Leasing option for Malaysia Airlines as demand rises

  • Business
  • Monday, 15 May 2017

Chief executive officer Peter Bellew(pic) said a decision on the type of aircraft will be made by the end of June. (Malaysia Airlines will take delivery of the first of six new A350-XWB aircraft by year-end.)

PETALING JAYA: Malaysia Airlines Bhd will lease a dozen second-hand wide-body aircraft from now till the end of 2019 while waiting for new aircraft deliveries, as it does not have enough capacity to serve nine key routes across Asia.

Chief executive officer Peter Bellew said a decision on the type of aircraft will be made by the end of June.

He said passenger loads were rising and demand for the airline’s services, including business class, was growing.

“We just don’t have enough capacity, so we are looking at six wide-body A330 for 2018 and six more in 2019. The nine routes are across Japan, Taiwan, China, India and Indonesia,” Bellew said.

“In the longer term, till 2023, we would need 30 to 35 wide-body aircraft,” he said.

The airline will take delivery of the first of six new A350-XWB aircraft by year-end, which will be used to replace the A380 superjumbos that will be converted to cater to haj flights under a plan named “Project Hope”. The haj flights will begin at the end of the year.

The airline has also ordered 25 of the new B737-Max 8 planes, with delivery deadlines starting from the end of 2019. However, with Boeing facing engine issues, there could be delays in the delivery.

“The biggest challenge is the lack of business class seats, as we have seen a 90% increase in bookings over the last nine months. Wide-body planes will have lie-flat beds and twin aisle, which gives great comfort,” he said.

“This will allow us to grow sensibly with minimum risk on existing routes with a high degree of certainly and success,” he said.

The airline shrunk its route network after being hit by two major air disasters in 2014, but now wants to grow market share across Asia. While the airline was shrinking its network three years ago, rivals were building up inventories of new aircraft that could compete on lower operating costs and higher fuel efficiencies than the age-old guzzlers. It takes three to four years to get a new aircraft, but that also depends on the model picked.

Experts believe Malaysia Airlines will need to finalise a new fleet and replacement strategy fast, as the airline’s rivals in the region have the latest planes fitted with the latest livery. There will also be a need to invest in on-board entertainment and food offerings to stay ahead of the competition.

An aviation expert pointed out that a number of the MAS aircraft were “old and tired” and needed to be replaced.

“We would need to build the fleet by 2023 close to 30 to 35 wide-body aircraft. We will also need to replace some of the older A330 from 2019 onwards,” Bellew said.

He said the airline was evaluating whether to acquire Airbus A330-neos or B787s in the wide-body aircraft category for replacement and growth. This will be for delivery from 2019 onwards.

He added that the B787 had greater distance potential, while the A330-neos were in production, but there would not be any more orders of the A350 aircraft.

While waiting for these planes to be delivered, Bellew said the airline would lease. MAS currently operates 77 jets.

Instead of forking out huge amounts of cash for the planes, the airline has opted for a leasing arrangement for them, meaning that it will get the new planes but the leasing company will own them. MAS will not be burdened with having to raise cash to buy planes.

On passenger loads and market share, he said the airline had seen a stark recovery on its KL-London-KL route with loads of around 80% in the first quarter.

“Forward bookings over the next six months are also encouraging, up 31% from the same time last year,” he added.

He said targeted and aggressive sales campaigns led to much better loads. Marketing campaigns were kick-started in August and September last year after a lull period focusing on the all-inclusive value fares offered with no hidden extras.

On the overall load factor, Bellew said “it was looking very good with quarter one passenger count increasing double digits by 12.9% year-on-year to 3.6 million passengers”.

“There is a very aggressive price war in the Malaysian domestic market, particularly for flights in Peninsular Malaysia and to Kuching. MAS is not dropping our prices, but will focus on our quality,” he pointed out.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

Business , malaysia airlines


Did you find this article insightful?


Across The Star Online