MH CEO comments - aircraft acquisitions, bundled fares & other topics

[MH_fan]

Those A380s, whilst very nice to travel on, were really not the right choice of aircraft for them. It didn't help that BA entered the KUL-LHR market around the same time, which put a lot of pressure on yields. They will do much better with the A350s and there could be the potential for code-sharing with BA in the future on this route.

 

[dajop]

Any word on the A380s?

I wonder if that question relates to quote 3 posted above (" The Malaysia Airlines CEO said that, under this scenario, “suddenly, many aircraft that didn’t look as sensible because of the cost of the oil, could [become] very practical to use again”.) Or is he talking about other fuel guzzlers such as 747's, A340's and even 777s?

 

[Strategic Aviation]

Malaysia Airlines plans lie-flat Boeing 737 business class seats - Australian Business Traveller

The airline will debut the seats on its new Boeing 737 MAX 10 fleet, due for delivery from 2021, with CEO Peter Bellew indicating to Australian Business Traveller they could use an all-new staggered design from Thompson Aero Seating.

Very few airlines are currently flying lie-flat business class seats on single-aisle jets like the Boeing 737 and Airbus A320 series, but Bellew believes there’s pent-up and profitable demand for sleep even on Malaysia Airlines’ regional flights of four to five hours “to secondary cities in China, maybe to Perth overnight.”

“If you ask business travellers what’s the number one thing they want from their flying, it’s sleep. (Above) food and inflight entertainment, this, that and the other, the most important thing for them is to get some sleep, even on a short flight, and people will pay a good premium for that.”

“There’s a lot of wealthy people in Asia, a lot of people who lead extraordinarily busy lives, and to be able to get three to four hours’ sleep on a flight is worth a lot of money to a lot of those people.”

Bellew will aim the Boeing 737 MAX 10 aircraft at "secondary and tertiary markets in China", which he sees as premium regional routes primed for growth due to the explosion of a moneyed middle-class with an appetite for travel.

Malaysia Airlines eyes Asia for Airbus A350 flights - Australian Business Traveller

The question then becomes what to do with the final pair of Malaysia Airline’s six-strong A350 fleet, which Bellew says will be delivered by the end of June 2018.

“We’re still evaluating what we do with the last two” Bellew told Australian Business Traveller, admitting that previous plans to expand to Paris, Amsterdam or Frankfurt are now looking less likely.

“Doing another direct service to Europe doesn't work very well due to the very low fares being offered by Gulf carriers, but we’re still working on it."

"If we can form a joint venture with another airline it might make sense, because it's the ideal way to get another European destination" he added. "The only way I can see it succeeding would be to work closely with another carrier."

“If not, we’ll use them for something like services to Shanghai and Tokyo,” Bellew revealed. “We’re still evaluating Auckland, but we took a major hit on yield with Emirates and Qatar (flying to Auckland)."

Either way, Bellew expects to make a decision of the airline's final Airbus A350 routes within the next two months, saying "we’ll have it locked in and on sale by the end of September."

 

[MEL_Traveller]

They will do much better with the A350s and there could be the potential for code-sharing with BA in the future on this route.

I would be very surprised in BA put their code on MH long hauls. I would have thought that would require some sort of safety assessment and approval of MH's operations?

 

[Strategic Aviation]

Haven't seen any media outlet suggest that and it's highly doubtful it would be an issue. If they haven't been grounded at home, banned from operating within the EU, downgraded by the FAA, temporarily lost their AOC or from a country that has been red flagged by ICAO, then profitability considerations would remain preeminent.

While it's feasible, I haven't heard of specific incidents affecting codeshares (e.g. Air France, Asiana, Germanwings, Indonesia AirAsia, etc).

 

[Strategic Aviation]

Malaysia Airlines plans return to Brisbane, more flights to Perth - Australian Business Traveller

The ‘when’ is, however, tied to the Oneworld member airline expanding its fleet, a process which isn’t expected to happen until sometime in 2018.

“I think Brisbane would do very well for us,” Bellew predicts, and not just for taking passengers to Kuala Lumpur or London.

“With our network we could offer some very seamless connections, particularly to relatively obscure places in China, where I don’t see them ever getting connected point-to-point.”

However, Bellew explains, “we don’t have the aircraft yet to re-open that route… what I’m trying to do is to put extra wide-bodies in place for the second half of next year, and 2019, and that’ll give us the capacity then that we can operate through to Brisbane, because we need a wide-body aircraft to get down there – the narrow-bodies won’t make it.”

For its part, Perth will see twice-daily Boeing 737 flights and “we will have the Boeing 737s available next year to be able to do that,” Bellew forecasts.

However, mindful of the number of travellers heading through KL to London, Bellew is keen to avoid clashing with Qantas’ non-stop Perth-London Boeing 787 service.

Malaysia Airlines has spiked plans to bring its Airbus A380 superjumbo to Sydney and Melbourne for the peak December-January travel season.

“We had a look at it but the figures don’t add up, and there’s a lot of logistical challenges in doing that,” Bellew explains.

 

[Danger]

I wonder what the seat number change is in downgrading from a single A330 to a double B737. I'm surprised MH is downgrading in light of competition from full service Malindo, in addition to Air Asia. The 737s would have to have the new J product to be even competitive.

 

[MEL_Traveller]

I wonder what the seat number change is in downgrading from a single A330 to a double B737. I'm surprised MH is downgrading in light of competition from full service Malindo, in addition to Air Asia. The 737s would have to have the new J product to be even competitive.

Malindo is full service, but heavily discounted. Air Asia is coach only and very cheap, hard to compete against.

If played right, full flat beds on the 737s, and being able to sell those at high prices, would probably more than off set the loss of a few economy seats which they'd have to sell at air Asia prices.

 

[mannej]

Malindo is full service, but heavily discounted. Air Asia is coach only and very cheap, hard to compete against.

If played right, full flat beds on the 737s, and being able to sell those at high prices, would probably more than off set the loss of a few economy seats which they'd have to sell at air Asia prices.

D7 isn't coach only on the PER-KUL route, as it offers the Premium seats as well.

 

[oz_mark]

I wonder what the seat number change is in downgrading from a single A330 to a double B737. I'm surprised MH is downgrading in light of competition from full service Malindo, in addition to Air Asia. The 737s would have to have the new J product to be even competitive.

Qantas seem to make 737s work to Singapore, and that's only a 10-15 minute shorter flight.

 

[MEL_Traveller]

D7 isn't coach only on the PER-KUL route, as it offers the Premium seats as well.

forgot about that. although still, MH should be able to command a premium for full flat and business class service.

 

[MEL_Traveller]

Qantas seem to make 737s work to Singapore, and that's only a 10-15 minute shorter flight.

must, in part, be due to the shackles of status? on paper it shouldn't work... competition with widebodies, double or triple daily frequencies, superior service, superior food, superior seating.

 

[Danger]

Qantas seem to make 737s work to Singapore, and that's only a 10-15 minute shorter flight.

Yes, true. I'd forgotten about that. Although we often here reports that a B737 doesn't cut it and that it should be an A330 again.

 

[Strategic Aviation]

Airbus, Boeing court a resurgent Malaysia Airlines - Australian Business Traveller

Malaysia Airlines is looking to order as many as 30 new Airbus A330neo or Boeing 787 jets, with representatives of both aircraft manufacturers courting the Malaysian flag-carrier over a sale worth as high as US$7 billion based on list prices.

The order could be preceded by lease agreements for up to a dozen used Airbus A330 or Boeing 777 jets as Malaysia Airlines works to rebuild its international network.

“So I think we’re about six to seven months from getting the quality back to where it needs to be, and then it’ll just be about convincing people that it is there,” Bellew continues, “educating people on the change that’s happened and spreading the gospel around that.”

Bellew isn’t shying away from the impact of the twin disasters of flight MH17 – shot down by a Russian-made missile over eastern Ukraine in July 2014 – and MH370, which disappeared in March 2014 on a flight from Kuala Lumpur to Beijing and has yet to be recovered.

“I’ve no doubt there are many people who have a negative perception of us because of what happened, but I believe the brand has recovered very well in pretty much all marketplaces,” Bellew suggests.

“You don’t get load factors of over 80% if there’s something wrong with your brand, and in the month of December we hit a network-wide factor of 90%.”

“That was the highest load factor of any full service carrier in the world last December, so there is nothing wrong with the brand, the brand is strong… and the numbers don’t lie, the bookings are there right now, the business has increased, so people are getting it.”

 

[Strategic Aviation]

Malaysia Airlines orders Boeing 787 Dreamliner - Bloomberg News

Malaysia Airlines has agreed to buy eight Boeing 787-9 Dreamliners and eight Boeing 737 MAX 8 jets as the Oneworld airline looks to boost services on its busiest routes.

 

[Strategic Aviation]

Malaysia Airlines looks to 'right-size' Airbus A350 first class - Australian Business Traveller

As Malaysia Airlines doesn’t offer first class service on flights to Australia – instead, only between Kuala Lumpur and London – Bellew explains where first class is heading, with London remaining firmly on the map.

“I think there’s a niche role (for first class) on the London route… we’re operating load factors of around about 60% in first class right now (on flights with eight first class seats), so having four first class seats is about the right mix for us."

“I expect that on each flight there will generally be one (reward) seat available for Enrich members or other points cardholders,” such as Qantas Frequent Flyer members, Bellew tips.

“Sometimes, depending on our seat analysis, the nature and time of year, and our predictions, there might be two, but I expect there’ll be one on every flight,” pledges the man in the top job.

Bellew touts the increased privacy of the seats, and with first class spanning just one row at the front of the plane, the overall experience of seclusion “should make it popular”, Bellew shares.

“We’ll also be doing a lot with the food, a lot with the experience on board and a lot with the experience on the ground at London and Kuala Lumpur, and that will give a lot of added benefit to our customers.”

Bellew suggests Malaysia Airlines "would probably have demand on flights to Auckland and to Tokyo,” both of which are now being considered as a destinations for the forthcoming Airbus A350 jets.

A final decision on this is expected before the end of October.

 

[MEL_Traveller]

'You don't get 80% load factors if there's something wrong with your brand'. If they have a brand. Load factor on rock bottom fares is easy.

 

[dajop]

'You don't get 80% load factors if there's something wrong with your brand'. If they have a brand. Load factor on rock bottom fares is easy.

Don't know about ex-Australia, but have been buying SIN-MEL fares for years now in Y. This year has seen a step change in the fares offered by MH. In the aftermath of 2014 it was easy to get fares return for slightly over $400 return. Last year that was more in the range of mid $500s. This year more in the range of mid $600s, such that QF $550 fare trumps MH easily ...

Likewise to LHR sale J fares at one point were $3000 SGD return. Now the sale fares are over $5k, which is higher than various other carriers. The days of the real rock bottom fares seems to be over, or at least paused for the time being.

 

[MEL_Traveller]

Often cheap SC runs around asia.

 

[Strategic Aviation]

Malaysia Airlines Will Lease 6 Former Airberlin A330s - One Mile at a Time

Malaysia Airlines has signed a letter of intent for a six year lease agreement with AerCap for six Airbus A330-200 aircraft.

These planes should start arriving in the Malaysia Airlines fleet in February 2018, and will remain in Malaysia Airlines’ fleet until 2023. Malaysia Airlines plans on using these planes to up-gauge several high-demand medium haul routes. Interestingly they’re viewing this as a replacement for six 737s that they’re having to return to lessors, so that’s quite a capacity increase compared to those planes.

Furthermore, it’s cool to see that they’ll keep the same interiors that airberlin had, meaning that there will be more flat beds on more shorthaul routes, which I’m a fan of.

Malaysia Airlines certainly seems to be on a better path than they were before, though I can’t help but wonder if they’re falling into the same trap that they did before. For the past few years the goal has been for Malaysia Airlines to shrink into profitability, after they realized they offered too much capacity in too many markets. They sort of wanted to transform into more of a regional airline.

Now they’re taking on six A330s for shorthaul flights to replace 737s (which surely isn’t helping their yields, even if they’re getting a good deal on these planes), and they also recently ordered eight Boeing 787 aircraft.