New fuel hedge, aggressive plans for China and EPL football club tie-up among airlines’ new moves
KUALA LUMPUR: A new fuel hedge, aggressive plans for China and an impressive branding tie-up with world renowned football club Liverpool are among efforts being taken by new chief executive officer Peter Bellew to boost Malaysia Airlines Bhd (MAS).
At a media briefing, Bellew explained that in the midst of rising oil prices, MAS had hedged 60% to 70% of its fuel requirements for the next 12 months, adding that the airline would be taking more steps to cut cost and grow revenue in the near future.
But it was MAS’ announcement that it had become Liverpool Football Club’s (FC) official global airline partner that dominated the briefing.
The club is one of the most followed, with a fan base of over 770 million globally. In South-East Asia, it has over 100 million fans and about 40 million in China.
“We hope to sell more seats with the tie-up,” Bellew said.
Bellew declined to disclose the exact amount to partner the English Premier League football club, merely adding that “it is less than 10% of MAS’ annual advertising and promotion budget”.
However, the benefit and exposure MAS would get from the tie-up would be tremendous, he added.
“Both brands have a long and illustrious history with similar culture rooted in a sense of family. Additionally, the partnership will go a long way in increasing awareness of Malaysia as a tourist destination to a huge global audience,” Bellew said.
Liverpool FC chief commercial officer Billy Hogan said Liverpool FC and Malaysia share a special passion for football. “When we visited Malaysia in our pre-season tour in 2011 and 2015, the reception was incredible.”
The tie-up is a three-year partnership, providing MAS with numerous benefits including LED and static board brand exposure at each home game at Anfield stadium, and exposure on the Liverpool FC website, publications and Facebook page besides co-branding opportunities in merchandising rights and customer engagement such as pitch-side access in Liverpool to players and legends.
The airline also has access to players to be featured as ambassadors and in all related communication materials.
He expects a spike in passenger traffic from Britain and China with the deal.
China is a market he wants to tap into, given the growing appetite of the Chinese for travel.
Bellew said the airline would announce significant expansion into China, although there has been “dramatic changes” in its market share the past months.
At the moment, MAS flies to Beijing and Shanghai.
“China traffic, for now, makes up 5%-6% of the airline’s average seat km (ASK) and it should double in 18 months,” Bellew said. As at June 30 this year, MAS’ ASK was at 10,351.2 seats.
He also expects passenger loads to increase from the current level of 69% to 80% in 18 months.
Forward bookings are picking up and better than what they were a year ago for the months of November to March next year.
“Things are going very well on the revenue side, with no further funding needed from parent Khazanah Nasional Bhd,” he said.
On the hedging, Bellew said the fuel requirement of 60% to 70% was hedged at US$65 a barrel.
The airline industry could face challenges if oil prices rise faster than expected, but Bellew said that “at US$60-US$70 a barrel, it would be still sustainable for MAS”.