February 11, 2013
Credit: Credit: ATR
When Malaysia Airlines (MAS) started Firefly in 2007, AirAsia Group CEO Tony Fernandes predicted the new venture would fail. He also mocked the name, saying a firefly is the insect with the shortest lifespan.
Six years on, Firefly is alive and prospering, having found a niche and refrained from competing head-on against low-cost and other full-service carriers. Without divulging figures, CEO Ignatius Ong says Firefly enjoys higher profit margins than the industry average. It has a fleet of 12 ATR 72-500s, and MAS has just ordered 20 ATR 72-600s, with options for 16 more, for Firefly and sister carrier MASwings.
Firefly plans to add two ATR 72-600s this year, the first in June, and expects to receive two or three more next year, as well as two in 2015 and two in 2016, says Ong. This will increase its ATR fleet to 20.
Ong says 12 more of the type will be delivered to Firefly after 2016, some for fleet expansion and some to replace ATR 72-500s. The carrier aims to have no ATRs older than eight years, says Ong, in order to keep maintenance costs low, boost the airline's image and generate consumer interest in the brand.
The alternative to buying ATR 72-600s would have been to lease ATR 72-500s to maintain complete commonality. But Ong says, “It makes sense for us to buy rather than lease aircraft. Buying the aircraft is cheaper in the long term.” He adds that “you have great resale value on the ATR. You won't lose money on it.” There are many airlines looking for good secondhand ATRs, he says.
Firefly is expanding its fleet while Malaysian low-cost carriers are increasing capacity. AirAsia Malaysia is adding 10 Airbus A320s this year, and newcomer Malindo Air tells Aviation Week it aims to start flying next month and build its fleet to 10-12 Boeing 737-900ERs by year-end. Malindo is a joint venture between Indonesia's Lion Air and privately owned National Aerospace & Defense Industries of Malaysia.
“The entry of Malindo will impact both AirAsia and MAS mainline,” Ong says. “There will be a lot of customers, even loyal customers, that will try the new carrier to see what it is like.” But he notes that the challenge for Malindo will be to retain those passengers.