with this metal (the A321). And if people truly believe that the 757 will start phasing out and this is the replacement aircraft we’ll have a really great head start,” Goepel said in an interview last summer.
Third-quarter revenue increased 23% year over year to $52.4 million thanks to higher rates and flight activity. A slightly wider operating loss of $2.5 million was attributed to a series of maintenance events that knocked out more than a third of the passenger fleet for almost two weeks, plus higher costs associated with a 15% increase in aircraft flying time. Severe weather events in September damaged two parked aircraft, three different aircraft were struck by birds, and a maintenance vendor severely damaged an aircraft during a routine check, GlobalX said in its earnings report last month. GlobalX said it expects insurance to cover some of the $2.7 million in repairs, but the $2.3 million impact to revenue had a significant impact too.
The picture was better for the first nine months of the year, with an operating loss of $4.6 million compared to $14.6 million for the same period last year. Also, earnings before interest, taxes, depreciation, amortization and rent nearly doubled in the third quarter to $15.4 million. EBITDAR is a common metric for measuring financial health in the airline industry because of the heavy rent costs for aircraft.
In early February, GlobalX replaced CEO and chairman Ed Wegel, splitting his duties between Goepel and board member Chris Jamroz.
Click here for more FreightWaves/American Shipper articles by Eric Kulisch.
Write to Eric Kulisch at ekulisch@freightwaves.com.
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