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Inside the deal: Demand for fast delivery fuels add-ons for AEI-backed Alpine Air

"Organs and medical equipment need to get to smaller cities and smaller hospitals in a very time-sensitive fashion," said Alpine's Jon Nemo.

Rising demand for air freight in e-commerce, healthcare and manufacturing prompted AE Industrial Partners portfolio company Alpine Air Express to acquire Suburban Air Freight in a deal announced on Monday. With Alpine based in Provo, Utah, and Suburban based in Omaha, Nebraska, the deal also helps Alpine expand geographically. It marked Alpine’s second acquisition since AEI came on board in 2019. The first was Alpine’s purchase of Great Lakes Airlines in 2020. To learn more about Alpine’s growth, PE Hub caught up with Jon Nemo, a senior partner at AEI and a former investment banker who specialized in aerospace, defense and government services.

Factors fueling the transportation of goods by aircraft include the rise of e-commerce during the pandemic and the shortage of truck drivers.

Jon Nemo, AE Industrial Partners

“We bought the business pre-covid with a similar thesis, which was more e-commerce activity, faster delivery requirements,” explained Nemo. “Covid only made that more compelling for us because the demand for e-commerce improved, delivery requirements continued to grow and, as you know, supply chain complexity has only increased. Having reliable service to be able to support the movement of air cargo is a priority.”

Alpine operates primarily out of the mountainous west, where the terrain and weather make it harder to use ground transportation for periods during the year and airfreight is the most compelling alternative for moving cargo.

Nemo also said demand is high for delivering time-sensitive healthcare components, including medicines.

“The large cities we operate out of have large medical centers, and oftentimes isotopes, organs and medical equipment need to get to smaller cities and smaller hospitals in a very time-sensitive fashion,” he said. “We have been able to use our fleet to support that work.”

Alpine also supports the automotive supply chain from Mexico to the US and other industrial supply chains as well as moving mail on a scheduled basis for the US Postal System. Some of Alpine’s clients include large integrators such as UPS, FedEx and DHL.

Nemo said Alpine’s role can be equated to the last mile of air cargo. In logistics, last mile is the final step in the chain of delivering goods to the consumers. “Our regional services essentially provide that last mile of service so that cargo e-commerce activity can get to the destination faster and more reliably.”

Despite rising fuel prices, AEI sees geographic and customer expansion as the two major growth drivers for the air cargo business. The acquisition of Suburban comes with new locations that will expand Alpine’s market.

“We see a lot of demand for our services,” Nemo said. “We are one of the few companies of our scale that is investing significantly in our fleet and our geographic presence, and we think that will continue to allow us to solidify our leadership position in the market.”

Alpine operates a fleet of more than 50 airplanes and owns a proprietary Supplemental Type Certificate to convert the Beechcraft 1900D aircraft from passenger to cargo configuration.

As air cargo grows, Nemo said the company is also exploring sustainable aviation fuels, which are cleaner and better for the environment.

“As we look out into the future, I would say we are exploring opportunities to drive more fuel efficiency and positive climate impact, including electrification, hybrid technology and sustainable aviation fuels,” he said, adding that there is an opportunity to potentially electrify Alpine’s aircraft over time as new engine and battery technologies evolve.

“There are electric and hybrid opportunities, and while we don’t think it’s a next-year thing, it is something that we are paying attention to.”