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| Ong: ‘Due to the weakening of the ringgit, there has been a 30 increase in our overall costs,’ |
Carrier coming up with innovative products to improve demand
PETALING JAYA: Premium short-haul carrier Firefly Airlines is forecasting a decline in its passenger numbers this year due to the lower demand amid a soft consumer market.
The Malaysia Airlines subsidiary is expecting an 11.1% drop in the number of passengers to 1.6 million for 2017 from around 1.8 million people in 2016.
According to Firefly Airlines CEO Ignatius Ong, the market would remain challenging for the group this year due to the lower household disposal income for discretionary travel and weak ringgit.
He said the industry had already been negatively impacted since the introduction of the goods and services tax (GST) in 2015.
“We came out of 2016 with a much softer market, and I think, for this year, we will adopt a more prudent estimation of about 1.6 million passengers,” Ong told reporters yesterday at the official launch of the group’s new product called FY e-wallet.
While the depreciation of the ringgit depreciation would be good in attracting foreign tourists to Malaysia, Ong said, the weak ringgit had made it more expensive for Malaysians to travel to other countries.
Furthermore, he pointed out, the weakening of the ringgit had significantly affected local carriers such as Firefly, as most of their costs were denominated in US dollar, while revenues were in ringgit.
“Due to the weakening of the ringgit, there has been a 30% increase in our overall costs, not because we are inefficient, but because we have to pay more at the US dollar cost base,” Ong explained.
He added that he hoped that the ringgit would strengthen to a more “sustainable level”.
Firefly would maintain its current capacity with 12 aircraft for 2017, after having taken out six planes from its fleet of 18 planes in November last year.
“In our first seven years of operation, we had a load factor of about 75% which allowed us to grow. But now, with a load factor of only about 60%, we had to cut our capacity by six aircraft due to the decrease in demand,” Ong said.
“When we see our load factor recover to around 70% to 75%, we may then press for one or two more aircraft into operation,” he added.
As part of a measure to improve demand for its services, Ong said, Firefly had to come up with innovative products such as the FY e-wallet.
The FY e-wallet is a new cashless and convenient method for consumers to purchase tickets without the hassle of unsuccessful transactions and to give consumers an added bonus amount from Firefly based on the amount category purchased from the airline.
Travellers can expect to get an additional bonus amount of up to 25% based on their purchase category of RM1,000, RM5,000 or RM10,000.
The amount validity is three months for the RM1,000 deposit and six months for the balance.
“We want to deliver value to our customers and we hope the e-wallet will entice more people to fly with us,” Ong said.
Since its soft launch in early December last year, FY e-wallet had achieved sales of about RM1mil.
Ong said Firefly aimed to achieve FY e-wallet sales of between RM10mil and RM15mil from its registered members of close to 500,000.
Source: The Star | Business | 21 Jan. 2017
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