This article first appeared in The Edge Financial Daily on May 23, 2017
KUALA LUMPUR: Malindo Airways Sdn Bhd is bullish on the growth potential of Asia’s aviation market and is not scaling back its breakneck pace of expansion even as its full-service counterparts such as Malaysia Airlines Bhd, Singapore Airlines Ltd and Cathay Pacific Airways Ltd have voiced concerns about industry overcapacity.
Its chief executive officer Chandran Rama Muthy said the carrier will take delivery of seven new aircraft this year, including four Boeing 737 MAX 8s. However, he declined to disclose the aircraft type of the other three planes.
“This year the domestic aviation industry is still looking at a 6% to 8% growth and so, prospects are good. The seven new aircraft will bring our system-wide seat capacity to 11 million and we are targeting to carry eight million passengers in 2017,” he told reporters in Singapore yesterday after a welcoming ceremony to celebrate Malindo Air being the first airline to take delivery and operate the 737 MAX 8.
Chandran is confident that Malindo Air, to be renamed to Batik Malaysia in July this year, will reach the eight million passenger mark in 2017.
“We did 900,000 in the first year [of operations in 2013], year two 2.75 million, year three 3.8 million and year four 5.8 million. So, eight million target this year is easy,” he said.
Asked about its turboprop operations at Sultan Abdul Aziz Shah Airport in Subang, Selangor, Chandran said the competition there remains “healthy”.
“Competition in Subang is healthy, our load factor is about 70%, I believe the other operator is also about touching 60% to 70%,” he said, referring to Flyfirefly Sdn Bhd.
Malindo Air currently operates 16 turboprops in Subang, and plans to add “a couple more” turboprops, said Chandran.
This year, Chandran said the airline plans to fly to Phnom Penh, Cambodia in August. “We plan to start service to Kunming in China, with a focus on charter flights. In Indonesia, we are considering [operating to] Lombok and Yogyakarta [apart from Bandung, Jakarta and Bali currently],” he added.
Malindo Air has recently launched new routes to Chittagong in Bangladesh, Guangzhou in China and Brisbane in Australia.
Earlier at the ceremony, Malindo Air received its first single-aisle 737 MAX 8 to become the world’s first airline to operate the plane.
Chandran said the airline will take delivery of the remaining three 737 MAX 8s this year, which will be used for both its charter and commercial scheduled flights.
“We are planning [to deploy] these aircraft to serve the economy-class market segment in South Asia, maybe in North India, Pakistan, Bangladesh and Kathmandu in Nepal. We plan to deploy most of them for chartered flights. These new aircraft will allow us to go to further destinations and will play a key role in providing lower air fares to our customers,” he said.
According to Boeing’s fact sheet, Malindo Air’s 737 MAX 8 utilises the CFM International LEAP-1B engine. The aircraft is said to be 8% cheaper to operate than its nearest rival, the Airbus A320neo. In terms of fuel consumption, 737 MAX 8 is 14% lower than 737NG and 9% more efficient than the A320neo.
Chandran said Malindo Air intends to leverage on the new aircraft’s fuel efficient feature to cover wider radius of destinations. “This aircraft is great for fuel saving, so we want to fly the maximum distance we can, like a six-hour flight.”
On the airline’s rebranding to Batik Malaysia, Chandran said the entire exercise will cost about RM5 million to RM6 million over a one-year period.
“We are already going to 16 countries. With the new brand, we can collaborate better with Batik Indonesia to bring in more tourists and it is easier for us to sell in the marketplace,” he explained. Malindo Air and Batik Indonesia have a common shareholder in Lion Air group. Malindo is 49% held by Lion Group and the remaining 51% owned by Chandran.