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.