Although he was recently promoted to the role of chief operations officer of Malaysia Airlines Berhad, Ahmad Luqman Mohd Azmi, former CEO of MAB Kargo, isn’t quite done with the airline’s cargo division yet.
“I’m taking more of a group role, but I will still be staying with MAB Kargo until my successor is found,” he said, in an interview with Asia Cargo News during the biennial Air Cargo India Conference and Exhibition in Mumbai. “That’s one of my main priorities.”
In the meantime, Luqman hopes to build on the positive momentum that the carrier experienced in 2017 to continue growing and improving.
“It was a journey that we started in late 2015 and early 2016,” he said. “We managed to deliver what we’re supposed to be delivering as a subsidiary. Our year-on-year growth was close to 25% and we saw an increase in yield of 4%, which helped us to drive profitability.”
One of the primary reasons for the increase in volume was that MAB Kargo was able to use its freighter aircraft more effectively.
“Our utilization increased from around 230-250 hours per month to an average of about 320 hours,” Luqman said. “That alone created additional capacity for us. Of course, about 60% of our business still moves in the bellies of our passenger aircraft.”
MAB Kargo’s current freighter fleet consists of just three Airbus A330-200Fs, but Luqman said that they are enough for the company for the time being because, apart from its own metal, it is also trying to grow through partnerships with other carriers that operate either very large aircraft like the Boeing 747F or narrowbody freighters.
One example of that is the partnership with Azerbaijani carrier Silk Way West Airlines which began in March 2016 as a block space agreement for a twice-weekly 747F flight between Kuala Lumpur and Amsterdam via Baku.
“It’s doing quite well and the relationship is maturing,” said Luqman. “We do intend to enhance that relationship and we’re exploring certain markets that we might be able to develop together. We believe Silk Way is the right partner for us because there is good synergy between us. There are only a few carriers like that. The oneworld alliance will help as well. This year is about exploring and strengthening these relationships and I think there are some strong carriers there with whom we can have some bilateral agreements.”
Malaysia Airlines started receiving the first of six A350-900s in November 2017, but Luqman pointed out that the cargo team has not been too happy with these new aircraft because of how they are being used by the airline.
“Frankly, the challenge with this aircraft is payload,” he said. “Even though it does offer better space, we’re not able to fully utilize it because we’re downgauging from an A380 on the London route. This results in a very high utilization on the passenger side and we’re looking at about a 30% reduction in cargo payload. We were able to achieve quite good loads on the A380, with the right mix of density and volume. That’s the challenging situation we’re in now, so the only way to work around that is to enhance collaboration.”
While MAB Kargo is exploring pockets of opportunity in some other Chinese cities like Zhengzhou or Wuhan, the only markets where it is looking at increasing freighter frequencies are Hong Kong and Shanghai.
“We do have two additional slots per week at Hong Kong, but they’re not at the right times,” Luqman said. “We’ve still taken them nonetheless because our partner Hong Kong Airlines has withdrawn freighter service from Kuala Lumpur so we need to replace some of that lost capacity.”
Because Hong Kong and Shanghai are both heavily congested airports that are so difficult to get slots for, the carrier has had to look for other options.
“We started a weekly A330F to Macau in January 2018, and for Shanghai we’re exploring an airport which is about an hour away from Pudong as a secondary complementary destination,” said Luqman. “Once we’ve worked out the cost structure and everything we’ll be ready to announce it.”
According to Luqman, it is still too early to tell whether Macau is working as an alternative to Hong Kong, but MAB Kargo has mitigated the risk by entering an agreement with a company which purchases all of the capacity in one direction.
“The challenge with Macau is that it doesn’t have an infrastructure that is similar to Hong Kong,” he said. “We also need to solve the problem of Macau-bound cargo because the route is very one-directional right now, unlike Hong Kong and Shanghai. We feel that we should be able to solve this soon, once the new bridge between Hong Kong and Macau is up and we can have better trucking.”
Overall, MAB Kargo has seen quite a slow start to the year in the first couple of months, even though Luqman had been hoping for the high volumes in the last quarter of 2017 to overflow into the first quarter of 2018.
“As of late February we’re still around 10-12% behind our projected target, so I’m a bit worried that the trend we thought we would see might not be there,” he said. “We’re looking at our freighter network to ensure that in any eventuality we will not be that greatly affected. The worry is that last year was such a good year that there’s been a tendency to charter flights out of Hong Kong, for example, adding capacity unnecessarily which may have an impact.”
Luqman, who was appointed COO of MAB effective February 1, 2018, joined MAB Kargo in September 2015, as the entire airline group was undergoing a massive corporate restructuring. Looking back, he said that he is most proud to have led the cargo division through the ordeal and achieve better productivity even with a 25% cut in staff.
“We were able to sit through that, come through in a stronger position and change the company from a non-profitable entity into a profitable one,” he said. “I’d say that is quite a feat in itself.”
By Jeffrey Lee
Asia Cargo News | Mumbai