November 14, 2012
Credit: Credit: MAS
Malaysia Airlines (MAS) concedes that low-cost carriers (LCCs) have changed consumer behavior so much that it is difficult to win over passengers on some routes without offering low fares.
The airline’s commercial director, Hugh Dunleavy, says it is hard for full-service carriers to make money serving routes between Malaysia and India and Malaysia and China because, thanks in part to LCCs, consumers wishing to fly these sectors have become accustomed to low fares.
But if MAS responds by trying to match the low-cost carriers on price, then “people are going to say to me ‘why is your plane full, yet you are losing money?” says Dunleavy. He says, “Anyone can fill the plane, but at what price?” To be successful financially, “it is about selling at the right price,” he adds.
One of the challenges for MAS is that “it is a premium airline, but there is a segment of the market that wants a cheaper, ‘no frills’ experience.”
Dunleavy made the remarks at a press briefing last week during the Association of Asia Pacific Airlines (AAPA) annual general meeting in Kuala Lumpur, Malaysia.
His remarks are significant because many industry executives are wondering if MAS will re-enter the low-cost carrier segment through its subsidiary Firefly. Currently, Firefly operates 72-seat ATR 72-500s, but it is hardly a low-cost carrier because it provides some frills, such as free drinks and snacks, and it charges a premium for convenience. Firefly operates out of Kuala Lumpur’s Subang Airport, which is closer to the city center and more convenient than Kuala Lumpur International Airport (KLIA).
Firefly used to operate Boeing 737-800s and 737-400s out of KLIA on a scheduled basis.
The Firefly 737s had an all-economy class configuration and competed head-to-head against AirAsia in the LCC segment. But Firefly shuttered this jet operation in December 2011 after MAS reached a collaboration agreement with AirAsia. Earlier this year, however, the collaboration agreement abruptly ended, leading many in the industry to wonder when Firefly will add jets and return to being an LCC.
Firefly’s CEO, Ignatius Ong, during the AAPA meeting told Aviation Week that the airline had no immediate plans to become an LCC again. He said recent news reports in Malaysia, which quoted him as saying Firefly plans to operate from West Malaysia to East Malaysia, misquoted him. Firefly’s ATRs lack the range to serve this sector, but 737s would have the range. It is understood that MAS is refraining from making any major decisions until after the government elections, due by the end of March.