From the Cockpit with MASkargo’s Jason Thomas

MASkargo, the cargo arm of Malaysia Airlines, is evaluating its operations and market share as new carriers emerge in Southeast Asia to meet the growing demand for express air freight. The carrier operates three production A330-200Fs and hopes to strengthen its presence in the Asia-Pacific region while building strategic partnerships that help it expand globally. [caption id="attachment_56867219" align="alignright" width="400"] Jason Thomas, CEO of Maskargo. (Courtesy/Malaysia Airlines)[/caption] MASkargo resumed freighter operations in Europe in 2020 after pulling out in 2015 and relying on a deal with Azerbaijan-based Silk Way West Airlines to provide capacity . Cargo Facts recently spoke with Chief Executive Jason Thomas, who assumed his position in January 2023, for to discuss MASkargo’s fleet strategy, outlook and assessment of growing regional demand. What follows is an edited version of that conversation. Cargo Facts : You’ve been operating with three A330-200Fs for some time. What is your strategy for the development of your freighter fleet? Jason Thomas: The Malaysia Airlines passenger network is very focused on the Asia-Pacific region, with three- to four-hour sectors from Kuala Lumpur mainly operated by narrowbody passenger aircraft. We do not have [cargo] capacity for the short-haul sectors but positioning our A330Fs on the short-haul sectors may not be the most efficient way of operating those freighters. What we are doing now is working with another local airline partner, which acts as a feeder for us from Myanmar, Vietnam and Indonesia into Kuala Lumpur, while MASkargo focuses on the medium- and long-haul sectors to places like China, Australia, Amsterdam and India with our Airbus freighters. Moving forward, we are also looking at the viability of having our own narrowbody freighters. We are not discounting modernizing our fleet or expanding our own freighter capabilities. MASkargo is evaluating whether a partnership would make more sense for us, or having our own operating lease, dry lease model or even purchasing new freighters would be the right way forward. CF : Which narrowbody type, and how many, would be the right fit for you? JT: Whether it’s an A321 or a Boeing, I would not say it’s going to be in huge quantities. The maximum that we will go is two or three aircraft because this is only going to act as a feeder into Kuala Lumpur, our hub. We are not only looking at Kuala Lumpur as our main hub, we are looking into expanding into other airports as well, like Penang and other cities in East Malaysia. It could be Kuching or Kota Kinabalu where we want to create a secondary hub. These narrowbody freighters would fly to those routes to act as feeders while we focus on the medium- and long-haul. When we have enough capacity coming in from the feeders into Kuala Lumpur or even to our secondary hub, the three A330Fs will not be sufficient for the medium- and long-haul, so we need to look into expansion in that space as well. CF : How would you expand that medium- and long-haul segment? JT: It’s very difficult for us to find the right, like-minded partner to complement us and our operations. Most of the cargo operators or the combination carriers that have that capability and reach are fairly well-positioned within our region. Our focus now is to find a partner who has a strong presence in the West, so we can focus on the East. Both of these strengths could complement each other and build a more comprehensive network. We position ourselves as the strength of the East: We have the traffic rights, the reach, the right aircraft, and the know-how, and we are mature in those markets. What is lacking now is an operator from the West. For us to grow our own widebody freighter operations, the only options that we’re looking at are 777 freighters, the new A350F, which will be very costly, and 747Fs. It will not be an immediate option because that would take time for us to do the evaluation and the purchase. A partnership will certainly be the best fit for us, but a partnership without any skin in the game, and an equity partner without any equity will not materialize in the long term. With A330 conversions, we could do it immediately and it’s not a challenge for us to get those aircraft but, in terms of reach, we will have the same limitation as what we currently have. For example, now we are operating the A330-200F to Europe with a tech stop in the Middle East. In the long run, it may not be cost-efficient for us, so the only way forward is to have that 777 kind of range. Of course, we need to get the approval directly from our shareholders and board. As a group, the focus now is the refleeting of our passenger aircraft. We have our A330neo campaign that will be starting this year. We also started bringing in the 737 MAX, so that’s our priority. For freighters, I wouldn’t say it will happen in the next two years or so. Maybe from 2026 onward, we might look into expanding our freighter network. [caption id="attachment_56867229" align="aligncenter" width="2560"] Malaysia Airlines operates three A330-200Fs. (Courtesy/Malaysia Airlines)[/caption] CF : Can you tell us more about the partnership with the local airline? JT: We started working with World Cargo Airlines as our partner sometime in November last year. So now we’re three months into the program with this narrowbody freighter operator, and it’s been working well for us. Of course, in terms of regulation, if we were to engage with a foreign carrier we may run into certain limitations concerning traffic rights, for example. Nevertheless, we are casting our nets further; we will be launching an RFP sometime in February to get more players into the equation to see how best we can capitalize on that. Our fleet management team has also been reaching out to lessors and manufacturers to see what kind of costs and aircraft types are suitable for operations. So all that is happening concurrently, but I would say our preference is definitely to go into the asset-light business model, and, if a partnership creates value, we would definitely embark on that instead of getting our own aircraft. At MASkargo, we have been aggressively searching for a strategic partner that could come in with equity. It could be just a commercial arrangement or a closed-wallet kind of deal, so our options on the table are open. The directive from the board, and even our shareholders, is that we are not limiting ourselves to just a commercial arrangement or interline arrangement or charter arrangement. CF : What gives you the ability to maintain an edge over regional competitors? JT: In the last couple of years, we’ve seen a lot of new entrants, especially narrowbody players. I’d be lying to say that it doesn’t create any competition; it creates competition and I think it’s a healthy competition, but we remain focused on the agility and our network for both our capabilities with our widebody freighters and belly capacity. We leverage our strengths, we focus on building our network outreach, and we’re not too focused on the four- to five-hour range within Kuala Lumpur; that’s not our market. Medium- to long-haul is our focus, building on network capacity that doesn’t limit us, putting our fingers into the different types of segments of the business, whether it's traditional general cargo, express cargo or even e-commerce cargo. We are currently equally spread out in all those segments, but we are not putting our bets into one particular commodity type. We want to remain agile and accommodate the various market segments that are available. We have our own ground operations in Kuala Lumpur and all across Malaysia. So, with that, we control the service delivery. We ensure our services are up to snuff and keep our customers happy. With our network, we remain agile and we continue to evolve and come up with new products, new ways of doing business. I think if we remain focused on that, we would have an edge over our competitors in this region. Cargo Facts Asia 2024, the essential event for stakeholders in the Asia-Pacific region, will take place April 15-17 in Singapore. Learn more and register by March 1 to take advantage of early-bird pricing.

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