Oneworld factor lifts MAS passenger load 3.5% in Q1

MAS group CEO Ahmad Jauhari Yahya with the oneworld alliance logo.

PETALING JAYA: Malaysia Airlines' (MAS) entry into the oneworld alliance, among other factors, has lifted loads, although not drastically. The airline saw a 3.5% rise in passenger loads for the first three months of 2013 to 76.6% from the 73% recorded a year ago.

It also saw a 16.5% rise in revenue passenger km (RPK) over the said quarter as opposed to the same period last year. RPK is the average amount an airline makes for flying a paying passenger over a distance of one km.

For the same quarter, it carried a total of 3.6 million passengers, compared to 3.1 million in the same period a year ago, although lower than the 3.7 million it carried in the fourth quarter of 2012. Traditionally, the first quarter is not as strong as the fourth quarter.

“We are glad that our passenger growth in terms of RPK in the first quarter of this year is 16.5% higher than last year, and (attributed) by a combination of factors, and not necessarily a direct result of MAS' oneworld entry,” the airline said in a reply to StarBiz's queries.

MAS became a member of oneworld in February, giving it access to its member network and making it easier for its travellers to fly to parts of the world where it does not serve directly. Its passenger loads in January 2013 was 73.9% , 76.9% in February, followed by 78.9% in March. Having crunched MAS' operating statistics, RHB Research said operating statistics had improved significantly, with the overall load factor increasing to 74.0% from the 70.9% recorded in the first quarter of 2012.

“We maintain our stance that MAS' turnaround could materialise on the back of strong passenger feeds from the oneworld alliance that may eventually improve its yield and load factor. The rationalisation of routes is showing positive results and the effective cost control may eventually improve MAS' profit margin,” the research house said.

It added that it was maintaining its “buy” call on the stock, with a target price of RM1.

Out of the 13 research houses tracking the stock as per Bloombergdata, four have a “buy” call, two a “hold” call and seven a “sell” call on the stock. MAS' shares closed unchanged at 70 sen on Friday.

MAS said there had been an increase in interline and code-share traffic upon joining oneworld, and that it had also seen a significant number of oneworld frequent flyer programme members using its network. It is leveraging on its partner networks to have greater access to Europe, China and North America.

MAS said it expected “a substantial increase in revenue from more strategic partnerships that would increase passenger flow and interline cost savings. By leveraging on partner networks, MAS would have greater access to Europe, China and North America.”

With such numbers, it is no surprise then if it was looking to expand its list of code-share partners. The airline is in talks at present with British Airways (BA), Latam Airlines, Qatar Airways and Sri Lankan Air.

Even Air France, which arrived in Malaysia last Tuesday, is looking to co-operate with it to expand into Asia. Last week, Air France chairman and chief executive officer Alexandre de Juniac met up with the MAS top management to explore co-operation with the airline, since both the carriers now ply the KL-Paris route. MAS has deployed its A380 aircraft for its daily flights to Paris, while Air France is using its B777 for its thrice-weekly flights.

When asked what came out of the meeting with De Juniac, MAS groupCEO Ahmad Jauhari Yahya said “the meeting was cordial. We discussed several areas of co-operation. Details are still being worked out”. “They are already helping us in the A380 component support area and are now looking at possible code-share opportunities,” he revealed, declining to elaborate.

Whether the code-share is for the KL-Paris route is unclear, but what Air France also needs is connectivity to Australia, since it no longer has a code-share with Qantas from Singapore to the Australian cities.

MAS stands a good chance of hammering out a deal that could include domestic travel, Asia and also Australian cities. If that happens, experts feel MAS would be carrying more traffic in the future. Both BA and Air France had code-share arrangements with Qantas in the past but all that came to an end after the Australian carrier entered into a partnership with Emirates. MAS is already talking to BA for a possible code-share.

Airline alliances help create a global network that can be used by airlines and air travellers alike. It helps airlines save cost in the areas of operations, maintenance, investments and purchases, while travellers have an option in departure times, availability of flights to a greater number of destinations, reduced travel time and various special offers.

A code-share, meanwhile, is where two or more airlines share the same flight to save cost. Under code-share arrangements, airlines can sell the seats, as they are operating the same route. Such arrangements allow greater access to cities through partner networks without having to offer extra flights. Among oneworld members are Qantas, BA, American Airlines, Cathay Pacific, airberlin, Finnair, Iberia, Japan Airlines, LAN, Royal Jordanian and S7 Airlines.

-thestar online.