MASwing Poised To Take Off In BIMP EAGA

TOULOUSE, France: Commuter airline MASwings, which currently only serves the travel needs of Sabah and Sarawak, is banking on expanding its services to the BIMP EAGA region by October this year, said managing director Datuk Salleh Tabrani. (BIMP EAGA refers to Brunei, Indonesia, Malaysia, the Philippines, East Asean Growth Area.) The move, it is hoped, will create a growth driver for the Malaysia Airline’s wholly owned and loss-making subsidiary. Some 75% of its routes under the Rural Air Services (RAS) are not commercially viable but are undertaken as a social obligation whereby the Government subsidises the losses.

“We have conducted a comprehensive study of the feasibility to operate the routes and will make an announcement soon with regard to our expansion plan,” he said. Salleh was speaking to reporters who attended the handover ceremony of the ninth and second last ATR 72-500 by ATR, the southern France-based maker of turboprop aircraft and subsidiary of EADS. The delivery of the last 10th aircraft is scheduled for April this year. Some of the new routes being considered include Brunei, southern Philippines, and Kalimantan and Sulawesi in Indonesia. “This will be a major milestone for us as we will move from becoming just a domestic player to a regional airline,” Salleh said. The airline is also awaiting approval from the Transport Ministry to ply some new routes which it hopes to launch in October this year. “But we will still continue to fulfil our obligations to meet the travel needs of Sabah and Sarawak by expanding our frequencies and current network in these states,” he reiterated.

The delivery of the ninth aircraft, which took place over the week, is part of the airline’s widespread fleet renewal programme which involves the phasing out of its Fokker 50. To date, it has managed to phase out all but one of its eight Fokker 50 and expects to cap it by first quarter of this year when it takes delivery of the final ATR. “We hope to return the F50 to PMB (Penerbangan Malaysia Bhd) by the first quarter or April,” he said. The airline has forked out some RM700mil for the purchase of 10 aircraft, which Salleh said had managed to reduce its cost per seat by 25% and increase its load factor significantly. “The ATR represents the future of domestic air travel within Sabah and Sarawak. It is the state-of-the-art aircraft that embraces the latest passenger comfort, technology and environment credentials…to drive forward our ambitious expansion plans and traffic demand. “It has significantly lower noise level and higher fuel efficiency which enables us to keep our operational costs low,” he elaborated.

The airline carries 88,000 passengers a month which marks a 24% increase in load factor from a year ago. Flight frequency has also been increased from an average 600 flights per week to 950 flights per week. Salleh attributed much of this to the fleet renewal plan. “Last year we registered a high OTP (on time performance) of 92.9% and this year we are targeting to improve that to 94%, which is rather high compared with the industry average of 80%. We are also targeting to carry some 1.1 million passengers this year from 902,000 last year,” he said. “We are trying to cut cost so that we can narrow our loss to a more comfortable level. In 2009, we managed to cut losses by half that of 2008 and we hope to continue this. The more profitable routes will subsidise the losses from the non-commercially viable routes,” he said. MASwings currently operates 39 routes within the two states and covers 22 destinations. At the handover ceremony, ATR chief executive officer Stephane Mayer said the versatility of the ATR aircraft was a key advantage in regions where runways often required short landing capabilities. In addition, he pointed out that the aircraft had a fuel consumption of up to 40% less than regional jets as well as some 40% less of CO2 emissions.

MASwings is the second largest customer of ATR, after India’s Kingfisher Airlines. About 50% of ATR’s new orders were from carriers in Asia, a market which was fast growing, said Mayer. ATR is also setting up a regional training centre in Kuala Lumpur by the end of the year. When MASwings started out in October 2007, it had eight Fokker 50s and five Twin Otter aircraft. It was set up by its parent Malaysia Airlines (MAS) to specifically provide air services within and between Sabah and Sarawak as well as Labuan which are referred to as Rural Air Services. But the RAS wasn’t always under MAS’ wings. Back in March 2006, under a domestic route rationalisation exercise, AirAsia managed to gain the RAS from MAS and had set up FAX to handle these routes. But 14 months down the road, when the extent of the losses of the RAS became only too clear, the budget carrier decided to surrender the RAS back to MAS.
MAS then set up MASwings to operate these routes in October 2007. As it stands, MASwings cross subsidises the profitable routes such as the KK-Sibu route with other unprofitable routes.
MASwings’ profit and loss is currently borne by the Government.

According to Salleh, the commuter airline chalks up a revenue of some RM150mil a year, which also comes from other sources such as ground handling services. It counts seven airlines including MAS, Royal Brunei Airlines, Korean Airlines and Dragon Air as its customers. “MAS has to bring down the losses every year to a more comfortable level. We hope that by expanding our services to include international services, some of these profitable routes will subsidise the losses even more,” Salleh said. Could the expansion plan turn around the airline, returning it to the black? “We hope so – eventually,” replied Salleh.

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