Air Wisconsin, which flies under the United Express brand as a regional partner of United Airlines, is exploring opportunities as an all-cargo carrier with a single freighter it expects to deploy in early December, President and CEO Robert Binns said.
The Appleton, Wisconsin-based company, which owns and operates a fleet of 64 small CRJ-200 jets for United in the Midwest and eastern U.S., has leased a CRJ-200 (Canadair Regional Jet) converted freighter in an effort to diversify its revenue stream amid growing cargo demand.
Air Wisconsin has not actively marketed the aircraft since it is still undergoing a heavy maintenance check and getting painted in the company’s livery, but Binns told FreightWaves that potential customers could include automakers that need expedited shipping of components to manufacturing plants and integrated express delivery companies looking to connect their network to smaller cities.
“Given the growth in cargo and our experience as one of the largest operators of the CRJ-200 we decided to put it on our certificate and test the waters,” the veteran airline executive said in an interview.
The move is part of a trend during the past 18 months of passenger airlines branching out to the all-cargo sector to take advantage of strong demand for air shipping fueled by pandemic-induced supply chain tightness and hypergrowth in e-commerce sales. WestJet, for example, recently announced plans to launch a freighter operation. Most passenger airlines have cargo divisions that market the excess capacity in the bellyhold of their aircraft, but the operating requirements and economics are much different than those of pure freighters that take main-deck cargo bundled on large pallets.
Air Wisconsin is following the lead of regional competitor Mesa Airlines (NASDAQ: MESA), which last year launched a cargo division that operates two Boeing 737-400 converted freighters for express carrier DHL.
“You traditionally have these regional airlines that fly under purchase agreements with mainline carriers, which are basically long-term wet-lease contracts. And on the cargo side you have very different carriers doing the same sort of thing for their customers. It’s interesting that those worlds have never really overlapped,” Binns said. “It’s a very similar business model, just for different customers.”
Air Wisconsin mostly carries mail in the lower hold of passenger planes. Building a cargo sales and logistics capability will depend on whether business comes from integrators such as FedEx (NYSE: FDX) and (NYSE: UPS) that have established routes and feed planes with their own packages or ad hoc charter customers, Binns said.
The airline’s chief has experience with cargo operations from his eight-year stint leading Global Aviation Holdings. One of its units was World Airways, which operated a fleet of 747-400 and MD-11 tri-jet freighters before going out of business in 2014. (Binns left the company before the new owners decided to take a quick profit and liquidate.)
Air Wisconsin is leasing the CRJ-200 freighter from Miami-based Regional One, which bought the plane from Pinnacle Partners. Aeronautical Engineering Inc. (AEI) managed the conversion of a CRJ-200 passenger jet into a freighter for Pinnacle. The aircraft operated in the Middle East before being sold to Regional One.
The 50-seat CRJ-200 has a 14,600-pound payload as a dedicated freighter. Revamping a passenger plane for cargo operations includes the installation of a large cargo door, a 9G rigid crash and smoke barrier, and modification of the main deck to support heavy loads.
AEI has converted 15 CRJ-200s so far, Robert Convey, senior vice president of sales and marketing, said in an email message. In February, the Miami-based aeronautical engineering firm signed a contract with Mexico-based Aeronaves T.S.M. to produce two additional CRJ-200 freighter conversions. The modifications are being done through a licensed contractor. Upon completion and delivery, Aeronaves will operate a total of 10 CRJ-200s.
Aviation experts say there is a large potential pool of CRJs for freighter conversion because U.S. airlines are phasing out no-frills, 50-seaters for larger, more modern aircraft. United Airlines (NASDAQ: UAL), for example, is moving to Embraer 175s as its smallest aircraft type.
The aircraft competes with the ATR 72 turboprop freighter, but Convey said the CRJ-200 can fly at twice the speed, which is beneficial for integrators that want late cutoff times for receiving last-minute packages. FedEx Express, however, has ordered 30 of the new ATR 72-600 aircraft, which has a larger payload.
Binns said Air Wisconsin has an advantage over CRJ cargo operators because it has a large stockpile of low-mileage engines, as well as maintenance and crew bases around the country. Some freighter companies have had difficulty getting engines for the aircraft after regional SkyWest bought up most of the available CF34 engines and secured all the shop capacity, essentially cornering the market. But Convey said the supply of the CF34 engines appears to be improving.
Cargo Facts was first to report Air Wisconsin’s entry into the air cargo market.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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