Jul 11, 2016

    $11 push for MAS to fly from KLIA2


    THE RM33 (S$11) price difference is the key factor for Malaysia Airlines (MAS) to consider some flights out of KL International Airport 2 (KLIA2), a move that has been criticised by several industry executives and travellers.

    To the critics, it is an "absurd" idea that could lead to MAS losing more money and confusing travellers.

    "It is an absolute waste of time and does not make economic sense. Split operations?" asks an industry veteran.

    Both the Malaysian Association of Tour and Travel Agents and National Chamber of Commerce and Industry of Malaysia poured cold water on the plan, saying such a move could confuse travellers.

    But the new MAS chief executive officer Peter Bellew, who took office on July 1 and on the same day announced plans to fly out of KLIA2, believes it makes absolute sense.

    "RM33 is over US$8 per customer. Most airlines' average profit is less than US$8 per customer," he said in a reply to queries from StarBizWeek.

    But his predecessor Christoph Mueller did not implement such a plan during his one-year tenure at MAS.

    The current passenger service charge at KLIA2 for international and domestic destinations are RM32 and RM6, versus KLIA's RM65 and RM9 respectively.

    Said an industry executive: "The point is that RM65 versus RM32 on a 50-minute flight to Changi in Singapore is a difference of RM33. That is why some airlines can offer RM50 on that route but MAS can only sell at RM83 one way.

    "So, MAS loses a valuable marketing tool by not offering flights to Singapore from KLIA2."

    He added that "Bellew is from Ryanair and always hungry to cut cost, especially on leisure routes where yields are low".

    The price advantage is there but so is competition and it may become too intense, as it will be up against AirAsia from KLIA2.

    The question is whether MAS has the staying power to fight AirAsia, which also happens to be the anchor tenant at KLIA2.