FIREFLY, a regional carrier and a fully owned subsidiary of Malaysia
Airlines, is in transformation from a community airline to a boutique
airline serving mainly the business crowd. Inside Investor asked the
enigmatic Ignatius Ong, Firefly’s CEO, about strategy, safety records
and future plans.
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| Ignatius Ong, Firefly's CEO |
Q: What is your definition of a community airline?
A: There are a lot of legacy airlines among the national airlines in
the world with a lot of fundamental structures in place that are hard to
change. We wanted to do something ground-breaking, to start a new
airline set as a template within our airline group and not follow the
same model. The point was to do something which hasn’t been done before
in Malaysia. Firefly was originally launched for “short hops”, to
connect communities within Malaysia and the wider region, thus the term
community airline. However, over time we saw that our flights were
increasingly used by the business community as well as leisure
passengers, and so we decided to softly rebrand the airline towards a
premium boutique airline because we are today doing a lot more than
connecting communities, for example flying to primary airports.
Q: Are there any synergies with MASwings?
A: Not really. It’s our sister company, but they have a different
focus, on Borneo. They are connecting the rural communities there. From
that perspective, it’s different, although from the group level the
business model of both is centered on turboprops. Another difference is
that some routes of MASwings are subsidised by the government because
they have to connect remote regions which is commercially unviable. But
our model is solely based on commercial operations.
Q: Do you foresee to deploy jets in addition to the turboprops?
A: It’s not really the right time now. Our strength today is
turboprops and we know how to address this traffic sector. However, I’d
never say never.
Q: What is your long-term target for the fleet size?
A: We have 13 aircraft at present, and 19 are on order. In five years
from now, I would like to reach the 20-mark of deployed aircraft.
Q: Do you also see network expansion?
A: Yes, but a network expansion is somehow limited for a turboprop
fleet with a two-hour reach. We are now creating hubs, apart from the
central hub in Selangor, in Penang, Johor, Malacca and Kota Bharu for
the East Coast. That way, we can increase our reach and network as much
as possible as opposed to just operating one hub. We are a
point-to-point carrier and will go wherever there is demand. For
example, there is no connection from Singapore to Ipoh, here we can act.
Q: What are the fundamental reasons for Firefly’s growth?
A: We have a strong brand, and many people have heard of us. However,
some say they haven’t tried us yet. So we did a brand refresh this year
to get the message through. Otherwise, we can stimulate demand on
certain routes to grow to a sizeable scale, and at the same time reduce
costs which we translate into low fares for our passengers, which, in
turn, stimulates demand further. For example: Many people go on holiday
two times a year – but I want to price our flights so that they can go
four times a year for the same amount of money. I know that there is
much competition outside, but that way we don’t cut into the pie of the
others, but just create more flights. That is the whole idea, and that’s
why traffic is growing. One of our most active passengers travels with
us 200 times a year. Moreover, many businesses are here in Selangor, and
many corporate people want to avoid traveling to Kuala Lumpur
International Airport and rather use us. In KLIA or LCCT, you need to be
there at least three hours earlier for check-in, whereas for us here it
can take less than 15 minutes all the way to get on board. It’s very
time-saving and allows us to have a quick turnaround. Especially for
corporate people, it makes a big difference to fly with us in terms of
time efficiency.
A: This was the original idea, but we are definitely not. There are
refreshments on board, pre-assigned seats, and people do not to have to
pay for extras. Furthermore, the passenger composition on our aircraft
is much different from others. Many airlines are, for example, carrying
many first-time flyers, while we have predominantly frequent flyers.
This makes a big difference.
Q: When do you think would be the right time for a stock listing?
A: This is hard to say. It depends on the government, first and
foremost, as we are still a government-linked company. I think we are
not at the right size yet. We need to reach a status that everyone in
Malaysia knows us and almost everyone has flown with us then this would
be the right time. The people who can make a decision on a stock listing
are actually at Khazanah Nasional or Malaysia Airlines because they are
holding the shares.
Q: There have been major safety issues with some rapidly expanding airlines. What is Firefly’s stance on that?
A: You are absolutely right, we have seen a lot of airlines rushing
in to get their operating licenses. There might be a situation where
safety could be compromised, but at Firefly we would never do anything
that way. We are using the safety protocols of Malaysia Airlines which
was one of the pioneers in safety and is well renowned for its safety
records. We are also cooperating with the manufacturers in terms of
maintenance and do more than what’s required. We also started our own
maintenance, and of course this may be a little costlier, but there is
nothing more important than safety in aviation. An airline can make huge
profits, but there only needs to be one incident that not only costs
the brand its reputation but more importantly human life. There are two
paramount things for our company: Profitability and safety. Good
maintenance also means to get high performance and less breakdowns or
delays, which is as important.
Q: What will the ASEAN Economic Community bring?
A: We can’t go on it alone in the long run. We have a focus on
domestic flights and the competition is pretty strong. We work closely
with Malaysia Airlines on code-sharing to offer new connections. In the
long run, we would also look into the opportunity to code-share with
other airlines in the region. We can’t grow organically alone.
Q: Why did firefly withdraw from East Malaysia?
A: At that time Firefly actually occurred some losses on these
routes, and the parent company, which itself was restructuring, said we
should focus on what we really are good at, and it was the right
decision at that point of time in my view as we have all seen.
A little on the background of the CEO, Ignatius Ong:
Started his career as a personal banker around 20 years ago,
worked in local and corporate banks and then switched to Andersen
Consulting – today Accenture -, where he was a senior consultant
overseeing a number of projects, such as mergers, CRM, loan
restructuring etc. within the financial services sector in Malaysia,
Singapore and Mauritius. Mr Ong joined Malaysia Airlines in 2004 where
as a manager in the project management department and later moved on to
take on a role with the then programme management office. Then became
regional senior vice president for Australia, New Zealand and Southwest
Pacific and was responsible for the region’s route revenue and
profitability between 2010 and 2012. After that, he was called back and
asked to take on the position at Firefly.
Firefly’s route map:
Source: Investvine | 24 Sept. 2013
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