Chronology of MASkargo

TAKING OFF.. 1970s

 

Even before the split from Malaysia Singapore Airlines (MSA) in 1972, local freight operators had already begun to draw MAS' attention on how lucrative the air cargo business could be.

Accordingly, MAS set out to develop the Subang International Airport as a regional transshipment centre for all international flights and the Senai Airport as an air cargo centre for Southeast Asia.

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CLIMBING OUT.. 1980s

 

Air freight was described as "the fastest offshoot of the airline industry" and by the mid-80s, the International Civil Aviation Organization (ICAO) was forecasting that Asia Pacific would become the largest air cargo market by the end of the decade.

...This was especially the case at the Kuala Lumpur International Airport in Subang where air cargo annual throughput had grown from just 2,400 tonnes in 1970 to 76,000 tonnes in 1980 and was exceeding 300,000 tonnes by the mid-80s.

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LEVELING OFF.. 1990s

 

The issue took on further urgency when the International Air Transport Association (IATA) predicted in 1991 that the Malaysian air cargo industry would register the highest growth rate in the world for the first half of the decade.

...With the conversion, MAS's air cargo revenue shot up to almost RM1 billion by 1995, a huge 87% increase over the previous year and catapulted the national carrier into the ranks of the world's top 20 freight carriers.

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CRUISING.. 2000

 

By the turn of the new millennium, MASkargo was well established as a major player in air freight and over the next few years it was to enhance its standing to become one of Asia's top three cargo carriers.

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Taking Off.. The 1970s

The early 1970s marked the take-off of the air cargo business in Malaysia and Southeast Asia. Then, industrialization was spreading throughout the region at a time when airfreight was emerging as a commercially viable option with the coming-of-age of several carriers like Malaysia Airlines System (MAS). Before this, sea freight was the normal mode of transport for goods while air cargo consisted mainly of mail, frozen foods and live animals. Increasingly over the decade, this was to change as Malaysian manufacturers relied on air transport to export their computer components, electronic goods and apparel while importing raw materials and consumables. Even before the split from Malaysia Singapore Airlines (MSA) in 1972, local freight operators had already begun to draw MAS' attention on how lucrative the air cargo business could be. They highlighted airfreight's selling point – faster delivery at lower operational costs means faster and greater profits. By the mid-1970s, the freight operators' campaign "Fly it rather than sail it" was in full swing, as were such innovations as containerization of air cargo. Soon, airfreight – previously thought of as 'incidental' revenue – was overtaking passenger sales in profitability. By now, it was clear to MAS as well as other regional airlines that they would be running at a loss without cargo revenue. In the five years since MAS started operating as a truly national airline, the volume of air cargo had grown six-fold whereas passenger load had merely doubled. Based on such figures, airline industry players predicted that future expansion of airlines would be linked more closely to cargo than passengers. Accordingly, MAS set out to develop the Subang International Airport as a regional transshipment centre for all international flights and the Senai Airport as an air cargo centre for Southeast Asia. It invested millions in upgrading its cargo handling capacity at several airports, constructing a master cargo complex at Subang and expanding facilities at Senai and Penang. The airline also added to its cargo handling staff, purchased new equipment and acquired a Boeing 737 cargo aircraft. Additionally, MAS announced plans to add two B-747 jumbo jets and six B-737s to its aircraft inventory by 1981. Another event in 1977 expedited MAS' growing focus on its air cargo business. The Government announced an RM800 million deficit in invisible trade, with the bulk of this being international freight charges and insurance premiums. By the late 1970s, MAS began using the title 'MAS Kargo' in referring to its air cargo division. The airline also unveiled plans for high cargo capacity, packaging assistance, skilled cargo handling staff and sophisticated equipment – all measures to take the air cargo business into the next decade.

Climbing Out... The 1980s

Air cargo continued to grow as a business throughout the 1980s, with the most significant expansion taking place across the Asia-Pacific region where newly industrialized nations joined the major league in trade. Air freight was described as "the fastest offshoot of the airline industry" and by the mid-80s, the International Civil Aviation Organization (ICAO) was forecasting that Asia Pacific would become the largest air cargo market by the end of the decade. In 1972, the region contributed only 7% of the world's air cargo traffic but by 1982, it had shot up to 22%. Malaysia was one of the emerging trading nations consistently posting double- digit growth rates in air freight, with MAS the major player for inbound and outbound air cargo in Malaysia. Other major airlines including several dedicated cargo carriers like US-based Flying Tigers and Lebanese-flagged Trans Mediterranean also sought to capture a slice of the lucrative Malaysian market. At one stage, this phenomenon alarmed the Government enough that it began calling for greater private sector involvement in air cargo to offset net freight and insurance payments in the billions of ringgit. During this period, MAS was always playing catch-up with its limited cargo capacity on flights and in particular, insufficient storage space at almost all airports. This was especially the case at the Kuala Lumpur International Airport in Subang where air cargo annual throughput had grown from just 2,400 tonnes in 1970 to 76,000 tonnes in 1980 and was exceeding 300,000 tonnes by the mid-80s. In response, MAS added or expanded new facilities at all the major airports. These included a 150,000 sq ft cargo complex with capacity to handle 160 million kg annually at Subang and a new facility for Penang. Additionally, warehouses in three other airports – Kota Kinabalu, Kuching and Senai - were expanded. In total, these measures created an extra 300,000 sq ft of cargo space at the five airports. To meet the demand for cargo uplift, MAS also set about to enlarge its fleet. The first B747s arrived in 1982 and by the late 1980s; the national carrier had purchased B747-400 Combis that could boost its international cargo capacity by as much as 30%. This was still insufficient for MAS to cope with the escalating demand, even despite several pacts with other airlines and cargo carriers to operate joint freighter services. By the late 1980s, MAS began casting its eyes at dedicated cargo services to popular destinations for Malaysian exports like Japan, Hong Kong and Europe. It was a natural and above all, logical progression for the airline since air freight revenue was approaching one fifth of MAS' total income. For instance, air cargo brought in RM220 million for the national carrier in 1988, a figure that was four times the amount at the start of the decade. At around the same time, MAS mapped out a strategy to take the business to a higher level. A strategy that was characterized by "wide cargo sales and efficient ground handling support." As the 80s was drawing to a close for the dawn of a new decade, the MAS cargo sales department was already looking ahead.

Leveling Off... The 1990s

The cargo division of MAS entered the 1990s faced with many of the same constraints from the previous decade as the air freight business continued to expand at breakneck pace. MAS was put under considerable pressure from the Government and the nation's industries to provide adequate cargo space for their growing exports. The issue took on further urgency when the International Air Transport Association (IATA) predicted in 1991 that the Malaysian air cargo industry would register the highest growth rate in the world for the first half of the decade. The national carrier's dilemma was simple. It had limited landing rights for most international destinations and could only schedule full freighter services by correspondingly reducing passenger or combi flights. While negotiating for more traffic rights worldwide, MAS responded to the situation by tying up with other airlines and cargo carriers to operate joint freighter services. They included Air France, US-based World Airways, Dutch carrier KLM, Richard Branson's Virgin Atlantic Airways and Srilankan Airlines. Finally in September 1991, MAS launched its first international all-cargo service to Dubai and Amsterdam with an MD-11. Despite a temporary halt a year later, this proved to be the vanguard of MASkargo's full freighter flights in the years to come. These later flights were undertaken by B747-200Fs, which were originally passenger aircraft converted into freighters. With the conversion, MAS's air cargo revenue shot up to almost RM1 billion by 1995, a huge 87% increase over the previous year and catapulted the national carrier into the ranks of the world's top 20 freight carriers. Even so, this only represented 35% of total air freight business in Malaysia. There was still plenty of room for MAS to grow and greater emphasis continued to shift to air cargo operations. By now, the air freight business was independently operated by MASkargo Sdn Bhd, which had been incorporated as a wholly-owned subsidiary of MAS in 1994. During the mid-90s, the persistent shortfall of cargo space at Subang was given little attention given the impending move to the new Kuala Lumpur International Airport at Sepang. When the national carrier shifted operations to KLIA in 1998, MASkargo could easily handle up to 650,000 tonnes a year at its ultra modern and handsomely equipped Advanced Cargo Centre (ACC). Unfortunately, the opening of the new airport came in the wake of the Asian Financial Crisis that deflated almost every regional economy for the rest of the decade. The Malaysian economy, however, started to come around by mid-1999 and this was reflected by the recovery of MASkargo's business for the year. MAS closed the decade on a high with the announcement that it would venture into total logistics operations with MASkargo extending its services to include land transport to complement its air operations. For the airline industry, this was an unprecedented development. It set the stage for MASkargo to welcome the new decade with renewed confidence.