‘Challenge Accepted’: An Interview with Challenge Airlines’ COO

[In The News]

DALLAS – What comes to mind when you think of a cargo airline? FedEx, DHL, and UPS? Sure, but there’s more to airfreight than just these giants. One such airline has been on my list for a while.

They operate two Boeing 747 jets out of the Belgian city of Liege and have the catchiest motto out there, which so happens to be painted right on the sides of the fuselage stating “Challenge accepted” Ring a bell? It’s Challenge Airlines BE (X7).

I had the privilege of spending the day with most of the management team at their headquarters at Liege Airport (LGG) for Airways and was able to get a good insight into how Challenge does it differently.

For the first of this two-part story, I got the chance to speak with Martin Scheffmann about the operations of the airline. Here’s what he had to say (the following post will focus more on the Jumbo operations and fleet plans and will be out in a few days – stay tuned).

Airways’ Siddharth with Martin Scheffmann, Christelle, Thomas, and Gianluca from Challenge Airlines BE

SG : “Challenge Accepted” is quite a unique motto. For those who don’t know much, Challenge Airlines is a cargo carrier based out of Liege but under the Challenge Group from Israel.

MS: Challenge Airlines BE received its Belgian AOC on April 18, 2019. We form part of the Challenge Group, which was founded in 2019 and is headquartered in Malta. However, our adventure did indeed start in Israel, in 1976, when CAL Cargo Airlines, recently rebranded as Challenge Airlines IL, began operating out of Ben Gurion Airport.

What made Challenge Airlines use Liege as its home base? Why not fortify at Tel Aviv?

Liege was historically the original hub chosen by CAL for its operations in 1997 when Liege was still a military airport, with the only exception of the TNT facility. Geographically located in the golden triangle, equidistant from main European gateways such as Amsterdam, Frankfurt, or Paris, and close to the UK, as well, Liege is a fully dedicated cargo hub with no night restrictions.

These are real assets from which a pure freighter operator can benefit. Challenge Handling, formerly known as Lachs and also part of the Challenge Group, started its operations around 20 years ago as the first handling agent based in Liege.

At present, you shoot 36 weekly departures to eight destinations, as for expansion, what are some gateways you’re considering? 

Since we are part of the Challenge Group, our expansion plans are aligned with the overall Group strategy. There is a clear roadmap to consolidating our existing trade lanes, in addition to establishing new strategic destinations in the U.S., Far East, Indian subcontinent, and Africa, based on market potential and customer requirements.

As an all-Boeing 747 operator, do you see many more years of the Jumbo at Challenge? Any looming plans for a replacement?

The 747 is an excellent aircraft when it comes to specific commodities, and therefore, will definitely remain part of our fleet. However, we have chosen the 767 and the 777 converted models for sustainability reasons. These are twin-engine aircraft, so they are less polluting and more efficient in terms of performance.

The first one will be deployed in the short to medium term to meet the demands of business partners willing to buy more than just air cargo capacity from us, and with a specific activity on specific trade lanes, whereas the second one will integrate the 747 on the long haul.

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Challenge Airlines BE has plans to bring in 2 Boeing 767s if I’m right. Are they P2F from IAI Israel?

In reference also to my previous answer; as per the Group strategy, these aircraft undergoing conversion by IAI will be introduced and registered under Challenge Airlines MT (Malta), and an additional two will be operated by Challenge Airlines IL. Challenge Airlines’ BE fleet will consist purely of 747 aircraft.

What are some of the current challenges at Challenge Airlines BE?

To name just a few of them: geopolitical tensions have forced us to identify alternative routes with additional stopovers, increasing costs and flight time, localized lockdowns post-pandemic, reducing carbon emissions, and assuming our responsibility as an airline by actively contributing and continuing our efforts to reduce our carbon footprint in all our processes.

As part of the supply chain, do you need more investment in aircraft or on-ground infrastructure/IT digitalization?

The ongoing digital transformation of the global supply chain is indeed creating new products, processes, and services. The Challenge Group is involved in and investing in several new products and services for our customers.

Besides supply chain optimization, the Group has also announced our future aircraft expansion plans and fleet renewal.

As an airline, we have invested in some specific new technologies: a 3D loading device to simplify the loading process with a preliminary simulation for oversized and heavy shipments, and Flightkeys to ease flight planning and route optimization.

E-commerce is forever booming, is it more of a must for a cargo carrier to have a fixed partnership with one of the E-commerce giants?

To meet the growing demand for e-commerce out of China, we regularly deploy our capacity in this region with a daily service to either HKG, WUH, or CGO. We had to stop our four frequencies to Hong Kong due to the well-known local restrictions, but we are planning to restore the service later this year.

How do you see your air freight pricing amidst the Ukrainian crisis? Perhaps a forecast for the coming years?

2021 was a record year for us. We kept our performance up and, based on the results of the first quarter of 2022, we can confirm that this upward trend is continuing. So 2022 will probably be another successful year for us.

The institutional industry forecast is going in the same direction, even though the seasonal increase in the passenger belly capacity is temporarily decreasing the yield a little. However, as I mentioned, we target specific verticals which require a freighter service, enabling us to mitigate this additional capacity on the market.

What do Challenge Airlines’ long-term outlook and strategy look like? Do you see possible integrations with shipping lines?

Our strategy is aligned with and dictated by the Group and, at the moment, an integration with a shipping line is not on the table. However, we are an active stakeholder in the new sea-to-air business model where, especially with our operation out of the UAE, we provide a significant contribution to world trade, to overcome the constraints of the sea freight supply chain.

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More On Challenge Airlines in the Coming Days

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The Challenge group is of conglomeration that specializes in providing niche air freight solutions that catered to the customers, from handling to ground and air logistics.

Young and dynamic, Challenge Airlines BE is one of the newer members under the Group umbrella and is rather small today but with more aircraft scheduled to join along with a solid base as Liege, the boutique carrier is sure to catch the attention of many.

The journey with Challenge doesn’t end yet. In the coming days, our readers will have a deeper look into how cargo is loaded onto X7’s Jumbo jets, along with some hot news for the carrier, so stay tuned to Airways!

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