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Cargo

China potential

Malaysia Airlines’ cargo arm is looking forward to building on a rationalisation of capacity to drive forward its business, with a specific focus on China, as Helen Massy-Beresford discovers
 

Malaysia Airlines’ newly restructured cargo business MAB Kargo Sdn Bhd (MASkargo) is making the most of an upturn in Asia-Pacific cargo traffic to grow its own business. Chief Executive Officer of MASkargo, Ahmad Luqman Mohd Azmi, says indications are good for the airline, adding: “MASkargo is optimistic for better performance this year compared to last year, albeit foreseeing a challenging year ahead. MASkargo’s first-quarter performance was strong and business has been good. Our year-on-year business grew by 5% in the first quarter of 2017 compared to the first quarter of 2016. As for the remaining quarters, we expect demand to be steady; spurred by e-commerce growth in the region.”


According to IATA, Asia-Pacific airlines’ freight volumes expanded by 8.4% in April compared with the same period a year earlier, with capacity increasing by 3.7%. “The increase in volumes reflects the strength of the order books reported by exporters across the region. Seasonally adjusted volumes recently surpassed the levels reached following the 2010 post-global financial crisis bounce-back,” the Association said in June, when it released the April numbers.


The Association of Asia-Pacific Airlines (AAPA) concurred that trade activity was buoyant in May, with Asian carriers seeing significant international air cargo demand. Measured in freight tonne kilometres, demand registered a solid 12.2% increase compared to the same month in 2016. The average international freight load factor also rose significantly, by 4.7% to 65.6%, following a comparatively modest 4.3% expansion in offered freight capacity, the Association added.


Andrew Herdman, AAPA Director General said, “The ongoing pick-up in the global economy, accompanied by increased consumer and investment spending, has provided a boost to both international air passenger and air cargo markets. Asian carriers are major players in the global air cargo market, and continue to benefit from the upswing in trade growth.”


Provided the climate remains positive for Asian carriers, MASkargo fully intends to benefit from that growth. “2016 is where we stabilised our operations,” says Luqman. “There were a lot of improvements, mainly due to the reduction of capacity that we undertook, both for belly cargo and freighter. As such, our improvements come from better capacity management.”


The airline, mirroring a trend seen more broadly in the industry, has cut its freighter fleet from six in 2015 to three Airbus A330-200F in 2016 and beyond.

 

“We still intend to use a mix of belly and freighter aircrafts for our operations,” Luqman continues. “So our strategy this year is to sweat all of our assets and leverage on our existing three freighter aircraft as part of our expansion plan. We are focusing on collaborations and strategic partnerships with partner airlines to enable us to grow and maintain our market reach. We believe in the need to better match capacity to demand to remain afloat.”


One area of growth is the e-commerce sector, particularly from the Far East, which Luqman describes as “booming”.


“As B2C business this year is expected to hit $2 trillion, e-commerce is definitely one of MASkargo’s main areas of focus. Therefore, incorporating e-commerce within the company’s business plan is essential,” he says.


MASkargo hopes to benefit from structural developments in Malaysia as well as burgeoning demand. >>


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