2021 looked like a repeat of 2020 with new variants, transport curbs and supply chain disruptions settling in with the new norm. For aviation, air cargo continued to run the show, with passenger demand still taking a back seat on the road to recovery.
As combination carriers found creative ways to add cargo capacity and enjoy the elevated yields, pure cargo operators like Raya Airways saw the situation as a ‘big opportunity’.
The Malaysian cargo airline has been operating weekly flights for DHL since February 2021 to transport Covid-19 vaccines to Kuching, Sarawak and Kota Kinabalu. In June of the same year, it started offering freighter services to the southern Chinese city of Nanning in Guangxi, China, becoming the first Malaysian cargo airline to do so.
”Air cargo demand is not just recovering from the COVID-19 crisis, but it is growing,” commercial chief MD Hidayat Rahim told Payload Asia. “It is crucial for us as a B2B key enabler to establish other connectivity options to cope with this growing demand.”
In Thailand, another airline has responded to the crisis and pivoted to cargo similar to its parent company Vietjet. Thai Vietjet topped other registered airlines in Thailand, with a dominant share of domestic air freight at 42.2 percent in the third quarter of 2021.
Combination carrier woes
Despite dominating the air freight market in Q3 of last year, Thai Vietjet admits a few challenges in running cargo operations as a combination carrier with a fleet that consists mainly of younger Airbus A320 and A321 totalling 16 aircraft.
Pinyot Pibulsonggram, commercial director at Thai Vietjet said one of the biggest challenges for the airline in terms of cargo operations is not having a freighter fleet to provide more capacity for each flight upon market demand.
To overcome this, the airline had to fully maximize and optimize current capacity with efficient cargo handling, arranging cargo in passenger cabins following authorities, and having favourable commercial policies to support partners for different routes.
“Before Covid, the airline extended its flight network to many destinations in the region, with good preparation and handling of operational tasks, as well as extensive partnership, enabling the airline to smoothly convert part of capacity into and operate air cargo services since the pandemic,” Pibulsonggram explained.
Cargo airlines play
Over at Subang airport in Malaysia, Raya Airways runs its own cargo complex, which includes its head office, a cargo centre and 24-hour customs facilities.
With three Boeing 767-200F and one 737-400F aircraft, the cargo airline operates scheduled services into regional hubs like Indonesia, Singapore, Vietnam and Hong Kong. The airline has also been instrumental in moving Covid-19 vaccines to East Malaysia together with DHL Express.
Rahim pointed out that with the shift in consumer behaviour and the growth in e-commerce, the company’s primary focus is on expanding its network to destinations within the Asean, Asia Pacific, and Oceania regions. It also plans to expand its product range in shipping live seafood and fresh vegetables, as well as odd-sized cargo, such as aircraft engines and motor vehicles, with an expertise on dangerous goods’ uplift.
“Raya Airways is looking to establish multiple centralized hubs for the growing e-commerce transactions outbound from China, namely, Shenzhen and Macau, just to name a few,” noted Rahim. “The key is to establish a resilient network expansion plan to ensure unified connectivity to serve growing demands.”
Whilst bigger airlines are trying every ounce of effort to stay afloat, Thai Vietjet is confident that it will continue to gain more market share in Thailand and abroad with its parent company Vietjet leading the way. The Vietnamese carrier has received its first widebody A330-300 and plans to operate services connecting Hanoi, Ho Chi Minh City and Nha Trang with Moscow, a plan that the carrier describes will help realise its expansion into Europe.
“Thailand’s domestic air cargo market is not very big, so Thai Vietjet focuses more on the international market,” said Pibulsonggram. “With good land transport infrastructure, it’s not easy for air transportation to penetrate the market at the moment. So diversifying products, adding more value to current services would help the airline gain more share on cargo.”
Meanwhile, Rahim admits that he does not have an exact indication of when the airline will stop transporting the Covid-19 vaccine with the country’s immunisation programme set to complete by February 2022.
The commercial chief noted that the plan is to continue growing as a key enabler in the business-to-business space but well aware of and prepared for the risks and opportunities that comes with it, including new technology, new market entrants, new customer expectations, and new business models.
Whilst Raya does not share the same backdrop as Thai Vietjet as a pure cargo airline, what they do share is the current reality that has put the spotlight on air cargo. In 2020, air cargo made up over a third (36 percent) of the airline revenues, up from 10 to 15 percent in previous years, according to IATA. Cross-border e-commerce, a main factor for the sector’s growth in the last few years, is expected to outgrow the domestic market with a predicted 20 percent share of air cargo trade volumes by 2022, according to McKinsey.