Malaysia Airlines records stable Q2 performance

KUALA LUMPUR: Malaysia Airlines Bhd managed to record "steady year-on-year (y-o-y) performance” in the second quarter of 2018, with a marginal yield improvement of 0.3 per cent.

In the face of increased competitor capacity, coupled with weak demand conditions due to Ramadan, revenue per available seat kilometre (RASK) also remained steady with a growth of 2.0 per cent y-o-y, the national carrier said in a statement today.

It did not disclose revenue and profit numbers, but said the first half of 2018 was “extremely challenging" as the airline was hit by many factors, including escalating fuel prices (up by over 37 per cent y-o-y), industry-wide overcapacity resulting in demand and yield pressures, and pilot shortages.

“Despite this, the airline managed to hold its position with stable performance posted for the quarter,” it added.

Khazanah Nasional Bhd, its sole shareholder, was reported as saying earlier this year that it expected Malaysia Airlines to show a profit this year.

Malaysia Airlines Group (MAG) Chief Executive Officer Izham Ismail said the carrier had been undertaking its biggest ever transformation over the past three years, cutting comparable unit costs by 5.0 per cent during the period.

“The airline had seen good traction for the last three quarters after a weak 2017 with yield and RASK showing positive improvements.

“However, we are also facing pressure from escalating fuel prices, foreign exchange (forex) volatility and overcapacity in the domestic market,” he said in the statement. 

He added that overcapacity has also led to a worldwide pilot shortage, further exacerbating the situation and hampering its growth.

Despite this, he said, relatively steady results were seen in the quarter from pre-emptive initiatives taken, including better capacity management as well as leveraging on the flexibility of our fleet type to navigate operational constraints.

“We remain committed to drive through our planned initiatives for the remainder of this year whilst putting in place proactive and defensive strategies to deliver profitable performance in 2019.

“We will continue to drive yield by implementing effective pricing strategies and delivering better value products to our passengers,” he said.

Moving forward, Izham said the group maintained its cautious outlook for fiscal year 2018 with potential volatility on the horizon from forex and escalating fuel prices.

“While the global economic situation remains volatile, we remain cautiously optimistic about the demand environment, both domestically and in the Asia-Pacific region.

“The group will continue to be prudent in controlling capacity and has already rationalised domestic route frequencies, allocating the group’s aircraft where we see the best potential returns,” he said.

According to Izham, the airline’s focus remains on improving yield through better pricing strategies, especially on premium segments of business class and corporate sale.

To address external pressures and anticipated operational constraints, Malaysia Airlines proactively conducts a capacity management exercise, reducing capacity and frequencies on non-profitable routes.

On pilot shortage, it said proactive steps were being taken to address this issue as quickly as possible, which included merging and upgrading flights to be operated by its wide-body aircraft to help cover gaps caused by the shortage of B737 pilots.

The airline has also put in place an extensive pilot training programme, implemented in August 2017, alongside recruitment drives.

Last month Malaysia Airlines received its sixth and final A350-900 aircraft, which will be deployed on the double daily London route.

The airline is maximising its assets by using certain aircraft types, such as the A350-900 and the A380-800, opportunistically during peak seasons to high traffic markets.

The quarter under review also saw the arrival of three of the A330-200s, bringing the current total fleet to five.

The aircraft have enabled Malaysia Airlines to be more competitive in the fast-growing Asia-Pacific aviation market, allowing the airline to up-gauge from a narrow-body on high demand markets, significantly improving the customer experience whilst also generating better revenue.

The last A330-200 is expected to arrive next month.

Meanwhile, MAG recently signed an agreement with four umrah tour operators – KRS Travel Sdn Bhd, ATS Global Travel & Charter, Ecoriths Leisure Travel & Tour and Rayhar Travels Sdn Bhd – to provide air charter services for the umrah season from October 2018 to June 2019.

The agreement would see Malaysia Airlines transporting over 70,000 pilgrims not just from Malaysia but also from neighbouring countries such as Indonesia.

With a total of 149 flights, operated via Malaysia Airlines’ Airbus A380-800 aircraft, the agreement represents the highest number of scheduled flights for the umrah season to date for Malaysia Airlines.

Source: Bernama | 30 August 2018

LCCT in Penang’s flight plan

GEORGE TOWN: If Penang gets a low-cost carrier terminal (LCCT), it will likely be to the south of the current passenger terminal and only about 1km from the proposed islands to be reclaimed off the southern coast of Penang island.

It has been the dream of AirAsia and the Penang Government to have the facility since 2007.

An inside source in AirAsia revealed that former chief minister Tan Sri Dr Koh Tsu Koon had given approval for AirAsia to build the LCCT on a 36ha piece of land at the coastal end of Penang International Airport in Bayan Lepas.

“But it met with resistance from the Transport Ministry then due to political reasons, and also because the plan was for the LCCT to be privately run, instead of by Malaysia Airports Holdings Bhd (MAHB).

“AirAsia was planning to make high-volume, short-haul flights to China and India from there.

“Now that there are new levels of political cooperation between the state and federal governments, it will be interesting to see if the 11-year dream can come true,” the source said.

The project was highlighted at the state assembly yesterday when Air Putih assemblyman Lim Guan Eng, who is also Finance Minister, hailed the move to have a new LCCT for Penang while debating the motion of thanks to the opening speech by Yang di-Pertua Negeri Tun Abdul Rahman Abbas.

Lim, speaking to reporters outside the august Hall later, said: “We are not talking about expanding the present terminal but a totally new one that will use the same runway.”

The former chief minister said Putrajaya would talk to Air­Asia and MAHB on the LCCT plan.

“While AirAsia is very much interested to help, we still need to work out the specifics of the plan,” Lim said.

He said a solution was needed be­­cause the present airport in Bayan Lepas only has the capacity to handle 6.5 million passengers a year but arrivals last year hit 7.1 million and the number was expected to increase to 7.8 million this year.

Former Jelutong MP Jeff Ooi recalled that the LCCT plan was proposed in 2007 and said if it had been done 10 years ago, Penang would have had a different future.

“Penang is well positioned to be a regional hub for international tra­vellers who fly low-cost.

“Tourists who arrive on full-­service airlines will have plenty of options to travel elsewhere on low-cost flights. So this makes Penang attractive as a prime point of visits for tourists,” he said.

On July 31, AirAsia Group chief executive officer Tan Sri Tony Fer­nandes hinted that the low-cost airline giant was looking at plans to build a LCCT in Penang.

“A new terminal will help us increase our planes from five to 16 over the next five years. This will bring in about eight million more passengers per annum into Pe­­nang,” he said after a courtesy call on Chief Minister Chow Kon Yeow.

He added that the plans would feature both domestic and international routes.

The current Penang International Airport is the oldest in the country, having been built in 1935 when Pe­­nang was part of the Straits Settle­ment in South-East Asia ruled by the British.

It underwent a major upgrade in 1979 to accommodate Boeing 747s, then the largest planes in the world.

The terminal saw two significant facelifts in 2009 and 2013.

Source: The Star | 7 August 2018

PSC rate to differ according to airports - Mavcom

KUALA LUMPUR: The Malaysian Aviation Commission (Mavcom) is looking into regulating a new passenger service charge (PSC) rate which will be different for each airport, said newly-appointed Executive Chairman Dr Nungsari Ahmad Radhi.

"We are reviewing the PSC (rate) and it will be based on the funding models of various airports because not all airports are profitable.

"It has already been equalised...the next stage is to differentiate by service level according to different airports," he told reporters today.

He said this after the signing of a master agreement between Malaysian Industrial Development Finance Bhd and Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP) on guaranteeing loans for small and medium enterprises here.

Nungsari is also the Director and Principal Officer of SJPP, a company wholly-owned by the Minister of Finance Inc.

Previously, Transport Minister Anthony Loke had ordered Mavcom to decide on the new PSC rates by January 2019.

Nungsari said Mavcom would look into the operating agreements between Malaysia Airports Holdings Bhd and the owner.

"The airports are owned by the government, so in order for us to impose differential rates for airports, the government will have to take a stand in terms of how it wants to treat the existing airports and how it wants to fund expansion," he added.

The PSC, formerly known as airport tax, is currently standardised for all airports in the country whereby RM11 is charged for domestic destinations, RM35 for ASEAN destinations and RM73 for international destinations beyond ASEAN.

Commenting on the RM1 service charge per passenger, Nungsari said it will remain in force.

Source: Bernama | 2 August 2018