Thursday 28 Mar 2024
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KUALA LUMPUR (Nov 16): Full service airlines are heading for big losses as they do not have a coherent strategy, said low-cost carrier AirAsia Bhd group chief executive officer Tan Sri Tony Fernandes in his latest posting over Twitter. 

“Many full service airlines are heading for big losses. As they just don’t have a coherent strategy. (One) can’t be low cost and full service.

“That’s full service airlines in Association of South East Nations (ASEAN). Airlines who try to do all will have painful experience and airlines with more brands also will,” he said this morning.

Yesterday, Bloomberg reported Malaysia Airlines Bhd was mulling the purchase of 25 wide-body aircraft or Boeing 737 Max 8 jets at a total cost of US$2.75 billion at list price in July, to meet with growing travel demand.

Quoting MAB chief executive officer Peter Bellew, the report said the airlines has options for 25 more to compete against the varied budget carriers in the region.

It, however, does not have enough planes to meet the unprecedented opportunity in China, Bellew told Bloomberg, noting that the global megatrend tourism is in China.

Bellew also said the airline would not do 'other long-haul routes till 2020', besides the current Kuala Lumpur-London route, after scrapping some European routes, and signing a code-sharing deal with Emirates airline.

Bellew reportedly said Malaysia Airlines was offering promotions on its business and economy cabins to lure passengers, including round-trip tickets between Kuala Lumpur and London for as low as US$450.

Separately, Bellew who told Bloomberg Television that the airlines has 60% market share on its London flights, up from 45% in May, said competition was intense on direct routes to Europe.

“But I think there will be a place in the future for Malaysia Airlines to look at direct long-haul services back to Europe,” he was quoted saying.

Meanwhile, Reuters quoted Phoenix-based (U.S.) Indigo Partners LLC co-founder and managing partner Bill Franke as saying that the Asian region had yet to see a truly low-cost carrier, dismissing efforts by traditional players to meet demand for cheap travel.

Franke, whose firm invested in the airline sector, reportedly said there was still a gap in Asia’s fast-growing budget market, for airlines with even fewer frills.

“There is no really, true low-cost model in India, China ... You have major flag carriers who try to move downstream (and) by and large, they have been unsuccessful. Sooner or later, the inefficiencies of larger airlines bleed down,” Franke was quoted as saying.

Franke said major network carriers were unable to shed deep-seated cost structures needed to support their wider operations, and struggled to compete successfully as budget carriers, Reuters wrote.

"They have big airline practices. They are not standalone," Franke reportedly said, citing Virgin Australia as an example of an airline that offers lounges and pre-selected seats.

"You always want to have the lowest cost structure for your category,” Reuters quoted Franke as saying.

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