Exclusive Interview: Fathi Buhazza, CEO, Maximus Air
Maximus Air president and CEO, Fathi Hilal Buhazza is certainly not a faint-hearted man. His frank views on the future for the region’s air cargo industry have been garnering much debate amongst a sector ripe for change. Driven by his own passion for progressive development, Buhazza is keen to see the region push forward an agenda of synergy and collaboration to kick the industry into a new era.
If you chart Maximus’ own rise as a leading all-cargo operator in the UAE, you witness first-hand how, by embracing change and new direction, the government-led company became the commercial success it is today. Established in 2005, the cargo operator began with a fleet made up of the hefty Antonov 124 and three Illyushin 76s under a foreign AOC from the Ukraine. Primarily on call to transport outsized cargo for the government of Abu Dhabi, Maximus obtained its own AOC whilst adding two Lockheed 382G Hercules aircraft to its fleet in 2007.
“In the early years, we realised that without our own AOC, we could not control the safety and security of the company, nor its enormous growth potential,” recalls Buhazza. “With the AOC, the structure of the company changed dramatically in terms of operations, quality, safety and security.” Just four years later, the company has transformed into a formidable player in the air cargo world – providing end to end services in a variety of sectors from humanitarian, equestrian and VVIP cargo solutions, to wet leasing aircraft.
After adding two Airbus A300-600RFs to its now eight-strong freighter fleet, Maximus Air began to diversify its offering, focusing on its burgeoning charter service. Whilst pleased with the revenue potential of the charter business, Buhazza felt that the company needed another edge to distinguish it from its competitors and provide a stable vehicle for growth.
“The charter business tends to be seasonal and unpredictable,” he points out. “But you cannot really develop as a company unless you can predict and sustain growth.” The vehicle for that growth took form of a largely untapped subsector in the region – that of ACMI services (Aircraft, Crew, Maintenance and Insurance).
Also referred to as wet leasing, ACMI is a popular solution for those airlines without freighter capabilities or those looking to increase their existing capacity, without the headache of having to own, run and maintain an additional in-house aircraft. Perceived as a versatile tool to cover influxes in demand and supply in the air cargo market, the ACMI subsector has grown in popularity globally. Some industry experts have even implied that redistribution of market share in the air cargo industry could see streamlined ACMI operators giving traditional air cargo operators a run for their money.
“The reason this business model works is because it provides a focus for both parties. We focus on the aircraft operations so that the airlines can concentrate on its core business,” says Buhazza. He points to the US as a region where the ACMI model is relatively commonplace and experiencing much success.
In the Middle East, Dubai’s national carrier Emirates has held a mutually profitable arrangement with global ACMI provider Atlas Air for the past 14 years. With its own prime geographical position as a hub surrounded by emerging market countries, Buhazza is confident that Maximus can emulate this success with its own ACMI business model.
So far, the air cargo operator’s experience of ACMI has included two major clients – Sudan Airways and Etihad Crystal Cargo. As its first client, the agreement between Sudan Airways and the cargo operator ended mutually due to the low levels of aircraft utilisation required. With Etihad Crystal Cargo however, Maximus found itself initially overwhelmed by a completely different scale of operations. “All of a sudden we were in a position where we had to go from doing 20 − 50 hours per aircraft a month to 275 − 300,” says Buhazza. “We were under a huge amount of pressure but this was our national airline and we were determined not fail. We underwent a lot of restructuring and investment to ensure that we were able to keep up.”
In fact, Maximus more than lived up to the challenge. The company reported a record operational month in July 2011, representing the highest ever aircraft utilisation from Etihad in a single month. “We were able to deliver some very good results. We had an average of 97.89 per cent technical dispatch reliability with more than 1700 flights with Etihad in 2010. That shows that something is working!” says Buhazza confidently.
Maximus’ success in the ACMI model has made Buhazza very excited about the potential growth prospects for this subsector. For its customers, the benefits of ACMI are an easy sell. As well as saving crew and AOC overhead, wet leasing provides more flexibility in terms of capacity and a lower cost per tonne than in-sourcing. “There is a lot of interest and I think ACMI is a business model that is yet to be fully appreciated in this part of the world,” Buhazza says.
There are rumours of another major ACMI deal on the Maximus table, but when it comes to officially naming names, he remains tight-lipped. The only hint is that it is possibly from outside the Gulf region. “There are a lot of opportunities for ACMI for this region in the future,” says Buhazza. “There are many hungry markets waiting to develop, such as what I call the ‘sleeping giants’ like Iran.” With its prime geographical location in Abu Dhabi, the company is also well placed to take advantage of the growth potential from emerging markets in both Asia and Africa into Europe.
“Our vision is to be a global leader in terms of logistics and operating aircrafts,” Buhazza emphasises. “Over the past five years, half of our work was devoted to the requirements of the Abu Dhabi government. But now we are looking for a major shift to move almost 80 per cent of our work outside the UAE.”
Maximus’ dual business model of cargo charter and ACMI is one that Buhazza fervently believes will fortify the company’s position in the air cargo world even further. At present the business split lies as 75 per cent charter and 25 per cent ACMI. This year, the company will be adding three more Airbus A300-600 freighter conversions to its fleet in order to further boost operations. Purchased from Japan Airlines at the start of the year, the freighter offers a maximum payload capacity of 46 tonnes. It is the youngest aircraft ever to undergo a passenger plane to freighter adaptation – giving it a fuel efficiency advantage over older models.
“With its range of 2650 nautical miles and its payload, the A300-600 is a perfect aircraft for this part of the world,” says Buhazza. “It allows us to reach the Indian subcontinent, Africa and even Switzerland without a stop.”
Under Buhazza’s leadership, Maximus’ performance has continued to be robust in its chosen subsectors – achieving a steady growth of 16 per cent last year. Much of the company’s success lies in its commitment to high standards in operations. Buhazza himself is a self-proclaimed ‘operations man’. Prior to joining Maximus, he spent fifteen years as the director of flight operations for royal aviation group Amiri Flight.
“When you work for the royalty, you simply cannot afford for the service to go wrong in any way at all,” he stresses emphatically. “Working to those expected standards leaves you ‘brainwashed’ to strive for only exceptional service levels.”
Buhazza’s ambitions for setting distinguishing benchmarks in the region do not apply to Maximus Air alone. Over the past twenty years, he has watched as the region’s aviation sector has matured and then prospered. “There can’t be a better place than this to be an air cargo operator,” Buhazza enthuses. “The growth has been amazing and the leadership and vision here is really inspirational.”
But as the enigmatic CEO and president reiterates, there is still much to be done to sustain the full potential of the region. In the past year, Buhazza has been regularly quoted and published on his strong views on how the region’s aviation industry needs to up its game in order to become a stronger global force. “A major problem here lies in operating a level playing field,” he states. “This is a double-headed dragon for many air cargo operators keen to break the Middle East’s market.”
On one hand, Buhazza points to the industry being held price-hostage by what he terms the ‘grey market’ – namely the unlicensed air cargo operators in the region. On the flip side, and of much more concern to Buhazza, is the lack of synergy within the region’s aviation industry. As the phenomenal growth of this sector took off pre-recession, many players were keen to grab the lion share of the market. This healthy competition led to the rapid growth of many companies as well as increased attraction from overseas players such as the European airlines.
Now, Buhazza believes, should be the time of market consolidation and co-operation between the major players in the Gulf region. Instead, he argues, some of the region’s airlines have adopted what he believes, ‘a piecemeal approach to growth, based on an individual airline’s access to subsidised goods and services’.
“We don’t need a monopoly in the UAE – we want to have a transparent, clear market in order to attract other people to come and invest here,” Buhazza emphasises. In order to achieve a synergy, Buhazza is calling for action on a political level to bring all the airlines in the region under one umbrella. He believes that the Gulf Co-operation Council (GCC), with its strong record for bringing the states together in other industries, is in prime position to take on this role.
“The GCC carriers, under the umbrella of the GCC, can work out how to develop the region, co-ordinate strategies and ensure a level playing field,” he says. “There are opportunities for airlines in every GCC country, but to ensure success across the board, it needs to be co-ordinated to enable us to work together in synergy.”