This article first appeared in The Edge Financial Daily, on May 16, 2016.

KUALA LUMPUR: Raya Airways Sdn Bhd, formerly Transmile Air Services Sdn Bhd, will soon break the duopoly and get a slice of the action in the provision of cargo terminal and ground-handling services at Kuala Lumpur International Airport (KLIA).

Its chief executive officer Lee Shashitheren said the cargo carrier is partnering with one of the world’s leading ground-handling firms for the venture.

Admitting that Raya Airways would be rivalling the country’s two major ground handlers, DRB-Hicom Bhd-owned KL Airport Services Sdn Bhd (KLAS), which is in the midst of selling it to Pos Malaysia Bhd, and Malaysia Airlines Bhd Cargo (MASkargo), Lee said its partnership with the global Asian company would provide it with the leverage to sustain competition.

When asked, Malaysia Airports Holdings Bhd managing director Datuk Badlisham Ghazali confirmed that an independent airline was among the tenants of its Low Cost Carrier Terminal (LCCT) building, which was previously occupied by AirAsia Bhd between 1996 and 2014, adding that “several parties” would be participating in the reconversion of the entire LCCT complex into a cargo facility.

According to Lee, Raya Airways will embark on a RM100 million project to refurbish 40,000 sq ft of the former LCCT to build a cargo terminal in Sepang. The first phase of the investment plan is to turn space in the LCCT into third-party ground handling.

A sum of RM100 million is part of the US$180 million (RM722 million) capital expenditure Raya Airways would raise through internal funding and bank borrowings to turn around the air freighter, which includes re-fleeting, he said.

Phase two consists of a cargo terminal that would be built on a 1.2ha land adjacent to the 350,000-sq ft LCCT. Raya Airways will eventually relocate to KLIA from its current site in Subang Airport, Lee explained in an interview with The Edge Financial Daily.

“We signed an agreement as a tenant with landowner Malaysia Airports Holdings Bhd towards the end of the fourth quarter of 2015. We target operations to begin by the final quarter of 2016, after we obtain local government planning permission and [from] the fire department.

“We have also received licences from the Department of Civil Aviation and transport ministry to expand to other airports in the country in future. We expect the cargo terminal to be ready in 2018.

“This is our first foray into KLIA as a third-party ground handler, coupled with the cargo terminal on land we secured. This will form competition in the existing market,” he told The Edge Financial Daily in an interview.

He said Raya Airways expects competitive pricing to attract airlines to utilise its services, including check-in, baggage handling, security, catering, cargo services and ramp services.

The cargo terminal, which aims to cater for all airlines landing in KLIA, would be fitted with a cold room, animal facilities and dangerous goods section.

A filing with the Companies Commission of Malaysia shows that Amrul Nizar Anuar Resources Sdn Bhd is the sole shareholder of Raya Airways. Datuk Ishak Ismail is a director of the company.

KLAS, which is mainly involved in ground-handling services, posted a pre-tax profit of RM7.2 million for the financial year ended Dec 31, 2015. It served 12,781 flights from Kuala Lumpur and 4,535 flights from Penang last year, and handled 137,084 tonnes of cargo in Kuala Lumpur and 23,245 tonnes in Penang.