Eager to bounce back to its former prominence as one of Southeast Asia’s leading carriers, the cargo arm of Malaysia Airlines, MAB Kargo, is confident that it will return to its former strong position after going through the turbulent times precipitated by the loss of two aircraft by Malaysia Airlines two years ago.

The loss of its two planes – one in an accident and the second one in an armed attack in Eastern Ukraine – in a span of six months created major problems for the airline.

Ahmed Luqman Mohd Azmi, MAB Kargo’s CEO, explained in a recent interview with Asia Cargo News that MAB Kargo was “working overtime” to return to business-as-usual status. the airline has undergone what he calls a “massive transformation” with the old company having closed down and a new corporate avatar operating since January 1, 2016.

“The year 2016 will be crucial for our turnaround and we are looking ahead towards that goal,” Azmi said.

MAB Kargo currently operates a fleet of four Airbus A330-200F and two Boeing 747-400 freighter aircraft. “The Airbus freighter is suitable for regional operations, mainly, to China, India and Southeast Asia (mainly Vietnam and Indonesia). However, we are still looking for partners on block-space arrangement basis, entailing leased aircraft of another airline. We are looking at building up traffic from Kuala Lumpur via Central Asia to Amsterdam. We have been serving the Dutch market for a number of years, with Amsterdam as our hub in Europe,” he said.

MAB Kargo handled a total volume of 398,722 tons of cargo in 2015, down 8% from 434,793 tons in 2014, resulting from a reduction in capacity in cargo transported in aircraft bellies.

While MAB Kargo’s focus has, essentially, been on the regional markets, it resorts to “blocked space” arrangements for its intercontinental traffic by using other airlines. Luqman revealed that the cargo carrier was negotiating with Emirates, the Dubai-based carrier, for transporting bellyhold cargo.

The cargo’s regional focus, Luqman emphasized, is on the two Asian giants, China and India.

“China and India are interrelated. We see strong demand for cargo from China into India, particularly in segments such as electronics, e-commerce, etc. As outbound cargo from India is concerned, we see good potential in pharmaceuticals, chemicals, transportation of dangerous products, [which] are not permitted for transport in the belly of passenger aircraft,” he explained.

India’s emergence as one of the world’s leading suppliers of pharma products is attracting foreign cargo carriers because pharma products have to be shipped by air in special temperature-controlled containers. India supplies pharma products to the rest of the world, replete with tremendous business potential for cargo carriers, according to Luqman.

MAB Kargo operates freighter flights to Chennai and Bangalore (twice weekly to both cities).

“We are looking into the possibility of adding another destination – either Mumbai or Delhi – in our future operations. This could be possibly decided by the third quarter of the year,” Luqman said. He identified Asia, Europe and Australia as the carrier’s markets. It serves North America through other carriers.

MAB Kargo currently provides freighter services to Kuala Lumpur, Penang, Kuching, Kota Kinabalu, Labuan, Bangkok, Jakarta, Sydney, Ho Chi Minh City, Manila, Hong Kong, Taipei, Kansai, Tokyo, Pudong, Chennai and Amsterdam, using two fully owned 747-400 and four A330-200 freighters. It also offers belly space capacity to over 100 destinations across six continents.

Luqman predicted that 2016 will be a challenging year also because of the decline in fuel prices which, in turn, “leads to decline in consumption in the oil-producing nations.”

MAB Kargo recently started a twice-weekly service to Zhengzhou in China, deploying an A330-200F aircraft and offering a capacity of 60 tonnes; the service also provides additional network connections to selected destinations from Zhengzhou.

But the cargo carrier says that its cooperation with Azerbaijan’s cargo airline Silk Way West, with which it recently signed a memorandum of cooperation, will open up access to the lucrative markets of Central Asia.

Luqman, who described the strategic partnership with Silk Way West as a block space agreement (BSA) on a twice weekly route to and from Kuala Lumpur and Amsterdam via Baku, Azerbaijan’s capital, said the partnership will expand MAB Kargo’s network to include new destinations such as Baku and Tehran, besides serving Frankfurt, Malpensa, Vienna, Istanbul, as well as New York.

“Malaysia is strategic in terms of location, and makes imports of Asian commodities affordable for importers in the Middle East, Europe and US. We are certain that the partnership will facilitate export and import of commodities and meet the demand for fast and efficient transport links,” he maintained, adding that MAB Kargo would benefit from the synergies through its partnership with Silk Way West which operates to over 20 destinations worldwide. On the other hand, the cooperation will also strengthen Silk Way’s position in Asia. “More choice means more flexibility for our customers.” Both Baku and Kuala Lumpur would become transit hubs and regional distribution centres.

Luqman has been “putting into perspective” reports about MAB Kargo’s intention to retire its two 747-400 freighters, explaining that a corresponding plan to phase out the two aircraft has been rescinded, and emphasizing that MAB Kargo will continue to be Malaysia’s leading cargo carrier, geared to serve regional markets of Southeast Asia, India, China and Japan.

By Manik Mehta

International Correspondent | New York