With an experience spanning over 70 years, SATS connects people, businesses and communities seamlessly through comprehensive services for customers like airlines, cruise lines, freight forwarders, postal services and e-commerce companies. Using innovative food technologies and resilient supply chains, it creates tasty, quality food in sustainable ways for airlines, foodservice chains, retailers and institutions.
SATS is delighting customers in 55 locations and 14 countries across the Asia Pacific, UK, and the Middle East. Payload Asia managed to interview chief operating officer, Bob Chi, as he touched on being passionate about excellence and striving to deliver the highest quality and value to its customers.
Can you tell us about the year 2020 that was for SATS? What would be the key take-aways and new additions to the company’s existing playbook?
2020 has been one of the most challenging years in our history, as COVID-19 restricted international travel. During this crisis, our customers and communities have recognised SATS as an essential service provider, highlighting our purpose to feed and connect communities. We have begun our transformation even prior to COVID-19, reshaping our organisation to target unique capabilities and new growth opportunities. In the wake of the pandemic, we accelerated the pace of transformation, and today, we are seeing results from some of these early initiatives.
In terms of growing the cargo business, where are the opportunities and what would be the key factors that you need to consider before any major decision?
IATA reports that global air cargo demand will continue with its upswing, with CTKs rising by 9.9% in June 2021. Looking ahead, shippers and businesses are likely to see strong demand in October when the peak season starts.
Cargo remains the most resilient part of our business. Majority of SATS’ cargo associates were profitable in the first quarter of our current financial year. First quarter cargo revenue improved 62% year-on-year and 6% quarter-on-quarter. We see opportunities for us to grow our cargo business in Asia and beyond.
With airside locations in Indonesia, India, Malaysia and China, where are you seeing the demand for cargo handling services, and where do you think are your key areas of focus?
Demand for air cargo remains strong, driven by eCommerce and the increased focus on health post-pandemic, which is driving handling for cold-chain handling of vaccines, medical supplies, and fresh food. We have two key areas of focus in the eCommerce space and cold-chain handling, particularly for vaccines.
SATS has been investing in specialised handling capabilities and facilities such as perishable handling, pharmaceutical handling, and e-commerce sortation. We will continue to build these capabilities and facilities in major air hubs across Asia, and provide high-quality handling services so that airlines, freight forwarders, and shippers can be assured of consistent high standards.
For example, we re-architected our cargo operating system to operate as a cloud-based service. This means that we can share data freely between different hubs to ensure service productivity and provide track-and-trace to airlines, shippers, and freight forwarders and support eCommerce growth across Asia.
SATS has been acquiring food manufacturing businesses as of late, can you tell us more about this?
SATS is investing in digitalisation and building new capabilities that will create value for our customers and business partners, and support future growth. We continue to work with our airline customers to reimagine travel by digitising touch points and developing innovative food packaging to minimise physical contact during the passenger journey. We recently acquired Food City in Thailand to increase scale for frozen food production, and are setting up our first large-scale central kitchen in India, to supply our growing customer base from aviation to food service and retail across the region. We have also successfully integrated our Monty’s Bakehouse acquisition in the UK to build a global innovation capability that is driving the success of new product innovation.
For gateway services, what would be your outlook for Asia Pacific given the rate of vaccination and travel resumption globally?
SATS is working hard to do our part in enabling the aviation industry to operate safely, efficiently and sustainably. We are supporting the IATA Safe Travel Pass by working with airline customers to create system linkages that will facilitate data transfer into the Safe Travel Pass digital wallet, which will allow passengers to benefit from a digital customer experience with minimal contact. This is both more efficient and safer for passengers, as well as ground handling and immigration staff. We hope international borders will open soon and continue to collaborate with industry stakeholders to facilitate the gradual reopening of travel across our network.