KUALA LUMPUR, June 25 — Despite a grim outlook for the global aviation industry, airlines plying the Singapore-Malaysia route remain upbeat about their prospects.
While carriers around the world are suffering, the Singapore-Malaysia sector is enjoying a boom, with several airlines set to expand and increase flight frequencies from next month.
Air services between Malaysia and Singapore have hugely increased this year, and many more flights are due to be launched from Singapore to various towns in Malaysia.
You would forgive AirAsia — the airline running the most number of flights between the two countries — if it should start to feel nervous as yet another player, Malaysia Airlines subsidiary Firefly, enters the market next month.
The newcomer will be the seventh carrier to fly the much-coveted Singapore-Malaysia sector.
But AirAsia chief executive Datuk Tony Fernandes said he was confident about the airline’s staying power.
“I am not concerned about Firefly. It is not an arrogant statement,” he told The Straits Times in an interview.
He explained that both airlines are different and reach out to different target markets.
Fernandes said he believes that Firefly, which operates smaller turboprop aircraft and flies from Subang — nearer to the city centre than Sepang, site of Kuala Lumpur’s low-cost carrier terminal — is unlikely to offer airfares lower than AirAsia’s.
“We’re also different from other airlines (like Malaysia Airlines and Singapore Airlines),” he added.
As AirAsia is a budget airline, he said, a passenger has to pay for meals, entertainment and even checking in a suitcase.
And those who have flown its long-haul carrier AirAsia X to Britain or Australia will know that the seats do not recline.
But these quirks do not seem to deter many passengers. Fernandes said passenger numbers have gone up and that plane loads average out at around 82 per cent.
Despite the industry’s glum fortunes regionally, AirAsia recorded net profits of RM203.2 million for the first quarter, compared with RM161.3 million a year earlier.
The opening up of the Singapore-Malaysia sector has been a boost. Fernandes estimates that 52 per cent of his passengers for the Singapore-KL route are Singaporeans.
And the Singapore-KL route is almost always nearly full, with an average load factor of more than 70 per cent, according to Kathleen Tan, AirAsia’s regional commercial head.
“The KL-Singapore route has been neglected for so long. It’s one of the few routes that has been in decline, so I think there’s enough for all of us,” said Fernandes, adding that the economic outlook for the route was “very good”.
He has never been wrong yet. He rose to fame after he turned around an ailing government- owned carrier into the success story that is now AirAsia.
Like AirAsia, its rival Tiger Airways also feels the sector is lucrative. It is keen to expand further later this year and is in discussions to launch new routes.
Its head of corporate communications Matt Hobbs said: “For the low-cost airlines, the market is certainly seeing growth and stable demand.”
Jetstar Asia also did not seem too worried about increased competition. Its Asia commercial head, Leslie Ng, said: “Our performance between Singapore and Malaysia remains strong.”
He cited a threefold increase in the number of passengers this month compared to the figure in the same period last year.
But analysts warned that a saturation point may soon be reached.
Azrul Azwar, a senior economist with Bank Islam, said that while the sector was still unaffected by the recession, he warned that it will reach a saturation point. “There could then be a price war, meaning more margin compression for carriers. But it will benefit passengers.”
Ng Sem Guan, aviation analyst with OSK Research, said: “The KL-Singapore route is a bit overcrowded. But new routes have the potential to grow, though it will take a while to mature.”
Both Air Asia and Air Asia X have removed administration fees on all flights.
Fernandes said yesterday this would lower fares and boost passenger volume.
The move would see a reduction of up to RM43 in ticket prices.
And amid the rosy outlook, at least for his airline, Fernandes promised one creature comfort for his long-haul passengers.
By December, seats in Air Asia X will be able to recline. — The Straits Times